The past few years have seen a rise in regulatory pressures across the world, together with an increase in the number of high profile fines and probes. With the laws getting redefined and more stringent every day, the costs of compliance are also considerable. This creates pressure to identify ways to govern AML risks and balance between regulatory compliance and the costs of compliance systems.
As there are plenty of laws and regulations surrounding AML, how to identify which AML regulations can impact your business? Is your business category or industry regulated? What are the likely consequences of non-compliance? What to know if you conduct business with other jurisdictions or set up branches in other countries? How to know whether you are getting the right advice?
As there is so much to cover, we created a guide to the key AML compliance regulations and the organisations that administer them. Links to their official websites give you a head start on your journey to building an AML compliance programme.
The global organisation, FATF, works together with national regulators to develop common minimum programmes for AML compliance. Countries face diverse business environments and challenges. Consequentially, the risks differ across multiple jurisdictions. Such risks are suitably addressed by each country’s regulator with relevant AML regulations and the consequences of non-compliance.
The Financial Action Task Force [FATF] list of 92 Recommendations are the internationally endorsed global standards against money laundering and terrorist financing. They provide the framework for countries to build an effective system to combat money laundering and terrorist financing, and implement necessary measures.
Case by case risk-based approach and guidance is laid down for sectors exposed to financial crimes – Legal Professionals, the Accounting Profession, Trust & Company Service Providers, Virtual Assets and Virtual Assets Providers, Money or Value Transfer Services, the Banking Sector, the Payment Services Sector, the Securities Sector, the Life Insurance Sector, and Nonprofits. To strengthen financial integrity and prevent the use of the system for financial crime, the Recommendations provide for Politically Exposed Persons, Beneficial Ownership, and Financial Sanctions, as part of the regulatory compliance mechanism.
The Financial Transactions and Reports Analysis Centre of Canada [FINTRAC] has the mandate to detect, prevent and deter money laundering and terrorism financing. A guidance document prescribes the individuals and entities designated as reporting entities and the requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act [PCMLTFA].
United States of America (U.S.A.)
The U.S.A has a comprehensive framework for monitoring and tackling money laundering, terrorist financing, financial fraud and sanctions, with inter-agency coordination and surveillance.
The Financial Crimes Enforcement Network [FinCEN] is a bureau of the U.S. Department of the Treasury that collects and analyses information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes.
The Bank Secrecy Act [BSA] of 1970, also known as the Currency and Foreign Transactions Reporting Act, assists government agencies in detecting and preventing money laundering.
The Office of the Comptroller of the Currency [OCC] guides the risk management framework of financial institutions and oversee compliance.
The Office of Foreign Assets Control [OFAC] is a financial intelligence and enforcement agency of the U.S. Treasury Department. It administers and enforces economic and trade sanctions in line with the national security and foreign policy objectives
The Intelligence Processing and Action against Clandestine Financial Circuits [TRACFIN] is tasked with analysing and fighting the risks of money laundering and the financing of terrorism. This includes identifying the origin of financial fraud and sharing and acting upon such information.
United Kingdom (U.K)
The Financial Conduct Authority [FCA] is mandated to regulate the UK’s financial sector and implement measures to combat money laundering and terror financing.
The Office for Professional Body Anti-Money Laundering Supervision [OPBAS] is an additional body set-up exclusively to strengthen the UK’s AML supervisory regime.
The Federal Financial Supervisory Authority [BaFin] supervises and regulates the banks and financial services sector, insurance and securities trading, for prevention of financial irregularities and crime.
European Union (E.U.)
The EU has a comprehensive framework of guidelines, along with a system of periodic review and Directives, that evaluate emerging risks across EU member countries and establish appropriate regulations.
The compliance framework consists of
- 4th Money Laundering Directive [4MLD]
- 5th Money Laundering Directive [5MLD]
- 6th Money Laundering Directive [6MLD]
- European Banking Authority [EBA]
The Federal Financial Monitoring Service [FFMS] /Rosfinmonitoring regulates the financial system, implements state policies related to money laundering and terrorist financing, assesses threats to national security arising such activities and develops measures to counter these threats.
The China Banking and Insurance Regulatory Commission [CBIRC] is an umbrella agency of the People’s Republic of China (PRC) authorised to perform both, supervisory and regulatory functions of business activities in banking and insurance. Its jurisdiction extends across the PRC, except for the territories of Hong Kong and Macau.
The Hong Kong Monetary Authority [HKMA] is Hong Kong’s central banking an institution that doubles up as the monetary and regulatory authority, working with stakeholders to mitigate money laundering risks.
The Financial Services Agency [FSA] is the government agency and integrated financial regulator responsible for overseeing banking, securities, and insurance sectors to ensure the stability of the financial system of Japan and enforce suitable AML measures.
The Financial Intelligence Centre Act [FICA] lays down the basic framework for a strong financial system to accelerate South Africa’s economic development. The role is to curb money laundering, tax evasion, terror financing, financial crimes, and overseeing sanctions.
The Financial Intelligence Unit [FIU] safeguards the financial system from the abuse of money laundering, terrorist financing and financial crimes, under the Prevention of Money Laundering Act [PMLA], 2002.
The Monetary Authority of Singapore [MAS] is Singapore’s central banking institution and umbrella organisation for monitoring and regulating the financial sector while ensuring all compliance requirements are met.
The Australian Transaction Reports and Analysis Centre [AUSTRAC] is an Australian Government agency that uses financial intelligence and regulation to prevent money laundering, terrorism financing, organised crime, tax evasion, and welfare fraud.
The New Zealand Financial Intelligence Unit [NZFIU] collects, analyses and disseminates financial intelligence relating to suspicious transactions/activities, money laundering and the financing of terrorism.