International: Financial Action Task Force
The international AML/CTF standard setter, the Financial Action Task Force ('FATF'), released an updated overview of the ratings for both the effectiveness and technical compliance of all of the countries whose AML/CTF regimes were assessed against the FATF Recommendations and using the 2013 Assessment Methodology.
Regional - APGML
January marked the release of the Joint APG and MENAFATF typologies report on 'Social Media & Terrorism Financing', following its initiation at the 2018 Joint APG/MENAFATF Typologies workshop. The report represents an 'updated and more focused analysis of techniques and trends, including indicators, associated with the abuse of social media services for financing acts of terrorism, individual terrorists or terrorist organisations'. It also highlights the challenges for investigative and prosecuting authorities in detecting, investigating and prosecuting terrorism financing through the abuse of social media platforms, but does provide guidance for competent authorities on how to surmount these challenges.
The Australian AML/CTF regulator and Financial Intelligence Unit, AUSTRAC, has made available the Annual Compliance Report for 2018. It requires reporting entities to answer questions about how they have met their AML/CTF obligations over the 2018 calendar year. The deadline for lodgement (via the reporting entity's AUSTRAC Online account) is 31 March 2019.
If the reporting entity did not provide a designated service in the 2018 calendar year, apart from, as a remittance affiliate, either:
- in the capacity of a non-financier carrying on a business of giving effect to remittance arrangements, accepting an instruction from a transferor entity for the transfer of money or property under a designated remittance arrangement; or
- in the capacity of a non-financier carrying on a business of giving effect to remittance arrangements, making money or property available, or arranging for it to be made available, to an ultimate transferee entity as a result of a transfer under a designated remittance arrangement;
the reporting entity is not required to lodge a compliance report.
No major updates this month.
The Hong Kong Monetary Authority ('HKMA') held a high-level Fintech Roundtable. In attendance were about 45 senior representatives from six international organisations and around 30 central banks or regulatory authorities in 18 countries. Facilitating the exchange of ideas in terms of regulatory approaches to fintech businesses and business models, the event included presentations and panel discussions on a range of topics in the fintech context. These also detailed case studies of international cooperation. Immediately afterwards, the HKMA held the Financial Stability Board Financial Innovation Network meeting.
The Monetary Authority of Singapore released a guidance paper which sets out the agency’s supervisory expectations of sound AML/CTF practices for capital markets intermediaries (but still applicable and relevant to other types of reporting entities as appropriate). The paper was released after the agency conducted a series of inspections that examined the effectiveness of the AML/CTF controls of capital markets intermediaries.
The Financial Conduct Authority ('FCA') has announced that the Global Financial Innovation Network - a group of 29 financial regulators and related organisations from around the world (chaired by the FCA) - is inviting applications from firms seeking to test innovative financial products, services or business models internationally. This arrangement is a pilot for such firms and was established after the FCA's calls for a global regulatory sandbox. In the pilot, regulators will ensure the presence of appropriate safeguards for their jurisdiction.
The FCA also opened its public consultation on its Guidance for cryptoassets to provide members of the cryptoassets sector clarity and certainty. In particular, the agency intends the final Guidance to help such businesses understand whether cryptoassets and thus their business models are captured by the regulatory frameworks that the FCA administers.
No major updates this month, bar the Huawei case (see the United States section).
The US Department of Justice ('DoJ'), Federal Bureau of Investigation and US Attorney for the Eastern District of New York, announced the charging of the former CEO and SVP of Insurance Corporation of Barbados Limited, a Barbados-based insurance company, with laundering bribes to the former Minister of Industry of Barbados in exchange for his assistance in securing government contracts for the company. Specifically, the charges were: one count of conspiracy to launder money and two counts of money laundering.
More significantly, the DoJ also reported the charging of Chinese telecommunications conglomerate Huawei, an American (Huawei Device USA Inc.) and Iranian subsidiary (Skycom) of the company, as well as its CFO, Meng Wanzhou, with a range of offences, including financial fraud, money laundering, conspiracy to defraud the United States and violations of American economic sanctions. In particular, Huawei's CFO is charged with bank fraud, wire fraud, and conspiracies to commit bank and wire fraud. The indictment particularly concerns alleged deception by Huawei and Meng of American financial institutions about its business activities in Iran. Meng is on bail in Canada having been arrested on the request of American authorities in relation to the above conduct. Canada's ambassador to the US told media outlets that the US will proceed with the formal extradition of Meng from Canada.
The Financial Intelligence Centre (FIC), Financial Sector Conduct Authority (FSCA), National Treasury (NT), South African Revenue Service (SARS), and the South African Reserve Bank (SARB), released a consultation paper on crypto assets and the opening for public submissions on the document. This is the result of the efforts of a crypto assets-focused joint working group within the Intergovernmental Fintech Working Group (an organisation including the mentioned agencies). The paper analyses two use cases involving crypto assets, as well as the benefits and risks concerning these use cases. Also, it reviews the regulatory approaches of other jurisdictions and makes recommendations for how South African regulators should approach crypto assets.
Additionally, the FIC has invited the comment of accountable institutions, reporting institutions, other reporters and supervisory bodies on its draft Guidance Note 4B on the reporting of suspicious and unusual transactions and activities to the agency under the Financial Intelligence Centre Act 2001 (South Africa) ('the Act'). The draft changes include the inclusion of indicators of suspicious and unusual activity relating to potential matches of client names on the Consolidated List of Targeted Financial Sanctions pursuant to section 26A of the Act as well as additional examples.