The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.
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UK 2025 Regulatory Initiatives Grid published
14 April 2025
The Financial Services Regulatory Initiatives Forum (the Forum) has published the Regulatory Initiatives Forum Grid (the Grid), with the UK Financial Conduct Authority (FCA) also updating its webpage. The previous Grid was due to be published in May 2024 but was postponed due to the General Election, meaning the Forum published only an interim update in October 2024.
The 2025 Grid sets out the regulatory pipeline for the next 24 months and reflects the reprioritisation that has taken place since the new government came into power. Notable initiatives include:- motor finance commission review: the FCA intends to confirm, within six weeks of the Supreme Court's decision on past use of discretionary commission arrangements by motor finance firms, whether it will propose a redress scheme;
- liquidity risk management in funds: the FCA will consult on refined proposals regarding liquidity risk management in funds to implement FSB and IOSCO guidelines;
- Consumer Composite Investments (CCI) Regulation: the FCA published a second consultation paper on the new CCI regime on 16 April (see our update) and plans to issue a Policy Statement with final rules in late 2025;
Topics : Client Asset Protection, Conduct and Culture, Consumer / Retail, Financial Crime and Sanctions, Financial Market Infrastructure, FinTech, Fund Regulation, MiFID II, Operational Resilience, Other Developments, Payment Services and Payment Systems, Prudential Regulation, Recovery and Resolution, Securities -
UK FCA updated webpage on cash-based money laundering
2 April 2025
The UK Financial Conduct Authority (FCA) has updated its webpage on cash-based money laundering and confirmed its intention to carry out a multi-firm review in this area in the financial year 2025/2026. The webpage sets out an overview of the FCA's work to reduce money laundering through cash deposit services such as those provided by the Post Office under the terms of the Banking Framework Agreement. The FCA sets out its expectations for firms who are part of the Banking Framework Agreement, including measures in relation to transaction verification and monitoring, deposit limits, suspicious activity reports, intelligence sharing and training. More broadly, the FCA expects firms to focus on communication with their customers. As mentioned above, the FCA also confirms that it is planning a multi-firm review in the financial year 2025/2026 in relation to the financial crime risks from cash-based money laundering. This review will be broader in scope than the Post Office and will consider other routes by which cash enters the financial system.Topic : Financial Crime and Sanctions -
UK Financial Intelligence Unit SARS report published
28 March 2025
The UK Financial Intelligence Unit (UKFIU) has published its annual report on suspicious activity reports (SARs) for the period between April 2023 and March 2024. The annual report structure has been updated due to a number of key changes, including the new reporting portal which was introduced in September 2023, and changes to the UK anti-money laundering regulatory framework. Key points noted in the report were the uptick in the number of defence against money laundering (DAML) requests refused, indicating better quality DAML SARs were being submitted, and wider use of account freezing orders by law enforcement. In terms of the sector breakdown, banking and financial services firms (including e-money, payments and crypto) continue to comprise the majority of SAR reporters, being responsible for over 95% of SAR reports. The report also confirms that the UKFIU will continue to work towards delivery of the new SARs Digital Service, which will provide greater analytical capabilities.Topic : Financial Crime and Sanctions -
Global alert portal launched to help reduce retail investment fraud
18 March 2025
The International Organization of Securities Commissions (IOSCO) has announced the launch of a new alert portal, which is aimed at strengthening the global fight against retail investment fraud. The International Securities & Commodities Alerts Network (I-SCAN) allows investors, online platform providers, banks and institutions to check if a financial regulator has a suspicious activity flag for a particular company or potential investment. I-SCAN is part of IOSCO's roadmap for retail investor online safety, which sets strategic initiatives for safeguarding retail investors worldwide from fraud, excessive risk and misinformation as digital trading and social media reshape the retail financial market. -
The Economic Crime and Corporate Transparency Act 2023 (Commencement No.4) Regulations
14 March 2025
