The world is going through another wave of COVID-19 and many countries are in a second lockdown at the time of this publication. At ACAMS, the anti-financial crime (AFC) community continues to work on bigger and bolder agendas, in an environment where bad actors are getting increasingly creative in finding new loopholes.
Strengthening the Current AML/CTF Framework
The Europe, Middle East and Africa (EMEA) region has seen several regulatory developments in the anti-money laundering/counter-terrorist financing (AML/CTF) sector. The European Union (EU) has been at the center of initiatives to strengthen its AML/CTF framework. Among them, the Criminal Law Directive (sometimes referred to in the industry as 6AMLD) comes to force from December 2020. It is designed to counter cybercrime and terrorist financing more efficiently. It will create a more stringent AML/CTF framework in the EU by extending criminal liability to legal persons and companies as well as consolidating a list of 22 new predicate offenses for money laundering to be consistent across the board.
As part of a growing effort to provide a legislative framework to cryptocurrencies, the European Commission (EC) has proposed, as part of its new Digital Finance Package, its “Regulation of Markets in Crypto Assets” (MiCA). If passed, the proposed cryptocurrency legislation would make the EU the largest standard-setter for cryptocurrencies in the world. The new EU regulatory framework will be applicable in all 27 member states, giving regulated virtual asset service providers (VASPs) the right to do business across the entire single market. It will replace the existing national frameworks with a new harmonized regime. To date, the United Kingdom (U.K.), Germany and France are among the member states that have passed their own regulation and are leading cryptocurrency oversight in Europe.
The EC has also introduced a new action plan for a comprehensive EU policy on preventing money laundering and terrorist financing to be delivered in early 2021. The action plan focuses on harmonizing, effectively implementing and reinforcing the existing AML/CTF framework at the EU level. It is built on six pillars: effective implementation of existing rules, a single EU rulebook, EU-level supervision, a support and cooperation mechanism for financial intelligence units (FIUs), better use of information to enforce criminal law and a stronger EU in the world.
In September 2020, more than 200,000 leaked suspicious activity reports filed with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) became the basis of a slew of newspaper stories that shook the region. Involving transactions by global financial institutions (FIs) valued at over $2 trillion between 1999 and 2017, the FinCEN Files showed that despite suspicious activity being reported to regulatory authorities, illicit activities continued. Banks with locations in 170 countries seem to have played a role in facilitating money laundering and other financial crimes. The news reports also showed that FIUs and law enforcement agencies lacked resources and infrastructure to act on the reports. Finally, the leaks revealed the frustration many anti-financial crime (AFC) professionals face and the need for significant changes to the design of the ecosystem across both public and private sectors to be effective in the fight against financial crime.
In the world of financial sanctions within EMEA, the U.K. government continues to implement sanctions statutory instruments ahead of the end of the Brexit transition period at 11:00 p.m GMT on December 31, 2020. As these are implemented, the path of the U.K.’s sanctions policy post-Brexit becomes clearer even as the EU and U.K. have imposed coordinated sanctions recently. The EU has separately issued guidance to enhance sanctions compliance effectiveness, on humanitarian assistance in sanctioned and fragile jurisdictions dealing with COVID-19, with the addition of a self-standing chapter on Iran, among others. The sanctions situation in Iran remains complicated, with conflicting interpretations between the U.S. and wider international community on whether sanctions snapback has been triggered.
