There are significant challenges facing the international community of financial and non-financial entities in complying with global AML laws and regulations
Governments are under increasing international pressure, to refine, enhance and increase the obligations under existing AML/CFT regimes.
To date the majority of AML/CFT regulatory focus has been on larger (Tier 1) financial organisation’s which are seen as systemically important.
However, there is a growing recognition that Tier 2 financial organisation’s to date have been subject to less regulatory focus and consequently have less mature AML/CFT responses and create a vulnerability to the effectiveness of existing AML/CFT regimes.
Governments globally are also expanding AML/CFT laws to include gatekeepers, which are increasingly being targeted by organised crime to launder the proceeds of their criminal activities.
This trend will see millions of additional businesses across a diverse range of sectors in ~200 Financial Action Task Force (FATF) member countries needing to comply with increasingly complex and frequently changing money laundering regulations.
Regulators are also often under-resourced to provide effective oversight of regulated entities bound to comply with AML/CFT laws and regulations.
Financial services businesses in many countries are struggling to secure and maintain the skilled resources required to ensure effective compliance with AML/CFT laws and regulations.
Businesses are increasingly exposed to the risks of being exploited by criminal networks creating significant social, economic and environmental issues.
Consultancy and other service providers have limited capacity to support existing reporting entities in their AML/CFT compliance efforts.
As a result the cost of compliance is rising, as are the penalties for non-compliance with global banks paying fines of USD$260 billion for non-compliance since 2008.
With the revision and extension of AML/CFT regimes to Designated Non-Financial Businesses and Professions (DNFBPs) globally over the next 5 years, additional strain will be placed on the existing finite resources within financial services businesses and service providers.