The fourth commencement regulations made under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) have been published. Regulation 2 brought into force on 18 March certain provisions in Parts 1 and 2 of the Act. Regulation 3 brings measures creating the new offence of failing to prevent fraud fully into force in all of the United Kingdom on 1 September. Regulation 4 amends the third set of commencement regulations which failed to comply with the requirement that guidance must be published before regulations bringing section 199 (failure to prevent fraud) of the Act into force are made. Guidance was published on 6 November 2024, the day after the third commencement regulations were made. Regulation 5 replaces references in certain regulations to the commencement of a provision with a reference to the actual date on which the provision came into force. The explanatory note also contains a table listing provisions of the ECCTA which have been brought into force by previous commencement regulations.Topic : Financial Crime and Sanctions -
UK FCA Primary Market Bulletin 54
14 March 2025
The Financial Conduct Authority (FCA) has published its Primary Market Bulletin 54 in which it discusses strategic leaks and unlawful disclosure. The FCA reports that it has seen an increase in instances where material information on live M&A transactions appears to have been deliberately leaked to the press. The FCA reminds issuers and advisers of best practice in mitigating unlawful disclosure and limiting market abuse as set out in Primary Market Bulletin 42, Primary Market Bulletin 52, Article 14 of the Market Abuse Regulation and Rule 2.1(a) of the Takeover Code. Anyone unlawfully disclosing inside information, deliberately or otherwise, risks being investigated for market abuse. The FCA stresses that written policies and procedures for identifying and handling inside information can have limited effectiveness if they are not accompanied by culture and practices which actively discourage leaks.Topic : Financial Crime and Sanctions -
EBA consults on draft RTS under EU's new AML package
6 March 2025
The European Banking Authority (EBA) has published a consultation on proposed regulatory technical standards (RTS) under the EU's 2024 anti-money laundering (AML) package. The AML package consists of a Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AML Regulation), a Regulation establishing the Anti-Money Laundering Authority (AMLA) and the Sixth Money Laundering Directive (MLD6). The EBA is consulting on draft RTS that will inform its response to the European Commission's (EC's) call for advice, which it intends to submit to the EC on 31 October.
Read more.Topic : Financial Crime and Sanctions -
UK Register of Overseas Entities (Protection and Trusts) (Amendment) Regulations 2025
28 February 2025
The Register of Overseas Entities (Protection and Trusts) (Amendment) Regulations 2025 were published, alongside an explanatory memorandum. The Regulations amend the Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022 to allow anyone whose information could be published or disclosed by the registrar under Register of Overseas Entities (ROE) to apply to Companies House to have their information protected. The ROE was established in 2022 mainly to improve transparency regarding the beneficial ownership of overseas entities holding land in the UK. Overseas entities owning or buying property in the UK must provide information to the Registrar of companies and most of that information is publicly available. There is protection of information of those at serious risk of violence or intimidation. Prior to this amendment, only a registrable beneficial owner or managing officer could apply for protection if they, or anyone they live with, would be at serious risk of intimidation or violence if the information about them is published.
The Regulations also allow trust information that is currently not publicly available to be accessed by application if certain requirements are met. The Regulations enter into force from 28 February, except for the provisions relating to trusts which will enter into force on 31 August. Companies House has published guidance on how to apply to protect details on the ROE.Topic : Financial Crime and Sanctions -
FATF consultation on complex proliferation financing and sanctions evasion schemes
26 February 2025
The Financial Action Task Force (FATF) has published a consultation aimed at improving country and private sector understanding of current proliferation financing (PF) risks. This study will detail the evasion techniques used by those evading the targeted financial sanctions detailed in Recommendation 7 of the FATF Standards, as well as other national and supranational sanctions that are not covered by the FATF Standards. The resulting report will focus on providing a comprehensive up-to-date understanding of typologies in complex sanctions evasion schemes relevant to PF and identifying enforcement challenges and best practices, which helps to inform countries' PF risk assessment and risk mitigation.
The questions posed by the FATF include: (i) which unique products or services are most vulnerable to exploitation by sanctions evaders and PF actors; (ii) how risks related to vulnerable products or services and/or high-risk countries for sanctions evasion and/or PF activity are managed; (iii) measures (such as setting suspicious transaction report rules) that effectively detect potential sanctions evasion activity; (iv) best practices for information sharing with the public and/or private sectors; and (v) what public information the FATF can provide to assist the private sector and others in mitigating PF risk.
