Anti-money laundering: Regulation Around the World

A number of enforcement actions taken by regulators around the world have been a reminder for financial institutions that board involvement in, and appropriate oversight of, anti-money laundering/countering the financing of terrorism (AML/CFT) compliance programmes is critical. Areas such as board training, understanding and appreciation, reporting and management information and escalation frameworks and protocols remain of high importance. Internationally, there have been changes with the Financial Action Task Force (FATF) adopting amendments to Recommendation 24 which concerns accurate and up-to-date information on the beneficial ownership and control of legal persons. Significant legislative change is also on the horizon in a number of jurisdictions including the United Kingdom and the United States. Regulators are also focussing on next generation AML supervision as seen in a recent speech in Hong Kong, while Singapore is likely to see increased enforcement efforts due to its upcoming FATF Presidency in July 2022, and AML/CFT compliance being stated as a key enforcement priority for the regulator.  Another key theme seen in various jurisdictions concerns beneficial ownership.

Key risks include:

• UK – In January the FCA  published on its website a new webpage setting out its expectations regarding the competence and capability of money laundering reporting officers. The outcome of HM Treasury’s consultation on the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 is expected this year.
• United States – Enforcement orders and large fines have been issued for AML failures making the point that the Bank Secrecy Act (BSA) applies to institutions dealing in digital assets and cryptocurrency in the same way as it does to those dealing in fiat currency. Significant reforms are also on the horizon, some believe that 2022 will mark a watershed in AML/CFT regulation similar to 1970 when the BSA was passed.
• Canada – The AML regime is being bolstered by the introduction of a beneficial ownership registry in 2023.
• European Union – The draft legislative package published by the European Commission is  in the midst of its legislative review process.
• Netherlands – DNB has published a schematic illustration of elements of the Anti-Money Laundering and Anti-Terrorist Financing (BES) Act.
• France – The FATF has published its mutual evaluation of France noting, among other things, the AML regime of supervisory authorities of designated non-financial businesses and professions is less developed.
• Germany – A number of important points were raised at the BaFin virtual symposium ‘Combatting money laundering and terrorist financing’ including that the regulator intends to be more proactive in relation to AML supervision.
• Luxembourg – In February 2022, the Luxembourg Department of Justice finalised its first vertical assessment of the money laundering and terrorist financing risks associated with legal persons and legal arrangements.
• Australia – The Australian Senate’s Legal and Constitutional Affairs Committee has published a report recommending that Australia’s AML/CFT regime be extended to businesses and professions such as real estate agents, lawyers, accountants and traders in high-value goods. The timing of any extension remains unclear.
• Hong Kong – The HKMA has published a speech on next-generation AML.
• Singapore – The FATF Presidency will be held by Singapore from 1 July 2022 for a fixed two-year term. The legislative framework is also being updated through amendments to the Payment Services Act 2019, and the Financial Services and Markets Bill that was recently passed. Additionally, the Monetary Authority of Singapore has published its Enforcement Report for the period July 2020 to December 2021, and has issued a new AML/CFT notice for financial institutions in the conduct of their operations and business activities in precious stones, precious metals and precious products.
• Shanghai - The People’s Republic of China has announced the launch of a 3-year AML campaign.
• United Arab Emirates (Onshore) – In March 2022, the UAE updated its AML implementing regulations which (among other things) applied existing, and introduced new, AML requirements for virtual asset service providers. In May 2022, the UAE National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee issued its guidance to regulated entities on assessing UAE persons’ AML risk in light of the UAE’s grey listing by the FATF.
• United Arab Emirates (DIFC) – On 7 April 2022, the Dubai Financial Services Authority’s new requirements for Designated Non-Financial Business and Professions in relation to whistleblowing in AML matters came into force. 
  
   

What to hear more about international AML developments?

To delve further into international AML developments, listen to our latest Regulation Around the World podcast where partners from our financial services team discuss what they are seeing on this topic.

Our Regulation Around the World webpage contains previous updaters and podcasts which apply a global lens to a hot topic in the financial services industry. Previous instalments include ESG, crypto-assets and horizon scanning.

Our Global Regulation Tomorrow blog tracks regulatory developments in a number of jurisdictions including the UK, US, Europe, Hong Kong and Australia. Supplementing the blog is our Global Regulation Tomorrow podcast where our financial services partners look at some of the latest developments in the world of risk and regulation.