Financial Crime World

EU Moves to Boost Cooperation Between Firms and Financial Intelligence Units

The European Union has announced several changes aimed at increasing transparency, improving information exchange, and strengthening anti-money laundering (AML) controls. These changes are designed to enhance cooperation between financial institutions and financial intelligence units (FIUs), providing a clearer approach for firms and FIUs alike.

Improved Cooperation and Information Exchange

Under the new regulations, firms can expect:

  • Support in developing awareness of suspicious activities and guidance on reporting such incidents to FIUs
  • Standardized templates and models for reporting suspicions, allowing for faster and more efficient coordination between FIUs across member states
  • Increased communication and standardization of approach, facilitating joint analysis between FIUs and the sharing of best practices

Enhanced Transparency and Statistics

The regulations require:

  • Member states to maintain comprehensive statistics related to the function of their AML/CFT frameworks
  • Reporting on the number of reports made to the FIU and types of predicate offenses identified
  • Increased transparency, providing firms with valuable insights into money laundering and terrorist financing threats and typologies

Centralized Automated Mechanisms for Accessing Identity Information

The regulations establish centralized automated mechanisms for granting FIUs immediate access to identity information of payment and bank account holders, facilitating cross-border information exchange and addressing difficulties in sharing intelligence across borders.

Data Burden and Quality

Firms must be aware of the potential data burden that may result from these changes and ensure:

  • Accuracy
  • High quality
  • Processing through well-governed systems

Amendments to Wire Transfer Regulations

The EU AML Package extends the scope of existing wire transfer regulations to align with the amendments made to Recommendation 16 (travel rule) of the Financial Action Task Force. This requires firms involved in sending or receiving crypto-assets to:

  • Collect information on the originator and beneficiary
  • Verify this information using independent sources
  • Report failures to do so to AML/CFT authorities

Payment Service Providers (PSPs)

For PSPs established in the EU, the new rules require:

  • Collection of information on the originator and beneficiary of a transaction
  • Verification of this information using independent sources
  • Inclusion of the Legal Entity Identifier of the payer and payee when transferring funds if provided by the payer

Impact on Firms Involved in Crypto-Asset Transactions

The proposed changes will have a significant impact on firms involved in crypto-asset transactions, particularly those that provide custody wallet services or engage in fiat-to-crypto exchanges. Firms must ensure they are up to speed with the new regulations.

Conclusion

The EU’s efforts aim to strengthen AML controls, improve information exchange, and enhance cooperation between financial institutions and FIUs. As a result, firms can expect increased regulatory attention and must be prepared to implement these changes to maintain compliance.