Financial Crime World

Unmasking Three Crucial AML Regulations in the War Against Financial Crime

Financial crime continues to be a major global issue, and Anti-Money Laundering (AML) regulations and laws need frequent updates to keep pace. In this article, we’ll discuss three essential AML compliances that businesses and financial institutions should be aware of in 2023.

Anti-Money Laundering Directives (AMLDs) and the European Union (EU)

The European Union has been at the forefront of implementing and updating AML regulations. One of the most influential pieces of legislation is the Sixth Anti-Money Laundering Directive (6AMLD), effective from January 2020. This directive introduces numerous changes to heighten the current regulatory framework, focusing on enhanced transparency and accountability in European financial transactions:

  • Broadening the definition of “politically exposed persons” (PEPs)
  • Enhancing customer due diligence requirements
  • Establishing a central register of beneficial ownership
  • Extending AML regulations to virtual asset service providers

FATF Recommendations

The Financial Action Task Force (FATF) is an international organization aimed at combating money laundering, terrorist financing, and related threats. It sets forth a set of 40 recommendations to prevent financial crimes. Although not regulations per se, these recommendations act as a global guideline for implementing effective AML and Counter-Terrorist Financing (CTF) measures:

  • Identification and evaluation of money laundering risks
  • Customer due diligence measures
  • Reporting and record-keeping procedures
  • Training and awareness of anti-money laundering requirements

Bank Secrecy Act (BSA) and FFIEC Guidelines

In the United States, the Bank Secrecy Act (BSA) is a primary legislative tool used to prevent money laundering, terrorist financing, and other financial crimes. Businesses and financial institutions must abide by BSA regulations and the interagency guidelines issued by the Federal Financial Institutions Examination Council (FFIEC) to effectively implement AML measures:

  • Currencies and monetary instruments reporting
  • Suspicious activities reporting
  • Customer identification program
  • Recordkeeping and reporting requirements

Conclusion

These three crucial AML regulations and guidelines are vital for businesses looking to prevent financial crimes and stay compliant with ever-evolving regulations. Stay informed and stay ahead of the curve with regular updates and resources dedicated to AML compliance.