June 2020

International

The Financial Action Task Force (FATF)

• Published an update on high-risk jurisdictions subject to a call for action on 30 June 2020 which identifies jurisdictions with strategic deficiencies in AML/CFT measures. On 28 April 2020, the FATF decided on a general pause in the review process for this list. Therefore, The Democratic People’s Republic of Korea and Iran remain on the FATF list.
• Published an update on its list of jurisdictions under increased monitoring on 30 June 2020. The FATF granted jurisdictions an additional four months for deadlines, with the exception of Mongolia and Iceland who requested to continue on their original schedule. Both countries have substantially completed its action plan and warrants an on-site assessment to verify that the implementation of its AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future. Therefore, they are no longer on the list. We will incorporate this into the AML Accelerate country risk rating update in the coming weeks.
• Conducted a new study to provide guidance to countries on measures they can take to combat money laundering from the illegal wildlife trade. To combat the financial flows from the illegal wildlife trade, countries should therefore as a priority:
• Identify and assess their money laundering risks relating to the illegal wildlife trade.
• Ensure that national laws and powers for law enforcement allow authorities to go after the finances of wildlife traffickers, and to pursue financial investigations.

This is covered in AML Accelerate under environmental risk/predicate offence/illicit trafficking. and risks/control measures can be articulated there.

• Opened public consultation on FATF's Recommendation 1 and its Interpretive Note to require countries and the private sector to identify, and assess the risks of potential breaches, non-implementation or evasion of the targeted financial sanctions (TFS) related to proliferation financing, as contained in FATF Recommendation 7, and to take action to mitigate these risks.

Australia

The Australian Transaction Reports and Analysis Centre (AUSTRAC)

• A reminder that the 2019 compliance report is due on 30 June 2020. If you still haven’t done so, please make your submission as soon as you can.

New Zealand

The Department of Internal Affairs (DIA)

• Issued Compliance News (June 2020) which includes the following.
• From 1 July you will be able to submit your annual report through DIA AML Online. The deadline for completion is 31 August 2020. A corporate trustee, whose AML/CFT obligations are being fulfilled by a parent law firm, accounting practice or a trust and company service provider (TCSP) that is a reporting entity in New Zealand is not required to submit an annual report by 31 August 2020.
• Published expiring regulations update:
• Step 1: Remove the expiry date of 30 June 2020 from the Exemptions Regulations - The Ministry has amended the regulation to remove the expiry date and this is now in force.
• Step 2: Changes to the Exemptions Regulations and Definitions Regulations made and new regulations issued - The Ministry aims to have new regulations in force by December 2020.
• Step 3: Consolidation of the existing six Regulations into a single Regulation - The Ministry aims to have new consolidated regulations in force by the end of 2020.
• Updated the independent audit obligation. The Ministry of Justice advises that they propose to have the new regulation in force by 31 December 2020. This would mean:
• Law firms, conveyancers, and new Trust and Company Service Providers are required to have their first independent audit completed by 30 June 2020. i.e. no change to the current timing.  
• Accountants and bookkeepers are required to have their first independent audit completed by 30 September 2020. i.e. no change to the current timing.  
• Real estate agents’ first independent audit would not be due to be completed until 31 December 2021 i.e. the independent audit due date for real estate agents would be extended from 31 December 2020 to 31 December 2021.  
• For any reporting entity that has already completed its first or a subsequent independent audit when the new regulations are implemented, it will have three years from the date of the last independent audit to complete the next one. 
• Published Department’s regulatory findings for the accountancy sector from its desk-based reviews and on-site inspections undertaken from January 2019 to January 2020. The top 5 “non-compliant” areas are:
• Wire transfer provisions
• Examining and keeping written findings, and adopting additional measures, for dealing with countries with insufficient AML/CFT systems
• Annual Report
• Monitoring compliance AML/CFT programme
• Examining and keeping written findings for large, complex and unusual patterns of transactions

The Financial Markets Authority (FMA)

• Filed civil High Court proceedings against CLSA Premium New Zealand Limited (CLSAP NZ) for alleged breaches of the AML/CFT Act. The FMA claims CLSAP NZ failed on numerous occasions to conduct sufficient CDD and enhanced CDD, to terminate business relationships, to report suspicious transactions and to keep records in accordance with the AML/CFT Act.

