Keeping Up With the Regulators — October 2019 Weeks #1 and #2

Your weekly briefing on what’s new in KYC/AML for FinTechs

Photo by Frederic Köberl on Unsplash

As promised, Fractal is sharing our (this time bi-)weekly briefings to help FinTechs stay up-to-date with the latest developments in the KYC/AML regulatory space. In case you missed our last issue, here it is:

https://medium.com/frctls/keeping-up-with-the-regulators-september-2019-week-3-and-4-45f1e7639811

Find the last two weeks’ briefing below:

Weeks 27.09.2019–04.10.2019 & 04.10.2019–11.10.2019

What’s cooking in the regulatory space?

• Austria: Providers of virtual currency services will soon be subject to supervision by the Austrian Financial Market Authority (FMA)
• Cayman Islands: Information on the beneficial ownership of companies will be made public
• EU: European Union finance ministers discuss the AML path forward: bloc-wide supervisor and new overhaul of rules are on the table
• EU: EBA, EIOPA and ESMA (ESAs) published their joint opinion on the risks of money laundering and terrorist financing in the financial sector
• EU: Finance commissioner pledged to propose new rules to regulate virtual currencies
• EU: A new approach for flagging countries with weak AML laws is on the works
• Estonia: The government plans to strengthen the AML framework on all fronts, from enforcement to legislation and justice
• Hong Kong: Securities regulator released regulations for crypto fund managers
• Iceland: FATF’s follow-up report flags that Iceland is still lacking in some key aspects such as enforcement, covered sectors and risk-based approach
• India: Government sets up an inter-ministerial committee for better coordination to prevent money laundering activities
• Ireland: Irish entities have until 22 November 2019 to file their beneficial ownership details in the European Central Register
• Liechtenstein: Parliament approves new Blockchain Act
• Liberia: AML framework under revision
• Macau: Macao has passed all 40 FATF technical compliance recommendations, according to APG’s follow up report
• Malaysia: Declaration of assets obligation may be strengthened until the end of the year
• Mongolia: APG publishes follow up report upgrading Mongolia in 16 FATF Recommendations
• Pakistan: National Assembly passes a bill to enhance the punishment for money laundering
• Pakistan: Mutual Evaluation Report published a week ahead of FATF’s review to determine whether Pakistan should be put on the blacklist
• Sri Lanka: APG publishes follow-up report on Sri Lanka’s compliance with FATF’s Recommendations
• Thailand: Cabinet approves a draft regulation which would allow financial institutions to scrutinise their customers’ sources of funds
• UK: Draft bill seeking to record the beneficial ownership structure of overseas entities that hold or are acquiring property in the UK under consideration
• UK: A new General Guideline will apply to the sentencing of organizations for business crimes such as money laundering
• USA: US Accountability Office issues recommendations to improve the efficiency of the suspicious activity reporting required by the BSA
• USA: Senators introduce the ILLICIT Cash Act, seeking to close shell companies loopholes and improve information collection and exchange

News

• Canada’s Commission of Inquiry into Money Laundering is holding 5 public meetings in B.C to hear from residents about the most significant laundering issues and consequences in each community
• Crypto advocacy group aims to defeat New York’s BitLicense-type legislation before it spreads to other states
• Visa, Mastercard, eBay, Stripe, Mercado Pago and PayPal have all withdrawn from the Libra Association
• Ernst & Young reports that Canada is 14 points, and the U.S. 18 points, behind the global average of 64 per cent consumer fintech adoption
• ESMA and EBA flag the risk that the relocation of firms from Britain could overwhelm the EU national bodies supervising anti-money laundering
• Binance joins efforts with Coinfirm to tackle new FATF regulations
• Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) lauded Togo for its improvements in this area

The AML’s Watch

• Netherlands bank ABN Amro is under investigation for money laundering and terrorist financing activities
• Brazilian police searched the homes of Banco do Brasil managers suspected of involvement in a $48 million money-laundering scheme
• Financial Intelligence Unit of India reports AML breaches by Public Sector Undertaking (PSU) banks
• Danske Bank’s Estonian branch enters into liquidation over money laundering case
• Raids and arrestments in India’s PMC Bank over money laundering probe
• The number of cryptocurrency firms being investigated by the UK’s financial regulator has surged by 74 per cent this year

Add this to your knowledge folder

• Report by Bellingcat and Transparency International UK on how Scottish Limited Partnerships (SLPs) are leveraged for global money laundering
• Overview of the AML regime set for by UAE’s 2018 AML Act
• The application of FATF’s travel rule to virtual currency businesses: content, interpretation and challenges
• Gift-cards regulation in the US
• Crypto regulation in South Korea: the inefficiencies around the requirement to share user’s transaction data with banks
• Crypto transaction regulations in the US: AML and taxes
• Addressing trade-based money laundering: financial services, logistics and law enforcement
• Rules engines vs machine learning in AML systems — the differences in the approach to data analysis

Good reads

• How is Estonia’s brilliant AML raking compatible with its high profile money laundering scandals?
• How the New York Department of Financial Services is trying to position itself as the “regulator of the future”
• Overview of Libra’s proposition and the regulatory challenges it faces
• How AI helps in the AML fight
• The West Is Open for Dirty Business — The European Union and the United States need a joint front against poisonous kleptocracy
• An interview with Scotiabank’s chief risk officer about the bank’s approach to anti-money laundering
• Free-trade zones’ vulnerabilities to money laundering
• Leveraging blockchain for a tiered approach to KYC to bank the unbanked

About the Author:

Catarina Veloso is a legal counsel at Fractal and co-chair of INATBA’s identity working group — Catarina specialized in energy law and focused on how blockchain technology can contribute to the management of electricity grids; but an unexpected(-ly happy) turn of events lead her to work closely with Fractal’s product team to remove all the friction while keeping all the compliance in a global KYC/AML onboarding solution.