Financial Crime World

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Financial Crime Prevention Laws in United States Minor Outlying Islands

The United States Minor Outlying Islands are a group of small islands that are part of the United States but are not part of any state. While they may be small, they are still subject to financial crime prevention laws and regulations.

Regulatory Focus

According to a recent report by KPMG, regulators in the U.S. Minor Outlying Islands will continue to focus on preventing fraud and financial crimes, including anti-money laundering (AML) and counter-terrorist financing (CFT). The report highlights the importance of evolving technological developments, geopolitical events, and interconnected financial networks in increasing these risks.

Key Areas of Focus

The regulatory focus includes:

  • Anti-money laundering and counter-terrorist financing frameworks
  • Risk mitigants to prevent illicit exploitation of access to the U.S. financial system
  • Monitoring areas such as:
    • Terrorist financing
    • Beneficial ownership
    • Sanctions/tax evasion
    • Consumer scams
    • Potential compliance violations

New Areas of Regulation

New areas of expanded regulations include:

  • Crypto and digital assets: regulators are looking to combat threats and vulnerabilities posed by digital assets and strengthen financial safeguards
  • AML for NFTs and DeFi platforms
  • Continued focus on sanctions and price cap compliance

Consumer Protection

In addition to these regulatory challenges, consumer protection will remain a key area of focus, with regulators assessing companies in areas such as:

  • Account holds and freezes
  • Model development and validation
  • Payment sender/receiver authentication procedures
  • Oversight and monitoring of synthetic identity fraud

Evolving Risks

The report also emphasizes the importance of evolving risks, including:

  • Domestic and international terrorist financing
  • Increased focus on OFAC and sanctions
  • Transnational criminal organizations
  • Drug and human trafficking
  • Smuggling
  • Proliferation financing
  • Synthetic identity fraud

Companies will be expected to enhance their risk and compliance frameworks for effective oversight and governance in areas such as:

  • Anti-bribery and corruption
  • Competitive behavior
  • Lobbying/political involvement
  • Code of conduct

Mitigating Risks

To mitigate these risks, fintech and payments companies should consider ways to responsibly leverage technology and data to monitor activity, coupled with a deep focus on customer experience. Companies should also establish a strong culture of compliance and risk management.

Authors

  • Fiachre O’Neill, Chief Risk & Compliance Officer, PayPal
  • Amy S. Matsuo, Principal, U.S. Regulatory Insights & Compliance Transformation Lead, KPMG LLP
  • John Caruso, Principal, Forensic, KPMG US

Contact

For more information on regulatory challenges and risk management, visit the KPMG Regulatory Insights website or download the full report.

About KPMG

KPMG Regulatory Insights is a thought leader hub for timely insight on risk and regulatory developments. Get the latest perspectives on evolving supervisory, regulatory, and enforcement trends.