Since 1991, the European Union has regularly updated and released new anti-money laundering directives to adapt to and be able to fight new money laundering and terrorist financing techniques (e.g.: MiCA to regulate crypto-currencies).
Keypoints of the Article
- The article discusses the importance of Anti-Money Laundering (AML) adoption for businesses and the legal and regulatory compliance challenges they face.
- It provides an overview of the history of AML directives in the European Union and highlights the latest 6th EU AML Directive (2018/1673).
- The directive aims to harmonize EU anti-money laundering legislation and includes four main points, such as a comprehensive definition of criminal activity, liability and sanctions of legal persons, better international cooperation, and strengthened punitive measures.
- Businesses should analyze their current screening methods and tools, draft or improve screening policies and procedures, perform screening of clients on their behalf, and choose the best screening tool and lists.
- Accuracy of the screening lists provided by the vendor should also be validated.
- A real analysis protocol concerning the different cases of money laundering and terrorism financing should be put in place to ensure that all the different possibilities of money laundering are regulated and properly analyzed.
- AML laws will undergo updates in the future to prevent new money laundering and terrorist financing techniques.
- The use of cryptocurrency is a recent danger that has not yet been clearly identified in the AML directives and could be an open door to money laundering and terrorist financing.
- It provides an overview of the history of AML directives in the European Union and highlights the latest 6th EU AML Directive (2018/1673).
- The directive aims to harmonize EU anti-money laundering legislation and includes four main points, such as a comprehensive definition of criminal activity, liability and sanctions of legal persons, better international cooperation, and strengthened punitive measures.
- Businesses should analyze their current screening methods and tools, draft or improve screening policies and procedures, perform screening of clients on their behalf, and choose the best screening tool and lists.
- Accuracy of the screening lists provided by the vendor should also be validated.
- A real analysis protocol concerning the different cases of money laundering and terrorism financing should be put in place to ensure that all the different possibilities of money laundering are regulated and properly analyzed.
- AML laws will undergo updates in the future to prevent new money laundering and terrorist financing techniques.
- The use of cryptocurrency is a recent danger that has not yet been clearly identified in the AML directives and could be an open door to money laundering and terrorist financing.
Today, modern technology services are becoming increasingly popular as alternative financial channels. However, some remain outside the scope of the law's requirements, which may no longer be legitimate. This is why an updated and evolving legal system is needed.
The latest directive in terms of AML is that of November 12, 2018 when the European Parliament issued new rules to strengthen the fight against money laundering through the 6th EU AML Directive (2018/1673) on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing, thereby strengthening the 2018 AMLD5.
Member States had until December 3, 2020 to transpose the directive and bring into force the laws, regulations and administrative provisions necessary to comply with it.
Why is anti-money laundering adoption an important issue for businesses?
A company has the responsibility to ensure that its financial transactions with stakeholders, shareholders and third parties are not linked to illegal actions. This practice allows the company not only to comply with legal provisions, but also to value the multiple aspects of the company (reputational, operational, financial, compliance risks).
What are the legal and regulatory compliance challenges?
This is a continuous new challenge for financial institutions and other regulated companies as local regulators no longer hesitate to impose huge fines and/or mandatory corrective measures in a relatively short time frame. Financial loss due to AML failures is no longer a residual risk and must be fully understood and integrated into every regulated entity.Anti-money laundering is a central theme in compliance. With the strengthening of controls by local and European supervisors, financial institutions need to ensure that they are compliant with anti-money laundering rules across all their departments, but also ensure through their regulatory monitoring that they are well informed on the latest issues from the EU, OFAC, FATF and local regulators.
Awareness, as well as the pace of adaptation of new regulations, should be ensured by the management committee and by the accountability of the executives with a clear governance.
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As compliance consultants, we can assist you in various areas, but to best manage your compliance department, the use of a dashboard system covering our responsibilities becomes a sine qua non condition to guarantee the success of the department.
5AMLD6AMLDAMLAnti Money LaunderingComplianceCompliance expertConsultantEUEuropeEuropean CommissionEuropean Court of JusticeFinancial InstitutionsMoney LaunderingPolitically Exposed Persons
Has anyone ever heard of World Wide Anti Money Laundering Association who are requiring the customer to put 20% of the funds which are being transferred into a holding wallet as POF so they can compare wallet addresses from the trading company and potential customer to the wallet address which customer puts the 20% into. If all checks out then all of the funds including the POF are returned to the customer.