Improving the Control Framework in the Middle East
The Middle East has taken important steps to improve its legislative framework, especially following the publication of the latest Financial Action Task Force (FATF) mutual evaluation report (MER) for the United Arab Emirates (UAE) in April 2020. The FATF evaluation pointed out that the country was an attractive trading hub for criminal financial flows stemming from industries such as oil and diamonds. It also observed that the absence of suspicious transaction reporting by the real estate industry and dealers in precious metals and stones limited access to financial intelligence available in relation to high-risk sectors in the UAE. Finally, the MER pointed out the underutilization of customs data and international cooperation. Since September 2020, the UAE has made improvements to bridge the gaps in the AML/CTF framework. Among these are:
- Imposing a mandatory registration for all hawala service providers lest they be subject to legal actions from the Central Bank of UAE that could result in financial penalty and imprisonment
- Launching a smart anti-money laundering (AML) platform called “Fawri Tick,” which allows the aggregation of various AML/CTF cases across the federal and local authorities, thus facilitating better cooperation among all authorities
- The suspension of licenses for 200 UAE law firms and fines up to 1.1 million euros ($1.3 million) over the breach of AML regulations
In November 2020, the Central Bank of UAE (CBUAE) announced a new regulation on stored value facilities (SVF), allowing both fintech and other nonbank payment services providers to access the UAE market more easily and support the development of digital payments in the country. The scope of this regulation includes licensing, supervision and enforcement provisions applicable to these companies, which are licensed to provide SVF.
In Saudi Arabia, the Saudi Arabian Monetary Authority (SAMA) is involved in an initiative with the CBUAE called Aber. This central bank digital currency (CBDC) project was set up to explore the uses of CBDC as a single currency for cross-border settlements. SAMA governor, Dr. Ahmed Abdulkarim Alkholifey, recently described CBDCs as “promising and… worth further exploration.”
Perspective at ACAMS
At ACAMS, teams work hard every day to keep the industry updated on the latest developments via the Monthly Sanctions Compliance Update series. Members are alerted about key changes to sanctions regimes and offered a synopsis of relevant geopolitical developments and proposed legislation (with analysis and input from leading sanctions experts). Through the International Sanctions Compliance Task Force―a cross-industry experts forum created to discuss key sanctions compliance questions―ACAMS continues to support industry needs through public-private sector dialogue and examination of key developments.
The webinar series “New Face of the Compliance Officer” concluded in November 2020 with discussions focused on transformation, data analytics, the use of artificial intelligence and machine learning, and the latest in know your customer (KYC), transaction monitoring (TM) and screening. Digitization continues at pace, propelled by lockdowns in the pandemic, so compliance officers need to be both reg-savvy and tech-savvy to be successful in fighting financial crime. Check acams.org for new master classes, networking sessions, webinars and podcasts on developments in the technology world, including fintech and regtech.
ACAMS continues to develop new professional training programs to support AFC communities. This year saw the launch of the Certified Know Your Customer Associate (CKYCA) and Certified Transaction Monitoring Associate (CTMA) to strengthen the first line of defense and provide practical education to professionals working within KYC and TM roles.
ACAMS continues to host several events including the following:
- The Africa AML and AFC conference is on January 27-28, 2021, which offers to change, challenge and commit to strengthening AFC in Africa. The conference will cover cryptocurrency, sanctions, green crimes and needed changes for implementing a strong compliance culture in Africa. It will also cover global trends, including implementing AML/CTF measures for designated nonfinancial business and professions, and developing strategies to fight corruption.
- The U.K. event “Anti-Financial Crime Virtual—Hot Topics” on February 25, 2021, will examine the impact of COVID-19, regulatory enforcement, fraud typologies and AFC culture among other topics relevant to the U.K. region.
In addition, ACAMS chapters have been actively engaging AFC community members. July marked the relaunch of the ACAMS South Africa Chapter—the 14th chapter in the EMEA region and the second chapter launched virtually this year. Several European chapters joined the ACAMS social impact initiatives, such as combating human trafficking and illegal wildlife trade (IWT). The Cyprus Chapter held an event on the topic of modern slavery and human trafficking, while the Netherlands and Germany Chapters have IWT working groups. The autumn EMEA chapter events featured a wide array of region/country-specific topics: sanctions (U.K.), AML and investment funds (Germany), cryptocurrencies (South Africa) and the money laundering reporting officer career path (Malta).
It has been a busy season for all at ACAMS. As 2020 winds to a close, there is still much anticipation to connect with ACAMS’ MENA and Africa members at the conferences, as well as the European members in May 2021 at the Europe virtual conference. ACAMS hopes to announce more global conferences in 2021, check acams.org for new ways to learn and network.
Shilpa Arora, CAMS, AML director—Europe, Middle East and Africa, ACAMS