AML developments – You need to know

 

 

2022 is expected to be a busy year in relation to AML/CFT matters: FATF resumes the mutual evaluation visits with Luxembourg, France and Switzerland on the agenda, the EU shall adopt the new AML/CFT package aimed at strengthening the fight against financial crime including among other the creation of an ESA responsible for AML/CFT and the adoption of a “Regulation” to harmonise rules and their implementation across the entire block, the UK will publish its long awaited AML/CFT review, whilst Switzerland will enact the changes to its AML Act. And finally, the EBA will publish the final guidelines on the role of AML/CFT compliance officers and remote client onboarding. It looks like AML/CFT issues will remain at the forefront of regulators’ agendas for a long time to come!

 

International

7 December 2021

A global conference took place at the initiative of FATF, which brought together the heads of international organisations (e.g.., UNODC, UNEP, CITES) to discuss how to develop partnerships to tackle dirty money fueling environmental crimes to follow-up on the report published in June 2021: Money Laundering from Environmental Crime  

 

3 December 2021

FATF closed its latest consultation on revisions to Recommendation 24 and its interpretative note: Transparency and beneficial ownership of legal persons. The consultation aimed at collecting views on specific subject matters: multipronged approach to collection of UBO information, Bearer share and nominee arrangements, RBA, and Access to information.

 

October 2021

FATF has updated its 2012 Recommendations. The updates, cover a revision of Recommendation 23, to clarify obligations on DNFBPs to apply group-wide AML/CFT programmes and the clarification of the types of offences which fall within the “environmental crime” category

 

October 2021

FATF has updated its 2019 Guidance on the Risk-Based approach to Virtual Assets and Virtual Assets Service Providers. The updates focus among others on clarifying the definition of virtual assets and VASPs, explaining how the FATF standards apply to stablecoins and providing additional guidance on the implementation of the “travel rule”, (Recommendation 16, Wires transfers, FATF 2012 Recommendations).

 

October 2021

FATF has updated its list of jurisdictions with strategic deficiencies, “Grey list”. Since June 2021, Jordan, Mali, and Turkey have been added, whilst Botswana and Mauritius have been removed. Please note that Malta, a country member of the European Union is still on the list of those jurisdictions, list it has joined in February 2021.

 

06.01.2022

The EBA published today its Opinion on the scale and impact of de-risking in the EU and the steps competent authorities should take to tackle unwarranted de-risking. EBA is of the view that providing access to at least basic financial products and services is a prerequisite and de-risking, when unwarranted can cause the financial exclusion of legitimate customers, may affect competition and financial stability. The Opinion includes the advice for the EU Commission on the need to clarify in the Payment Account Directive (PAD), the interaction between AML/CFT requirements and the right to open and use a payment account with basic features as well as the importance of taking advantage of the forthcoming review of the Payment Services Directive (PSD2) to ensure more convergence in the way payment institutions access credit institutions’ payment accounts services (Call for advice published the 18th of October, EBA advice on PSD2 review expected no later than 30 June 2022).

 

10.12.2021

The EBA launched a public consultation on its draft Guidelines on the use of remote customer onboarding solutions. The Guidelines aim at clarifying how financial institutions may develop and implement a sound and risk sensitive initial CDD process when onboarding customers remotely and how they satisfy themselves that the chosen tool is adequate and reliable on an ongoing basis and will allow them to comply effectively with their initial CDD obligations. It closes on 10th of March 2022.

 

 02.11.2021

EBA consultation on new Guidelines on the role of AML/CFT compliance officers has closed. The new Guidelines aim at clarifying ESAs/NCAs expectation in relation to the role, tasks, and responsibilities of AML/CFT compliance officers and also include provisions on the wider AML/CFT governance set-up, including at the level of the group. Once adopted, these Guidelines will apply to all financial sector operators that are within the scope of the EU AML Directive.

 

 20.07.2021

The EU Commission presented an ambitious package of legislative proposals to strengthen the EU’s anti-money laundering and countering the financing of terrorism rules with the aim of harmonising the rules across the EU. It consists of the creation of a new EU AML Authority (AMLA), a new Regulation on AML/CFT and a new AML/CFT Directive (AMLD 6) to replace the current AMLD 4 as amended and a revision of the 2015 Regulation on transfers of funds (Regulation 2015/847/EU). The texts are currently discussed at the EU Parliament, the EU Commission is looking to have this reform operational by 2024.

 

 

June 2022

HM Treasury to publish the AML/CFT review. The report will set-out the findings and possible options for reform in line with Action 33 of the Economic Crime Plan 2019-22. A Call for evidence has already been published and has closed the 14th of October 2021.

