Emerging & Specific Regulation
Anti MoneyMoney Laundering
The latest changes in anti-money laundering (AML) regulations in the EU and the UK for 2023 are significant and diverse, reflecting the evolving landscape of financial crimes and the need for more stringent controls.
Overview of Topic
Here’s a summary of these changes:
EU AML Regulation Changes:
EU AML Authority (AMLA): Proposed in 2021, AMLA safeguards the EU’s financial system from money laundering and terrorist financing. Its go-live in 2024 sees the supervision of high-risk cross-border financial entities and a coordination role with national AML/CFT authorities for a harmonised EU-wide supervision approach.
New 6AMLD: Additions to the Sixth Anti Money Laundering Directive reportinclude national risk assessments (NRAs) every four years, beefed-up Financial Intelligence Unit (FIU) tools for intelligence and Suspicious Activity Report (SAR) filing, and cross-border asset registers. Clarification on beneficial ownership information obligations and better whistleblower protection is included.
Common Rules of Conduct for Financial Institutions (FIs): As part of the EU’s ‘single rulebook’ for AML/CFT, there will be more detailed customer due diligence rules, clarification on ultimate beneficial ownership, and requirements to connect bank accounts to national registers for faster information sharing.
Crypto Asset Transfer Regulations: The Markets in Crypto Assets (MiCA) framework, effective in 2024, sets compliance requirements for cryptocurrency service providers, including maintaining liquid reserves for stablecoins, obtaining authorization to operate in the EU, and introducing a public register of non-compliant crypto asset service providers overseen by the European Banking Authority (EBA). The Transfer of Funds Regulation (TFR) will require cryptocurrency exchanges to obtain personal details for all parties in crypto asset transfers and transactions.
UK AML Regulation Changes:
The Second Economic Crime Bill: The supplementary legislation boosts the capability of Companies House to probe and enforce, reforms limited partnership rules, introduces new powers to attach and recover crypto asset proceeds from money laundering, and solidifies AML rules such as transformed information sharing obligations and a simplified SAR process. This legislation draws the UK’s AML/CFT laws nearer to alignment with the EU post-Brexit.
These changes represent a comprehensive effort by both the EU and the UK to tighten AML controls, address emerging threats, and ensure financial system integrity, especially in the face of evolving technologies like cryptocurrencies.
Significance in Today's Landscape
Compliance with the latest changes in Anti-Money Laundering (AML) regulations is of paramount importance for financial institutions and other affected entities. Here are several reasons why it is essential to adhere to the latest AML requirements:
Legal Obligation: AML regulations are enacted by governments and regulatory authorities to combat financial crime, including money laundering and terrorist financing. Compliance with these regulations is a legal requirement, and failure to do so can result in severe penalties, including fines and legal action.
Risk Mitigation: AML regulations are designed to identify and mitigate the risks associated with money laundering and illicit financial activities. Staying compliant helps financial institutions and businesses protect themselves from being unwittingly involved in criminal activities.
Reputation Management: Non-compliance with AML regulations can damage an organization’s reputation. Clients, partners, and stakeholders expect businesses to maintain high ethical standards and robust AML procedures. Failure to do so can lead to loss of trust and business opportunities.
International Impact: AML regulations often have global implications. Many countries have adopted international AML standards set by organizations like the Financial Action Task Force (FATF). Non-compliance can affect an organization’s ability to conduct international transactions and interact with foreign counterparts.
Financial Consequences: Regulatory fines and penalties for AML violations can be substantial. In addition to financial penalties, entities may face confiscation of assets derived from illegal activities and other punitive measures.
Enhanced Due Diligence: Compliance ensures that an organization has robust mechanisms in place to know its customers and verify their identities as well as insure business continuity
WHO DOES IT IMPACT?
Impacts on EU financial institutions, notably those operating cross-border by objectives to increase administration and potentially systemic changes in compliance monitoring. Asset managers, banks, commodity traders and Fintechs among others.
How Can We Help?
As a consultancy specializing in regulatory compliance, particularly in areas like anti-money laundering (AML), there are several key services you can offer to add value for your clients. These services can be tailored to various sectors, including banking, insurance, and legal firms, among others. Here are some suggestions:
1
Regulatory Compliance Advisory
Offer advisory services on understanding and following AML regulations, including upcoming EU and UK regulatory revisions. This may mean interpreting regulation texts, advising how to apply provisions, ensuring monitoring and compliance.
2
Risk Assessment and Management
Experience in helping identify and evaluate the AML risks and details from business activities; and in creating compliance steps to mitigate these risks through internal rules.
3
Compliance Program Development
A delve into creating and executing effective AML compliance programs. Services may include drafting policy and procedure, setting-up monitoring tools, and ensuring a program is functional and up-to-date.
4
Training and Education
Facilitate training programs to update employees on AML regulations and compliance importance and their own part in helping fight money laundering. This can include workshops, seminars, or e-learning.
5
Due Diligence Services
Support to carry out due diligence, explicitly in consumer onboarding to meet customer Due Diligence (CDD) and Know-Your-Customer (KYC) criteria.
6
Audit and Independent Review
Provide independent audit or review services to review the efficiency of AML programs and any area for improvement identified. Tasks may include testing transaction monitoring processes, how risk is assessed on areas and archive-keeping scrutiny.
7
Technology Solutions
Offer advice and implement technology solutions for AML compliance, such as automatic transaction monitoring systems, tools for confirming customer identity, and data analytics solution to pinpoint any suspicious operations.
8
Regulatory Liaison and Reporting
Preparation and delivery of reports for clients and regulators, reporting to any regulatory requests recieved and being aware of upcoming regulatory amendments.
9
Crisis Management and Remediation
Support in crisis situations such as regulatory intervention or non-compliance issues. This would include remediating the breach identified and addressing the issue timorously.
10
Sector-Specific Compliance Solutions
Offer sectoral specific compliance support for industries such as financial services, legal services, property market or cryptos as these sectors may bring about different AML issues.
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