January 2021

International

The Financial Action Task Force (FATF)

• Published remarks: Covid-19 and the changing money laundering and terrorist financing risk landscape. A key priority of the FATF is to explore the opportunities that digital transformation brings to fighting money laundering, including to onboard customers or detect criminal activity. In particular, the FATF is focussing on three areas:
• Identifying the opportunities and challenges of new technologies for the private sector, supervisors and regulators;
• Exploring the potential for data pooling, analysis and the real and perceived barriers to this including data privacy and protection, to explore new technologies that facilitate information-sharing amongst financial institutions while protecting personal information; and
• Helping to accelerate digital Transformation for operational agencies, such as financial intelligence units and law enforcement authorities.
• Published Jamaica, Cuba and Nicaragua's progress in strengthening measures to tackle money laundering and terrorist financing.

Australia

The Australian Transaction Reports and Analysis Centre (AUSTRAC)

• Proposed amendments to Chapters 3, 6, 7 and 10 of the AML/CTF Rules. The proposed changes are to support reforms to the AML/CTF Act made by the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Act 2020 (Phase 1.5 reforms). The consultation period for these amendments is 27 January 2021 until 11 March 2021. Below are the summary of changes for reporting entities:
  
  • Customer due diligence
    • These reforms make it clear that customers must be identified before providing a designated service, except for very limited circumstances. They also expand the circumstances where you can rely on customer identification by another reporting entity.

• •  

• • Tipping off
    • There will be expanded exceptions to tipping-off provisions that allow information from suspicious matter reports (SMRs) to be shared with an external auditor, or offshore members of the same corporate or designated business group that are regulated by laws that give effect to some or all of the FATF recommendations .

• • Correspondent banking
    • These changes affect financial institutions. The reforms include clearer prohibitions against entering into a relationship with a bank that allows its accounts to be used by a shell bank, in addition to clearer and strengthened due diligence and risk assessment requirements during a correspondent banking relationship.

• • Additional measures
    • In addition to these changes, the Phase 1.5 reforms support cooperation and collaboration to detect, deter and disrupt money laundering, terrorism financing, and other serious crimes, and increase the AUSTRAC CEO’s ability to provide access to AUSTRAC information to law enforcement partners.

• Emphasised that collaboration is key to combating trade-based money laundering.

New Zealand

No major updates this month.

Canada

No major updates this month.

United Kingdom

The Law Society of Scotland

• Completed an extensive revision and redraft of the UK AML guidance for the legal sector. Key changes in the guidance include:
• Revised, more granular contents section with embedded links to sections for ease of navigation
• Introduction of Key AML Compliance Principles
• Revised, updated and expanded AML Governance and Internal Controls sections.
• Fully revised and expanded Risk Assessment section (firm-wide, client and matter)
• Expanded guidance on understanding and evidencing source of funds and source of wealth
• A new section on technology – expanding on the requirement for firms to consider and understand the purposes and basis on which they are using AML-related technology (along with its underlying functionality) in order to use it effectively to mitigate risk
• Updated Training section
• Fully revised and updated Legal Professional Privilege section with new LPP/SAR reporting decision-making template (drafted by an independent expert in this niche area of law).

The Solicitors Regulation Authority (SRA)

• Updated the guidance for sectoral anti-money laundering and terrorist financing risk assessment. The document sets out information on ML/TF risk that SRA consider most relevant for firms they supervise.

The Gambling Commission

• Gambling business, White Hat Gaming, overhaul following Gambling Commission money laundering investigation. In addition to paying a £1.3m regulatory settlement, White Hat Gaming has committed to an ongoing programme of improvements to strengthen its policies and procedures.

European Union

No major updates this month.

United States

The Financial Crimes Enforcement Network (FinCEN)

• Extended comment period for rule aimed at closing anti-money laundering regulatory gaps for certain convertible virtual currency and digital asset transactions. FinCEN is providing an additional 45 days for comments on the proposed requirements that banks and MSBs report certain information regarding counterparties to transactions by their hosted wallet customers, and on the proposed recordkeeping requirements.
• Announced $390,000,000 enforcement action against Capital One, national association for violations of the Bank Secrecy Act. Specifically, FinCEN determined and Capital One admitted to willfully failing to implement and maintain an effective Anti-Money Laundering (AML) program to guard against money laundering.  Capital One also admitted that it willfully failed to file thousands of suspicious activity reports (SARs), and negligently failed to file thousands of Currency Transaction Reports (CTRs), with respect to a particular business unit known as the Check Cashing Group.  The violations occurred from at least 2008 through 2014, and caused millions of dollars in suspicious transactions to go unreported in a timely and accurate manner, including proceeds connected to organized crime, tax evasion, fraud, and other financial crimes laundered through the bank into the U.S. financial system.

Hong Kong

The Hong Kong Monetary Authority (HKMA)

• Published a report titled “AML/CFT Regtech: Case Studies and Insights” highlighting the opportunities that Regtech offers to transform the effectiveness and efficiency of AML/CFT efforts, and sharing end-to-end approaches which worked in real-life examples. Key takeaways include:
• Getting started – common initial questions; possible ways to begin; good practices.
• Data and process readiness – key preparatory steps regarding data, processes and the use of network analytics.
• Third-party vendor relationships – how to identify and evaluate potential Regtech providers in a fast-developing field.
• People, talent and culture – necessary knowledge, skills and experience in implementation teams and the often misunderstood role of data scientists.
• Performance metrics and indicators – what success looks like.

Singapore

No major updates this month.

Other Jurisdictions

No major updates this month.