July 2020

International

The Financial Action Task Force (FATF)

• Released webinars on COVID-19 and the changing money laundering and terrorist financing risk landscape. Key issues discussed:
• How has COVID-19 changed the criminal economy and what key threats and vulnerabilities are we seeing at the national, regional and international levels?
• What medium to long-term risks do we see emerging from the COVID-19 crisis?
• What are some good practices and strategies the public and private sectors can put in place to manage the changing risk environment?
• Released webinars on the impact of COVID-19 on the detection of money laundering and terrorist financing. Topics  discussed:
• How has COVID-19 affected day-to-day financial activity and how are national authorities and the private sector adapting ML/TF detection capabilities in a rapidly evolving environment?
• How have national authorities and the private sector dealt with challenges to ensure business continuity so that ML and TF activity continues to be detected?
• What are some of the medium to long-term issues facing the anti-money laundering/counter terrorist financing (AML/CFT) community and what lessons can we learn from the impact of the pandemic?
• Organised a webinar to discuss the FATF’s recent report on money laundering and the illegal wildlife trade. The objective of this webinar was to discuss the main money laundering trends linked to IWT, as well as practical examples of how governments, the private sector and civil society can tackle ML from IWT. The webinar also discussed next steps and commitments for action across government and non-government stakeholders.
• Completed a review of the implementation of its revised standards on virtual assets and virtual asset service providers, 12 months after the FATF finalized these amendments. The report reviews the implementation of the revised Standards and sets out:
• how money laundering and terrorism financing risks and the virtual asset market have changed since June 2019 (Section 1);
• jurisdictions’ progress in implementing the revised Standards (Section 2);
• the private sector’s progress in implementing the revised Standards, including the development of technical solutions for the implementation of the travel rule (Section 3);
• issues identified with the revised FATF Standards and Guidance (Section 4); and
• FATF’s next steps regarding virtual assets (Section 5).
• Published the report to G20 on so-called stablecoins. This report sets out the FATF’s views on so-called stablecoins and addresses the following:
• what the characteristics of so-called stablecoins are (Section 1);
• what the money laundering and terrorist financing risks of so-called stablecoins are (Sections 2 and 4);
• how the FATF Standards apply to so-called stablecoins and the different businesses involved in the so-called stablecoin (Section 3); and
• how the FATF plans to enhance the global anti-money laundering and counter-terrorism financing framework for virtual assets and so-called stablecoins (Section 5).

Australia

The Australian Transaction Reports and Analysis Centre (AUSTRAC)

• Released proposed amendments to Chapter 46 of the AML/CTF Rules (special circumstances for the applicable customer identification procedure) for public consultation. The proposed amendments create a simpler, less prescriptive chapter.

The proposed amendments include two new general conditions that must be satisfied before a reporting entity can rely on section 33. Also included is an additional special circumstance that allows a reporting entity to carry out the applicable customer identification procedure (ACIP) in respect of a customer after opening an account, provided no transactions - other than an initial deposit - are conducted in relation to the account.

New Zealand

The Department of Internal Affairs (DIA)

• To deal with the risks arising from Covid-19, the DIA AML Group recommends reporting entities:
• Review their risk assessment and AML/CFT programme to identify any emerging risks from COVID-19 and ensure policies and processes reflect current business practices, such as increased online interactions and transactions.   
• Follow up any unusual or suspicious behaviour and ensure these interactions are reported to the Financial Intelligence Unit through goAML. 
• Conduct regular account monitoring and check that risk indicators and flags reflect the current environment.  
• Ensure customer due diligence and enhanced customer due diligence procedures are effective and verification of the identity of customers is completed. 
• Following some feedback from the Institute of Certified NZ Bookkeepers regarding the AML/CFT Act account monitoring obligation, DIA recommends that bookkeepers refer to this previously published explanatory guidance for bookkeepers.
• Published the summary of the DIA’s findings for the legal sector (law firms and sole practitioners) from its compliance assessments undertaken from January 2019 to January 2020. Top 5 "non-compliant" areas are:
• Examining and keeping written findings, and adopting additional measures, for dealing with countries with insufficient AML/CFT systems
• Amended Identity Verification Code of Practice 2013
• Examining and keeping written findings for large, complex and unusual patterns of transactions
• Prescribed transaction reporting (PTRs)
• Reliance on third parties to undertake CDD
• Issued civil proceedings result in a total penalty of $7.585m against two money remitters - OTT Trading Group Limited (OTT) and Christchurch based money remitter, MSI Group Limited (MSI). The penalties relate to breaches of the AML/CFT Act between May 2014 and April 2019 and reflect aggravating conduct. This included failing to cooperate with the Department in its investigation and attempts to mislead the Department, including trying to disguise the status of MSI as a reporting entity.

The Financial Markets Authority (FMA)

• Published a report identifying key risks in the Derivatives Issuer (DI) sector and highlighted future focus areas to improve sector compliance. The report concluded that the risk profile of the DI industry is high. Among the high risk issues identified by the self-assessment were:
• Complying with regulations for handling client money;
• Taking steps to determine products are suitable for retail investors, such as DIs offering exotic options (e.g. binary options);
• Oversight of governance and compliance; and
• Dealing with vulnerable customers.

Canada

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

• Published a special bulletin to help reporting entities understand COVID-19 related money laundering trends and observations for transaction reporting and fraud reporting.
• Published guidance guidance related to the ministerial directive on financial transactions associated with the Islamic Republic of Iran issued on 25 July 2020. The guidance answered the following questions:
• Why was this MD issued?
• When does this MD come into force and who does it apply to?
• What are the requirements of this MD?
• What records must you keep under this MD and what is the retention period?
• How do you report the transactions captured under this MD?

United Kingdom

GOV.UK

• Published a webinar for all businesses affected by the money laundering regulations, topics including:
• how to make suspicious activity reports to the National Crime Agency
• what happens to those reports
• how to improve the quality of your reports

European Union

The European Banking Authority (EBA)

• EBA is calling for input on ‘de-risking’ and its impact on access to financial services. This forms part of the EBA’s work to lead, coordinate and monitor the EU financial sector’s AML/CFT efforts. Its objective is primarily to understand why financial institutions choose to de-risk instead of managing the risks associated with certain sectors or customers. 

Hong Kong

The Hong Kong Monetary Authority (HKMA)

• Published observations and industry practices to assist Authorized Institutions (AIs) in developing sustained efforts to cope with the evolving COVID-19 situation and support operational responses which are consistent with the risk-based approach. Key observations and practices including:
• Customer due diligence under social distancing and travel restrictions
• Pressure on AML/CFT resources
• Emerging threats and changes in customers’ behaviour

Singapore

The Monetary Authority of Singapore (MAS)

• Published guidance on strengthening capital markets intermediaries’ oversight over AML/CFT outsourcing arrangements which sets out MAS’ supervisory expectations of sound practices where AML/CFT control functions are outsourced. The paper is based on inspections of capital markets intermediaries, but the takeaways are applicable to other financial institutions, with the appropriate calibrations.

United States

No major updates this month.

South Africa

No major updates this month.

Other Jurisdictions

No major updates this month.