AML Regimes - Toughening Up on AML Screening and Money Launderers

AML Regimes – Toughening Up on AML Screening and Money Launderers

The countries around the globe are tightening the reins on AML regimes and struggling to eliminate the risks of money laundering and terrorist financing. Global and local regulatory authorities are getting stringent. For instance, FATF, AMLD5 & AMLD6, FINMA, FCA, FINTRAC, etc. are proposed regulations to combat bad money flow across the world. Countries like Canada, the UK, and the USA are becoming rigid in implementing the time-to-time updated regulations that could better contribute to the purpose of eradicating money laundering.

The UN Office of Drugs and Crime estimated that 2% to 5% of annual global GDP is affected by money laundering. This amount haunts global businesses when it comes to harsh regulatory penalties by the authorities. AML compliance is mandatory in businesses that can be used somehow to facilitate illicit funds transfer in the world. It can cost heavily when any entity is evaluated to be aided by the businesses knowingly or unknowingly. 

Banks around the world are penalized for the ignorant of AML compliance and regulations. Among those Swedbank and Danske banks suffered a non-compliance penalty of millions of dollars. Financial institutions are therefore active with respect to the adoption of AML regulations to strengthen up the AML screening process within an organization.

Dutch Banks all Set Up Against Money Laundering

In the past few years, Dutch banks have been noticed facilitating money launderers. As a penalty, one of the Dutch banks underwent a penalty of $858 million, which is considered the largest fine in the history of Dutch. Identifying the high risks of money laundering and non-compliance fines, five Dutch banks are taking in place joint transaction monitoring. Similarly, Danske banks are also planning to jointly develop a platform that handles all KYC and due diligence processes of customers. Also, with the help of technology, they are developing algorithms that help them monitor the malevolent transactions and illegal funds transfer.

Counter-Terrorism Steps by the USA

To counter money laundering and terrorist financing, the USA is expanding its measures. A report by the Wall Street Journal stated that Trump administration is all set up to expand counter-terrorism steps at a global level. The target of the USA will be international FIs that are assisting (knowingly or unknowingly) the groups and affiliates of money launderers and terrorists. Also, it is taking steps for the AML screening of entities against several sanction lists and criminal databases.

UK Anti-money Laundering Regulations

Money Laundering Act (MLA) 2017 announced new regulations for the UK. This act will be extending to the other states also. Businesses in the UK are up to review the framework of regulatory authorities that serves the purpose of eliminating money laundering and terrorist financing activities. In case of any confusion, businesses would need to collaborate within 28 days with the Financial Services Authority (FCA). in case of any restriction with respect to AML practices as per regards of EU AML, then businesses must take some additional steps to combat the risks of money laundering. In case of any discrepancy, businesses will be abandoned or terminated depending upon the severity of non-compliance. This new regulation serves the purpose of AML screening and stringent practices to disrupt the money laundering streamlined flow.

PCMLTFA Regulation Canada to Combat Money Laundering

The government of Canada is all set up to amend the regulations that could better combat financial crimes. Proceeds of Crume Money Laundering and Terrorist Financing Act (PCMLTFA) regulations are active in Canada. After the amendments in new regulations, financial institutions are supposed to conduct due diligence based on identity verification and document verification practices. AML verification will be done accordingly which is part of this regime. To undergo AML compliance norms, identities should be verified against several criminal records and database issues by law enforcement agencies. These regulations will be contributing to the alignment of AML compliance in businesses. 

How do these Regulations respond to the Businesses?

AML regulation in the world has the sole purpose of eradicating the money laundering activities that are facilitated by a large number of fo businesses. These regulations are definitely impacting the business norms when it comes to AML compliance and harsh non-compliance penalties. These could be a monetary loss, reputational damage or business assets freezing. AML verification of customers is mandatory for businesses such as real estate, verification of beneficial owners, criminal liabilities list and AML verification virtual currency providers (as proposed by AMLD5 and AMLD6). 

Manual AML verification is replaced by automated AML screening. Financial institutions are now integrating with AML verification API with the system and screen all onboarding customers against a number of sanction lists, criminal records, PEPs list, etc. This helps businesses to verify customers with updated databases and records that ultimately contribute to the elimination of money laundering and terrorist financing.

Leave a Reply

Your email address will not be published. Required fields are marked *