Global Anti-Money Laundering Regulations  : What You Need to Know

The global anti-money laundering landscape is varied and financial institutions must keep pace with changing rules and regulations in order to meet their compliance obligations.

Regardless of where you operate, to comply with anti-money laundering legislation, you must deal with financial regulators and understand the legislation imposed nationally and internationally. Given the breadth of legislative ground to cover, our guide to the main global anti-money laundering regulations and the organizations that apply them is a good place to start.

Overall

The Financial Action Task Force (FATF)

The Financial Action Task Force is an intergovernmental organization dedicated to combating money laundering and the financing of terrorism. With 36 member states, FATF’s jurisdiction spans the globe and encompasses all major financial centres. Its primary function is to set global standards for anti-money laundering compliance and monitor their effective implementation. In pursuit of this objective, the FATF regularly publishes updated AML/CFT guidelines. To comply with FATF regulations, Member States and their financial institutions must

• Implement customer identity verification measures (Know Your Customer – KYC).
• Apply the due diligence measures recommended by the FATF.
• Maintain appropriate records of high risk customers.
• Regularly monitor accounts for suspicious financial activity and report such activity to the appropriate national authority.
• Apply effective sanctions against legal persons and obligated entities that do not comply with FATF regulations.

The European Union

EU 5AMLD and 6AMLD

The European Union’s anti-money laundering directives are the mechanism it uses to harmonize AML/CFT legislation in its member states. Issued periodically, the Money Laundering Guidelines are updated to reflect current money laundering, terrorist financing and crime risks facing financial markets. The fifth EU Money Laundering Directive (5AMLD) was published on July 9, 2018 and will enter into force on January 10, 2020, while the draft 6AMLDwas published at the end of 2018 and will come into force in June 2021. To comply with the rules of Directive 5-6 AMLD, financial institutions must be aware of the content:

• 5AMLD: The Fifth Anti-Money Laundering Directive addresses the regulation of cryptocurrency, introducing a legal definition of cryptocurrency, reporting obligations and rules for electronic wallets. 5AMLD also introduces new legal requirements for prepaid cards, transactions involving high-value goods, beneficial ownership, high-risk third-country customers, and politically exposed person (PEP) lists.
• 6AMLD: The Sixth Money Laundering Directive includes provisions for a harmonized definition of money laundering offences, an extension of the scope of money laundering and the criminal liability of persons associated with it, and penalties harsher for those convicted of money laundering.

The United Kingdom

The Financial Conduct Authority (ACF)

An independent, non-governmental body, the Financial Conduct Authority is responsible for regulating the UK’s financial services industry, including combating money laundering and other criminal activities such as terrorist financing. The general objectives of the FCA are to protect consumers, to ensure market integrity and stability and to promote competition. It is also empowered to introduce and enforce rules and to conduct investigations for these purposes. Concretely, the powers of the ACF include

• The Regulation: Setting minimum legal standards for financial products in the UK and banning products that do not comply with ACF rules.
• Supervision: Ensuring that UK financial institutions operate safely and comply with specific anti-money laundering regulations, including by carrying out risk assessments, monitoring suspicious activity and reporting it to the relevant authorities .
• Licensing: Imposing registration and requirements on financial institutions before issuing licenses to operate in the UK.

United States

The bank secrecy law

The Bank Secrecy Act (BSA) is the United States’ primary anti-money laundering regulation and is administered by the Financial Crimes Enforcement Network (FinCEN). The BSA focuses on money laundering, but its scope has expanded to include other financial crimes. For example, it was amended by the Patriot Act in 2001 to include counter-terrorist financing (CTF) measures. Under the BSA, financial institutions must meet a number of requirements, including:

• A compliance program: US financial institutions must develop and implement an internal anti-money laundering program appropriate to their risk profile. Anti-money laundering programs should include written policies and procedures, employee training, audit schedules, and the appointment of a compliance officer.
• Reporting: The BSA has various anti-money laundering reporting and filing requirements, including Suspicious Activity Reports (SARs), Currency Transaction Reports (CTRs), and Forms 8300 for high value transactions.
• Record keeping: Financial institutions must maintain detailed records of suspicious activity, including the identity of buyers and the value of their transactions.

Financial institutions that fail to comply with BSA regulations can be prosecuted under the US Criminal Code, with penalties including jail time and fines of up to $250,000.

Asia

Hong Kong Monetary Authority (HKMA)

The Hong Kong Monetary Authority is responsible for the stability of Hong Kong’s banking system and monetary policy. Under the authority of the Anti-Money Laundering and Anti-Terrorist Financing Ordinance , the HKMA is also the regulatory body responsible for combating money laundering and terrorist financing. In this role, she ensures that financial institutions in Hong Kong meet a variety of legal requirements, the most important being the development and implementation of an effective anti-money laundering and anti-terrorist financing program. . In order to comply with HKMA Anti-Money Laundering Policy,

• Risk assessment: Financial institutions should develop their anti-money laundering program by taking a risk-based approach to the unique money laundering and terrorist financing threats they face.
• Procedures and controls: AML/CFT programs should include a variety of procedures and controls, including independent audit schedules, employee training and selection, and compliance management.

 Compliance officers: Each financial institution should appoint a compliance officer with sufficient authority to take responsibility for its AML/CFT program and suspicious activity reporting.

Monetary Authority of Singapore (MAS)

The Monetary Authority of Singapore (MAS) is mandated to serve as the city-state’s central bank and regulate its financial sector. As such, the functions of the MAS include the conduct of monetary policy, the supervision of financial institutions, the management of reserves and assets, and the development of Singapore’s international financial status. Financial institutions must comply with the MAS Anti- Money Laundering Policy, which is set out in its Advice on Preventing Money Laundering and Combating the Financing of Terrorism, including:

• Due Diligence: Financial institutions must apply due diligence procedures to their customers – and enhanced due diligence procedures when there is suspicion of money laundering or terrorist financing activities.
• Customer knowledge: The identity of customers must be verified by independent checks. Financial institutions must keep records of these checks.
• Reporting and follow-ups: Financial institutions in Singapore are required to carry out regular reviews of their customers’ accounts, monitor suspicious activity and report incidents to MAS.

Financial institutions that fail to comply with MAS’ Anti-Money Laundering Policy may be held criminally liable and subject to fines of up to $1 million.

Australia

AUSTRAC

The Australian Transaction Reporting and Analysis Center (AUSTRAC) is the Australian Government’s primary financial intelligence agency responsible for combating money laundering, terrorist financing, fraud and other financial crimes. AUSTRAC operates under the authority of the Anti-Money Laundering and Terrorist Financing Act (2006), and works to identify criminal threats to and abuse of the Australian financial system. As such, AUSTRAC’s efforts to combat money laundering involve:

• Detection and Monitoring: AUSTRAC uses its financial intelligence resources to detect and monitor money laundering and terrorist financing activities.
• Reporting: Financial institutions in Australia have certain AML/CFT reporting obligations to AUSTRAC and must detail financial transactions above a certain value as well as suspicious activity of any kind.

Law Enforcement: AUSTRAC works with a range of government agencies to implement anti-money laundering and investment fund policy , including police, security and tax services . Individuals and companies that fail to comply with AUSTRAC regulations face jail time and fines.

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