Financial Crime World

Combating Money Laundering and Terrorist Financing: A Comprehensive Guide

Overview

The fight against money laundering (AML) and combating the financing of terrorism (CFT) is an ongoing effort that requires cooperation from various organizations around the world. In this article, we will summarize key points from recent guidelines, opinions, reports, and recommendations issued by prominent regulatory bodies.

European Banking Authority (EBA)

The EBA has played a crucial role in shaping AML/CFT policies and regulations within the European Union. Some of their notable contributions include:

Guidelines on Risk Management

  • Policies and controls for effective management of ML/TF risks: The EBA has issued guidelines to help financial institutions implement robust risk management frameworks.
  • Remote Customer Onboarding Solutions: The EBA has provided guidance on the use of remote customer onboarding solutions under Article 13(1) of Directive (EU) 2015/849.
  • AMLCO function: The EBA has established guidelines for the AML/CFT Compliance Officer (AMLCO) function.

Opinions and Reports

  • De-risking and financial inclusion: The EBA has issued opinions on de-risking practices and their impact on access to financial services, particularly in the context of the invasion of Ukraine.
  • Financial inclusion: The EBA has highlighted the importance of financial inclusion in promoting economic growth and stability.

European Insurance and Occupational Pensions Authority (EIOPA)

EIOPA has also made significant contributions to AML/CFT regulation. Some notable examples include:

Supervisory Convergence

  • Opinion on supervisory convergence: EIOPA has issued an opinion on supervisory convergence in light of the United Kingdom withdrawing from the European Union.

Financial Action Task Force (FATF)

The FATF is a global inter-governmental organization that sets international standards for AML/CFT. Some of their recent updates include:

International Standards

  • Updated guidelines: The FATF has updated its International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation in February 2023.
  • Beneficial ownership: The FATF guidelines cover various topics, including beneficial ownership for legal persons, risk-based approaches for virtual assets and virtual asset service providers, proliferation financing risk assessment and mitigation, and digital identity.

Best Practices

  • Beneficial ownership best practices: The FATF has issued best practices on beneficial ownership for legal persons to help financial institutions improve their AML/CFT compliance.

Basel Committee

The Basel Committee is an international organization that sets banking standards. Some of their notable contributions include:

Guidelines on Risk Management

  • Sound management of risks: The Basel Committee has issued guidelines on sound management of risks related to money laundering and financing of terrorism (revised in July 2020).
  • Financial inclusion: The committee has also provided guidance on the application of core principles for effective banking supervision to financial inclusion.

Conclusion

These guidelines, opinions, and recommendations provide a comprehensive framework for financial institutions and regulatory bodies to combat money laundering and terrorist financing. By understanding and implementing these standards, we can create a safer and more stable financial system for everyone.