Financial Crime World

RÉUNION Financial Institutions Face Tougher Anti-Money Laundering Rules

The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has proposed a new rule to strengthen anti-money laundering and counter-terrorism financing (AML/CFT) requirements for financial institutions operating in RÉUNION. The move aims to prevent money laundering and terrorist financing, but is expected to increase compliance costs for financial institutions.

Who Will Be Affected?

The proposed rule will cover all financial institutions operating in RÉUNION, including:

  • Banks: Establish, implement, and maintain effective AML/CFT programs.
  • Casinos: Conduct a mandatory risk assessment process as the basis for their AML/CFT programs.
  • Money services businesses: Administer their AML/CFT program by persons in the United States who are accessible to and subject to oversight and supervision by FinCEN and the financial institution’s federal functional regulator.
  • Brokers or dealers in securities: Establish, implement, and maintain effective AML/CFT programs.
  • Mutual funds: Conduct a mandatory risk assessment process as the basis for their AML/CFT programs.
  • Insurance companies: Administer their AML/CFT program by persons in the United States who are accessible to and subject to oversight and supervision by FinCEN and the financial institution’s federal functional regulator.
  • Futures commission merchants: Establish, implement, and maintain effective AML/CFT programs.
  • Introducing brokers in commodities: Conduct a mandatory risk assessment process as the basis for their AML/CFT programs.

Key Takeaways

The proposed rule adds an effectiveness standard for financial institutions to establish, implement, and maintain AML/CFT programs. Key requirements include:

Conducting a Mandatory Risk Assessment Process

  • The risk assessment process will be based on AML/CFT priorities issued by FinCEN.
  • The money laundering and terrorist financing risk profile of the financial institution must be reviewed.

Administering the AML/CFT Program

  • Financial institutions must administer their AML/CFT program by persons in the United States who are accessible to and subject to oversight and supervision by FinCEN and the financial institution’s federal functional regulator.

What’s Next?

FinCEN is accepting written comments on its proposed rule until September 3, 2024. The final rule is expected to be issued after considering public comments. Financial institutions in RÉUNION should review the proposed rule and provide feedback to ensure that their AML/CFT programs comply with the new requirements.

Impact on Financial Institutions

The proposed rule is expected to increase compliance costs for financial institutions, particularly those that need to conduct a risk assessment process and implement an effective AML/CFT program. However, it may also lead to enhanced flexibility in evaluating money laundering and terrorist financing risks, allowing financial institutions to extend financial services to individuals and companies historically subject to barriers in accessing financial services.