AML Information Sharing

A cornerstone of an effective AML/CFT framework, information sharing between financial institutions is an ongoing compliance priority for regulators and financial institutions around the world.  

CFT/AML Information sharing is a key recommendation of the Financial Action Task Force (FATF), which includes information sharing requirements in 25 of its 40 Recommendations and recently published guidance on Private Sector Information Sharing. Following FATF, governments around the world have implemented information sharing initiatives, such as the FinCEN Exchange in the US, and the Joint Money Laundering Intelligence Taskforce in the UK, which demonstrate the importance of bridging gaps between bigger industry players. 

The most significant recent development in AML  information sharing regulation is the US’ Anti-Money Laundering Act 2020 (AMLA) which came into effect on 1 January 2021. Amongst several important regulatory measures, one of AMLA’s central objectives is to ‘improve coordination and information sharing’ at every level of the US financial compliance infrastructure. To achieve this goal, AMLA amends the Bank Secrecy Act (BSA) to include requirements for financial institutions, financial authorities, and law enforcement agencies to ‘establish appropriate frameworks for information sharing’ – supported by suitable data security measures. AMLA also introduced a pilot program to facilitate information sharing between US financial institutions and their international counterparts (with certain exceptions for firms in Russia and China). 

Cross-border AML information sharing

Cross-border information sharing is also a priority beyond the US. In 2020, the UK government released guidance on ‘cross-border information sharing within corporate groups’ which re-emphasized the UK’s commitment to FATF principles on information sharing. The guidance set out the importance of information sharing for global risk-assessments, better mitigation of risks, and more effective customer due diligence and suspicious activity reporting. 

The UK guidance comes at a time of increased EU concern over cross-border AML information sharing, especially in the wake of Brexit, which has seen administrative barriers form between the two administrations. Regulatory steps have been taken to facilitate the flow of information between the UK and the EU, notably via the EU-UK Security of Information Agreement, which came into effect on May 1st 2021. However, with the political and regulatory effects of Brexit still being felt, financial institutions should continue to monitor their AML/CFT compliance obligations and risk exposure closely. Tip: Ongoing geopolitical events, such as tensions between the US, Russia, and China, and economic fallout from Brexit, have made AML information sharing more important than ever. With that in mind, industry and political groups are likely to focus on innovative new ways to share information relating to cross-border financial crime.