Financial Crime World

Financial Crimes on the Rise: Regulators Focus on Anti-Money Laundering, Counter-Terrorist Financing

A Growing Concern in Anguilla

ANGUILLA - The global financial landscape continues to grapple with an increasing number of financial crimes. In Anguilla, a tiny Caribbean island nation, financial institutions are being called upon to step up their game in preventing illicit activities.

Key Regulatory Focus Areas for 2023

Regulatory focus areas for 2023 include:

  • AML/CFT frameworks: Ensuring that financial institutions have robust systems in place to detect and prevent money laundering and terrorist financing.
  • Risk mitigants: Implementing measures to mitigate the risk of illicit activities, such as customer due diligence and suspicious activity reporting.
  • Fraud models: Developing and using advanced data analytics and machine learning to identify and prevent fraudulent activities.

Increased Scrutiny on Crypto and Digital Assets

Regulators worldwide are also turning their attention to the growing threat of financial crimes in the crypto and digital assets space. In Anguilla, the Financial Services Commission (FSC) has warned financial institutions to be vigilant in preventing the use of cryptocurrencies for illicit activities such as money laundering and terrorist financing.

Key Regulatory Focus Areas for Crypto and Digital Assets

Regulators will be looking closely at:

  • NFTs: Non-fungible tokens have been growing rapidly, and regulators expect financial institutions to assess customer due diligence and suspicious activity reporting related to these platforms.
  • DeFi platforms: Decentralized finance (DeFi) platforms are also a key area of focus, with regulators expecting financial institutions to ensure that they are complying with AML/CFT regulations.

Consumer Protection a Top Priority

In addition to preventing financial crimes, regulators are also focusing on consumer protection. Financial institutions must ensure that they are treating consumers fairly and transparently, particularly when it comes to:

  • Account holds and freezes: Ensuring that account holds and freezes are transparent and reasonable.
  • Payment sender/receiver authentication procedures: Implementing robust authentication procedures to prevent unauthorized transactions.
  • Synthetic identity fraud: Preventing the use of synthetic identities to commit financial crimes.

Companies Must Enhance Governance Frameworks

Regulators expect companies to enhance their governance frameworks to effectively oversee and manage financial crimes risks. This includes:

  • Strengthening controls in regulatory focal areas: Implementing robust controls in areas such as AML/CFT priorities, competitive behavior, lobbying/political involvement, and code of conduct compliance.
  • Improving risk management: Developing and implementing effective risk management strategies to identify and mitigate potential risks.

Experts Weigh In

“We expect financial institutions to take proactive measures to prevent financial crimes,” said Fiachre O’Neill, Chief Risk & Compliance Officer at PayPal. “This includes using analytics and automation to monitor activity, coupled with a deep focus on customer experience.”

Amy S. Matsuo, Principal at KPMG LLP, added that regulatory focus areas for 2023 include AML/CFT frameworks, risk mitigants, and fraud models. “We expect financial institutions to strengthen controls in these areas to prevent illicit activities,” she said.

John Caruso, Principal at Forensic, KPMG US, noted that regulators will be looking closely at the use of NFTs and DeFi platforms. “Financial institutions must assess customer due diligence and suspicious activity reporting related to these platforms,” he said.

As the global financial landscape continues to evolve, financial institutions in Anguilla must stay ahead of the curve in preventing financial crimes and ensuring consumer protection.