 

 Spring 2022

The UK government plans to issue a secondary legislation aimed at amending the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) to ensure that the UK continues to meet international standards. The consultation closed in October 2021 and covered among others a potential amendment to the list of sectors in scope of the regulated sector among other by the inclusion of crypto asset exchange providers and custodian wallet providers, considered whether AML/CTF supervisors should be granted with additional rights to view the content of SARs in an effective and appropriate manner, considered the merits of updating the activities that make a person a credit and financial institution to align the definition with the EU approach and sought views on the merit of amending the current wording of Regulations 16, 18 and 19 to include provisions on proliferation financing.    

 

31.03.2022

The FCA has extended the end date of the Temporary Registrations Regime (TRR) for existing crypto asset businesses from 9 July 2021 to 31 March 2022. It shall allow crypto asset firms to continue to carry on business while the FCA continues with its robust assessment: a significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations. This has resulted in an unprecedented number of businesses withdrawing their applications.

 

17.12.2021

The FCA has fined HSBC Bank £63.9millions for deficient transaction monitoring controls. The findings highlighted among others the lack of overall testing and updating of the scenarios/parameters used to identify indicators of ML/FT as well as the absence of checks in relation to the accuracy and completeness of the data being fed into the monitoring systems.   

 

13.12.2021

National Westminster Bank Plc (NatWest) was fined £264,772,619.95 (The figure before 1/3 reduction for plea is £397,156,944.14) following criminal convictions for three offences of failing to comply with money laundering regulations: on-going monitoring – 8(1) of MLRs 2007, conduct risk sensitive monitoring – 8(3) of MLRs 2007, enhanced ongoing monitoring – 14(1) of MLRs 2007. This is the first time the FCA has pursued criminal charges for money laundering failings.

 

 19.10.2021

The Financial Conduct Authority has fined Credit Suisse over £147 million for serious financial crime due diligence failings related to loans worth over $1.3 billion, which the bank arranged for the Republic of Mozambique: these loans, and a bond exchange, were tainted by corruption. The FCA’s fine reflects the impact of these tainted transactions which included a debt crisis and economic harm for the people of Mozambique.

 

 

30.11.2021

The Commission des sanctions has fined MMA IARD €4millions for ineffective controls in relation to sanctioned parties, failure to report sanctioned parties to the competent authorities and non-application of asset freeze. Commission has additional issued a warning together with the obligation to publish the sanction on the ACPR website for a period of five years.

 

 12.07.2021

American Express Carte has been fined €2millions for various failings in the AML/CFT systems and controls: incomplete and ineffective business wide risk assessment, customer risk assessment methodology lacking granularity in particular in respect of high-risk clients, poor transaction monitoring systems and totally unsuitable to AEC business model, lack of intra-group  outsourcing arrangements, compliance instructions overridden, poor internal audit arrangements/no controls carried-out for several years, CDD and client documentation incomplete and SAR submission arrangements ineffective. The Commission des sanctions has additional issued a warning together with the obligation to publish the sanction on the ACPR website for a period of five years

 

 

06.01.2022

CSSF fines Banque de Luxembourg, €1.32millions for flaws in its AML/CFT systems and controls (2018 audit findings).

 

 22.12.2021

CSSF has issued the Circular 21/788: Guidelines for the Collective Investment Sector on the CSSF AML/CFT external report.

 

04.11.2021

CSSF has issued the Circular 21/786: FATF statement concerning high-risk jurisdictions and jurisdictions under increased monitoring. Please refer to the international section (October 2021).

 

 

Mid 2022

Some revision to the Anti-Money Laundering Act, the main Swiss AML/CFT legislation are expected to come into force. They have been adopted by the Swiss parliament on the 19th of March 2021. The changes to the Act are: the obligation to verify the beneficial owner identity to ascertain who is the UBO, the obligation to keep customer data up to date and the right to terminate a business relationship after 40 days if the MROS hasn’t provided any feed-back/news/instructions. Switzerland is expecting a FATF inspection in 2022.

 

 15.12.2021

Abu Dhabi-owned Falcon Bank based in Zurich, has been found guilty of money laundering offences and has been ordered to pay CHF3.5 million (US$3.8 million) by Switzerland’s Federal Criminal Court as well as CHF7 million in damages. The case involves the illicit proceeds of the sale of shares of the UniCredit banking group worth €210 million (CHF219 million). The Federal administrative court has also confirmed the five-year ban imposed by the FINMA on the former CEO of the Bank. In May 2021, the Bank has announced its closure after allegations of involvement in the Malaysian 1MDB fraud case.

 

 18.11.2021

FINMA concludes final proceedings connected with Venezuela. It has issued an official reprimand and set restrictions on two Swiss banks for failing in their obligations in relation to AML/CFT: insufficient economic back-ground checks and lack of adequate documentation in relation to high-risk business relationships. The FINMA has imposed a temporary ban on accepting new Venezuelan and PEP clients on Banca Zarattini. It has also imposed a mandatory termination of all remaining business relationships with Venezuelan clients on CBH (Compagnie Bancaire Helvétique) which must in addition review other especially risky client relationships and terminate these if necessary. 

 

 

 

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