The deadline for responses is 21 March.Topic : Financial Crime and Sanctions -
UK FCA portfolio letter on supervision priorities for asset management and alternatives portfolios
26 February 2025
The UK Financial Conduct Authority (FCA) has published a portfolio letter explaining its current supervision priorities for asset management and alternatives. Firms must discuss this letter with their Board, Executive Committee and accountable Senior Managers to consider whether the risks of harm discussed exist in their firm and implement strategies for managing them.
The FCA's supervisory priorities include:- Supporting confident investing in private assets. The FCA will shortly be releasing its multi-firm review on private market valuation practices. The FCA will also start a multi-firm review on conflicts of interest at firms managing private assets.
- Market integrity and avoiding disruption. Informed by the vulnerabilities identified in the System Wide Explanatory Scenario, the FCA will focus surveillance on prudent risk management, liquidity management and operational resilience.
- Consumer outcomes. The FCA will publish its findings from the ongoing multi-firm review of unit linked funds later this year and will also start a multi-firm review of model portfolio services (MPS). This review of MPS will look at how firms are applying the Consumer Duty, to provide confidence that investors are receiving good outcomes from MPS.
Read more. -
UK Unauthorised Co-ownership Alternative Investment Funds (Reserved Investor Fund) Regulations 2025 published
26 February 2025
The Unauthorised Co-ownership Alternative Investment Funds (Reserved Investor Fund) Regulations 2025 have been published, along with an explanatory memorandum. The regulations support the Government's introduction of the reserved investor fund (RIF) which will be a new type of UK-based investment fund vehicle legally structured as an unauthorised co-ownership alternative investment fund. The regulations will apply, with modifications, sections 261M to 261O and 261P(1) and (2) of the Financial Services and Markets Act 2000, which currently apply to investors in investment funds that are authorised contractual schemes, to investors in UK-based RIFs (or funds that were RIFs). The Regulations were made on 25 February and come into force when the Co-ownership Contractual Schemes (Tax) Regulations 2025 which establish RIFs come into force, that is 19 March. -
ESMA guidelines on cryptoasset transfer services under MiCAR
26 February 2025
The European Securities and Markets Authority (ESMA) has published official translations of its guidelines on the procedures and policies, including the rights of clients, in the context of transfer services for cryptoassets under the Markets in Crypto-Assets Regulation (MiCAR) on investor protection. The guidelines apply to competent authorities and cryptoasset service providers (CASPs) that act as providers of transfer services for cryptoassets on behalf of clients within the meaning of Article 3(1)(26) of MiCAR. These guidelines aim to ensure the common, uniform and consistent application of the provisions in Article 82 of MiCAR. They include guidelines on: (i) the policies and procedures in the context of transfer services for cryptoassets; (ii) information requirements on individual transfers for cryptoassets; (iii) execution times and cut-off times; (iv) rejection or suspension of an instruction to transfer cryptoassets or return of cryptoassets transferred; and (v) the liability of the CASP.
The guidelines will apply from 27 April. National competent authorities must notify ESMA by 26 April whether they comply, do not comply but intend to comply or do not intend to comply with the guidelines. Cryptoasset service providers are not required to report whether they comply with the guidelines. -
Revised FATF AML and CTF standards to better promote financial inclusion
25 February 2025
The Financial Action Task Force (FATF) has published an updated version of its anti-money laundering (AML) and counter-terrorist financing (CTF) standards after the February FATF Plenary approved changes to Recommendation 1 and its Interpretive Note, with corresponding amendments to Interpretive Notes to Recommendations 10 and 15, as well as related Glossary definitions to better support financial inclusion. The amendments aim to better promote financial inclusion through increased focus on proportionality and simplified measures under the risk-based approach. Alongside this, the FATF also published a consultation document on updating its Guidance on AML/CFT measures and financial inclusion, to equip policy makers and regulators with practical examples. Responses must be submitted by 4 April.Topic : Financial Crime and Sanctions -
FATF second consultation on payment transparency
24 February 2025
The Financial Action Task Force (FATF) has published a second consultation on payment transparency, and in particular proposed revisions to recommendation 16 (R.16). The revisions adapt the FATF Standards to the changes in payment business models and messaging standards, as well as to the evolving risks and vulnerabilities. This consultation picks up the main issues raised in the first consultation during February to May 2024, and how these have now been addressed. It also provides more information on the questions of policy intent and proportionality which were raised as overarching issues during that consultation. The revised proposal is attached as an annex to the consultation.
