The landscape of anti-money laundering (AML) regulation is continuously evolving. New guidelines are being legislated or approaching the road. Meanwhile, regulators are often participating in the private sector, and new approaches to combat financial crime are being introduced. The extent of these evolutions will influence financial institutions (FIs) around the globe to fulfill their AML compliance requirements.
Let’s have a look on how anti-money laundering activities are evolving region-wise in 2021:
Recently, for the Fiscal Year 2021, The National Defense Authorization Act passed into law. Following the USA PATRIOT Act of 2001, this is supposed to be the major tool for fighting financial crime, preventing terrorism, and preventing money laundering activities. In the United States, this supervisory policy is new, however, later only limited European countries had executed actions to pinpoint owners, involving non-residents. It will incorporate companies, organizations, revenue-producing associations along with organizational corporate structures of LLC (Limited Liability Company), contemplated by the American system to be regulated.
In addition, the region of Latin America continues to struggle with national efforts to curb money laundering, corruption, and coordinated crime. In 2021, we can expect the current state of affairs to persist due to the joint efforts of the United States and Latin America. As a consequence of corporate transparency laws with the aforesaid AML Act, we might see some evolution. However, these are doubtful till at least 2022. We should assume US restrictions to resume in the region in order to meet the U.S. Treasury’s 2020 National Strategy for Preventing Terrorist and Other Illegal Financing obligations. The preferred impact is to overcome terrorist financing, prohibited drug actions, and human smuggling, along with other severe violations.
In conclusion, we’re expecting much smoke in 2021. There must be prepared proposals of actions to deliver the obvious development shortcomings with how suspicious activity reports (SARs) are conducted.
As the United Kingdom (U.K.) departs from the EU Union, the Sanctions and Anti-Money Laundering Act 2018 goes into effect. If you’re supervising screening practices at your institution, be ready to feature an alternative list to the combination. We anticipate that the financial sanctions implementation office (OFSI) will expand its workload. Reconsider your risk desire and adjust appropriately. Automating is crucial at this point and can facilitate the smooth operation of the institution.
It has been over a year since the Sixth Anti-Money Laundering Directive (6AMLD) of Europe took effect. Until June 3, 2021, members have to rearrange the new directive into national law. It's unlikely that most member nations will be able to meet that date based on our history.
In summary, the EU wants a "supervisor" to assist national authorities and FIUs, but also to be able to replace their authority if necessary. In the Middle East, the United Arab Emirates (UAE) will resume overhauling its AML/CTF framework to address gaps identified by the Financial Action Task Force (FATF). The UAE is continuously opening up its markets and implementing new guidelines to sustain the advancement of digital payments and to oversee its collected benefit services. In Saudi Arabia, the government is investigating digital payments as a measure beyond a currency by the central bank for accelerating payments. In 2021, we can expect the government to adopt new regulatory amendments and digital frameworks.
An amended Payment Services Act has been introduced by Singapore's government. The proposed regulatory changes will allow current payment service regulations to be integrated with the current AML supervision - specifically virtual asset service providers (VASPs) and digital payment tokens (DPT) - as well as standardize international money transfer services. We expect the Monetary Authority of Singapore (MAS) to resume leading technological innovation and cooperation in Financial Technology. In 2020, they concluded their Global FinTech Revolution Challenge, and they are improving their cooperation with the private sector and other countries.
You can expect the Monetary Authority of Singapore (MAS) to continue adopting digitization and the digital economy. Due to the current allocation of their digital bank licenses, as well as their commitment to revolutionize and engage the community, more candidates and a persistent conversation on risk and regulation will be encouraged by these organizations.
Royal approval was given in mid-December to the Anti-Money Laundering (AML) and Counter-Terrorism Financing and Other Legislation Amendment Act 2020 in the southeast. The provisions following the Act will take on diverse forms across 2021 and 2022, with key areas including consumer expectations, correspondent financing, data protection, and cross-border money transfers.
Now is the time to evaluate your anti-money laundering (AML) program to ensure you have taken all the necessary measures to safeguard your prospects from these minor, but crucial variations. The financial services industry requires organizations to maintain an effective anti-money laundering program that is in compliance with the latest regulations and laws.