The FMA also claims that these alleged breaches are representative of CLSAP NZ’s general approach to compliance with its obligations under the AML/CFT Act over the time that they occurred. The representative transactions involve nearly $NZ50 million and occurred between April 2015 and November 2018.

Canada

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

• Published the regulations amending certain regulations made under the proceeds of crime (money laundering) and terrorist financing act, 2019: SOR/2020-112. We are in the process of reviewing the amendments and will give you an update if there’s any changes in our AML Accelerate program template.

United Kingdom

The Financial Conduct Authority (FCA)

• Fined Commerzbank AG (London Branch) £37,805,400 for failing to put adequate AML systems and controls in place between October 2012 and September 2017. The FCA’s investigation identified failings in a number of areas, including Commerzbank London’s failure to:
• Conduct timely periodic due diligence on its clients, which resulted in a significant number of existing clients not being subject to timely know-your-client checks;
• Address long-standing weaknesses in its automated tool for monitoring money laundering risk on transactions for clients.; and
• To have adequate policies and procedures in place when undertaking customer due diligence on clients.

The Gambling Commission

• Allowed further temporary extension to submission dates for regulatory returns - an additional four weeks (28 days) for operators whose regulatory returns are due on or before 30 June 2020.

European Union

No major updates this month.

United States

The Financial Crimes Enforcement Network (FinCEN)

• Issued guidance to address questions related to BSA/AML regulatory requirements for hemp-related business customers. It explains how financial institutions can conduct due diligence for hemp-related businesses, and identifies the type of information and documentation financial institutions can collect from hemp-related businesses to comply with BSA regulatory requirements.
• Financial institutions should obtain basic identifying information about hemp-related businesses through the application of the financial institutions’ customer identification programs and risk-based CDD processes, including beneficial ownership collection and verification, as they would for all customers. Financial institutions must also establish appropriate risk-based procedures for conducting ongoing CDD.
• For hemp-related business customers, financial institutions are expected to follow standard SAR procedures and file a SAR if the financial institution becomes aware, in the normal course of business, of suspicious activity.
• Financial institutions must report currency transactions in connection with hemp-related businesses in the same manner they would for any other customers (i.e., report all currency transactions above $10,000 in aggregate on a single business day).

In AML Accelerate, you could articulate any exposure to this sector under environmental risk/money laundering/higher risk customers.

Hong Kong

The Hong Kong Monetary Authority (HKMA)

• Published feedback from recent thematic reviews of AML/CFT control measures for remote customer onboarding initiatives and the key observations and good practices.
• Authorized Institutions (AIs)should adequately assess ML/TF risks associated with a remote on-boarding initiative prior to its launch.
• AIs should apply a risk-based approach in the design and implementation of AML/CFT control measures for remote on-boarding initiatives.
• AIs should monitor and manage the ability of the technology adopted to meet AML/CFT requirements on an ongoing basis.
• Ongoing monitoring should take into account vulnerabilities associated with the product and delivery channel.

South Africa

The Financial Intelligence Centre (FIC)

• Published consultation paper relating to the proposed amendments of the schedules of the Financial Intelligence Centre Amendment Act 2001 (ACT 38 OF 2001). 

The process of amending the Schedules to the FIC Act is intended to widen the application of the Act by including additional categories of institutions and businesses under its scope.

Further, the revision to FATF Recommendation 15 on new technologies in October 2018 requires jurisdictions to regulate virtual assets and virtual asset service providers for anti-money laundering and combating the financing of terrorism purposes.

In addition, during the FATF’s 2009 assessment of South Africa’s compliance of the FATF Recommendations, it commented negatively on the low level of compliance within certain non-financial sectors and the absence of a robust framework for supervision and enforcement to address non-compliance with the FIC Act. The proposed amendments to Schedule 2 are intended to address this negative finding.

Written comments on the proposed amendments are invited before close of business on 18 August 2020.

Singapore

No major updates this month.

Other Jurisdictions

No major updates this month.