The deadline for responses is 18 April. The FATF will finalise the revisions in June, following which it will develop a guidance paper on payment transparency to facilitate consistent implementation of the updated standards. -
Wolfsberg Group FAQs to help assess risks generated by the emergence of digital assets for AML and CTF purposes
21 February 2025
The Wolfsberg Group has published FAQs on defining digital assets. The FAQs propose definitions to be used by financial institutions, policymakers, supervisors and regulators to understand the characteristics of digital assets, money laundering, terrorist financing and operational risks they generate, as well as serve as an input to financial institutions developing policies and appropriate controls. The Wolfsberg Group intends to supplement these FAQs in future with guidance on the risks and associated controls for digital assets in line with the concepts developed in the FAQs.
The Wolfsberg Group has also published guidance on payment transparency roles and responsibilities to supplement the Wolfsberg Group Payment Transparency Standards. -
Financial Services and Markets Act 2023 (Digital Securities Sandbox) (Amendment) Regulations 2025 laid
January 30, 2025
The Financial Services and Markets Act 2023 (Digital Securities Sandbox) (Amendment) Regulations 2025 were laid before parliament, together with an explanatory memorandum. The Regulations relate to the Digital Securities Sandbox, which is a temporary supervisory regime allowing firms to test certain innovative financial market infrastructure activities that launched on September 30, 2024. The Regulations amend the Sandbox by modifying the application of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to Sandbox participants. This is to ensure that firms which may already be registered or authorized with the FCA for other activities need not register separately with the FCA as a cryptoasset business for the purpose of undertaking Sandbox activities. The explanatory memorandum accompanying the Regulations also confirms that a number of firms have successfully completed the approvals process for the Sandbox and passed through Gate 1 (the testing stage). The Regulations make certain other minor amendments, and come into force on March 3, 2025. -
UK Conduct Authority publishes report on assessing and reducing the risk of Money Laundering Through the Markets
January 23, 2025
The Financial Conduct Authority has published a report on assessing and reducing the risk of Money Laundering Through the Markets. Money Laundering Through the Markets is the use of capital markets to launder criminally generated cash so that it appears legitimately generated. The report renews the risk assessment of Money Laundering Through the Markets and risks documented in the FCA's June 2019 thematic review. It also sets out the findings of the FCA follow-up review, which it believes will assist brokers and other firms operating in the capital markets to continue to improve their controls and ensure they meet the required standards. The FCA's report provides further insights through practical case studies and examples of good and poor practice.
Overall, the FCA saw good practice and progress in several financial crime systems and controls across larger and smaller firms. However, relevant firms needed to more rigorously tackle the issues raised in the previous thematic review. Key challenges observed include: (i) transaction monitoring; (ii) knowledge of the U.K. Financial Intelligence Unit Money Laundering Through the Markets suspicious activity reporting glossary code; (iii) information sharing; and (iv) documenting customer risk-assessment methods in enough detail. The FCA would like firms to continue reviewing their systems, controls, Money Laundering Through the Markets awareness and training. Moving forward, the FCA will use its supervisory work, to make sure firms are considering Money Laundering Through the Markets risks, and the points raised in this report to drive improvements and reduce risk across the markets. It will also encourage firms and third-party providers to innovate more, to tailor transaction monitoring systems and alerts to capital markets.Topic : Financial Crime and Sanctions -
UK Financial Conduct Authority Policy Statement on Changes to Financial Crime Guide
November 29, 2024
The U.K. Financial Conduct Authority has published a policy statement on changes to its financial crime guide, following its consultation in April. The changes cover the following areas: (i) sanctions—to reflect information learnt from assessments of firms' sanctions' systems and controls following Russia's invasion of Ukraine in 2022; (ii) proliferation financing—to ensure that proliferation financing is explicitly referenced throughout the guide, where appropriate. This includes highlighting a 2022 change to the MLRs, which requires firms to conduct proliferation financing risk assessments; (iii) transaction monitoring—to provide further guidance on how firms can implement and monitor transaction monitoring systems. This includes supporting responsible innovation and new technological approaches; (iv) cryptoasset businesses—to make clear that cryptoasset businesses registered under the MLRs should refer to the guide; (v) Consumer Duty—to clarify that firms should consider whether their systems and controls are consistent with their obligations under the Duty; and (vi) consequential changes—includes replacing expired links, updating outdated references to EU rules and refreshing case studies based on more recent FCA enforcement notices.
Read more. -
UK Financial Conduct Authority Discusses Strategy for 2025 to 2030
November 26, 2024
The U.K. Financial Conduct Authority has published a speech by Emily Shepperd, FCA Chief Operating Officer, on the FCA's strategy for 2025 to 2030. In the speech, Ms. Shepperd sets out the four main themes of the FCA's strategy. Ms. Shepperd emphasises that trust in both the FCA and the financial services sector underpins these themes and will be crucial as the FCA looks to pursue growth, alongside ensuring proportionality in regulation and encouraging innovation. She also explains that the FCA has decided to set its ambitions on 2030, a five-year strategy, learning from its first 3-year strategy that it takes time to deliver and cement change.
Read more. -
UK Financial Conduct Authority Finalized Guidance for Payment Firms that Enables a Risk-Based Approach to Processing Suspected Fraudulent Payments
November 22, 2024
The Financial Conduct Authority has published finalized guidance for payment service providers that enables a risk-based approach to processing suspected fraudulent payments. Following the publication of the Payment Services (Amendment) Regulations 2024, the amount of time that a PSP has to process an outbound payment when there are reasonable grounds to suspect fraud or dishonesty was extended to up to four business days. To support these regulations, HM Treasury asked the FCA to issue guidance to explain how it expects PSPs to apply these legislative changes, taking into account feedback from stakeholders.
Following a consultation in September, the finalized guidance sets out:- the requirements for delaying outbound payments and determining whether the threshold for "reasonable grounds to suspect" has been met;
- how PSPs should use the payment delay window;
- obligations on PSPs if they delay an outbound transaction; and
- the treatment of suspicious inbound payments.
The FCA has amended its payment services and electronic money approach document to include the new finalized guidance. The guidance came into effect on November 22, 2024. -
International Organization of Securities Commissions Publishes Consultation Report on Pre-Hedging
November 21, 2024
The International Organization of Securities Commissions has published a consultation report on pre-hedging. The report assesses potential conduct and market integrity issues associated with the practice of pre-hedging. IOSCO proposes a definition of pre-hedging and a set of recommendations to guide regulators in determining acceptable pre-hedging practices and managing the associated conduct risks effectively.
IOSCO seeks feedback on the proposed definition, and a minimum set of recommendations as guidance which are broadly applicable in most circumstances. IOSCO additionally seeks feedback on whether the proposed recommendations need to be adapted to specific circumstances. For example, IOSCO particularly requests feedback in relation to the differences in the proposed recommendations between bilateral non-electronic transactions and pre-hedging in the context of electronic trading, including competitive requests for quotes. The deadline for comments is February 21, 2025. IOSCO anticipates providing a final report with recommendations to IOSCO members in 2025. -
UK Financial Conduct Authority Revises Market Cleanliness Statistic Methodology
November 19, 2024
The U.K. Financial Conduct Authority has announced that it is revising the market cleanliness statistic used in its annual report to measure insider trading. In future, the FCA will: (i) detect abnormal price movements that happen on the same day as an announcement because the price information used is more frequent; (ii) introduce a market comparison test to ensure the statistic is less affected by market volatility, for example, that caused by the Covid pandemic or Russia's invasion of Ukraine; and (iii) include more announcements from firms with multiple takeover offers. The revised measure is higher, reflecting the scope of the statistic now including potential insider trading on the day of an announcement. In addition, the new methodology makes the statistic more robust to periods of market volatility. Based on the insights received from reports, alerts, and market intelligence, the FCA has not seen an increase in market abuse. The FCA welcomes feedback from the public, industry and academic community on these changes.Topic : Financial Crime and Sanctions -
HM Treasury Updates High-Risk Third Countries List under Money Laundering Regulations
November 19, 2024
HM Treasury has updated its money laundering advisory notice on high-risk third countries. Under the U.K. Money Laundering Regulations, the U.K. regulated sector must apply enhanced customer due diligence in relation to high-risk third countries. This obligation is in addition to the requirement to apply enhanced customer due diligence where there is an assessed high risk of money laundering or terrorist financing, including geographic risk based on credible sources. High-risk third countries are those named by the Financial Action Task Force on either its "High-Risk Jurisdictions subject to a Call for Action" or "Jurisdictions under Increased Monitoring" lists. On October 25, 2024, the FATF published its most recent update to its lists of jurisdictions, which firms are advised to consider.Topic : Financial Crime and Sanctions -
EU Final Guidance on Implementation of EU And National Sanctions
November 14, 2024
The European Banking Authority has finalized two sets of guidelines setting common standards on the governance arrangements and the policies, procedures, and controls that financial institutions should have in place to be able to comply with EU and national restrictive measures. Restrictive measures applicable to financial institutions comprise targeted financial sanctions and sectoral measures, e.g., economic and financial measures. Both sets of guidelines will apply from December 30, 2025.
The first set of guidelines is addressed to all institutions within the EBA's supervisory remit, i.e., those regulated and supervised under the Capital Requirements Directive, the Payment Services Directive, and the Electronic Money Directive. These guidelines set out the governance and risk management systems that financial institutions should implement to address the risk of potentially breaching or evading restrictive measures.
The second set of guidelines is specific to restrictive measures under the Wire and Cryptoasset Transfer Regulation. The guidelines specify what payment service providers and crypto-asset service providers should do to be able to comply with restrictive measures when performing transfers of funds or crypto-assets.Topic : Financial Crime and Sanctions -
UK Home Office Publishes New Guidance on Failure to Prevent Fraud
November 6, 2024
The U.K.'s Home Office has published guidance on the new corporate criminal offense of failure to prevent fraud under the Economic Crime and Corporate Transparency Act 2023. Under the offense, large organizations may be held criminally liable where an employee, agent, subsidiary, or other "associated person" commits a fraud intending to benefit the organization. In the event of prosecution, an organization would have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time that the fraud was committed. The offense applies to all large, incorporated bodies and partnerships (including partnerships that are not bodies corporate).
Read more.Topic : Financial Crime and Sanctions -
The UK Economic Crime and Corporate Transparency Act 2023 (Commencement No. 3) Regulations 2024 Published
November 6, 2024
The Economic Crime and Corporate Transparency Act 2023 (Commencement No. 3) Regulations 2024 have been published. The Regulations bring into force certain provisions of the Economic Crime and Corporate Transparency Act 2023. Regulation 2 brings measures relating to civil recovery of crypto-assets, which are already in force in England, Wales, and Northern Ireland, but only partially in force in Scotland, fully into force on November 7, 2024. Regulation 3 brings into force measures creating a new offense of failure to prevent fraud on September 1, 2025.
For more information on the issues and developments relating to FinTech, see our blog A&O Shearman on fintech and digital assets. -
Financial Action Task Force Publishes Consultation on Changes to AML/CFT and Financial Inclusion Standards
October 28, 2024
The Financial Action Task Force has published a consultation paper on revisions to its anti-money laundering and counterterrorism financing standards relating to financial inclusion. The consultation is part of FATF's program of work to address the unintended consequences of AML/CFT measures.
The revisions focus on recommendation 1 (assessing ML/TF risks and applying a risk-based approach) and its Interpretive Note, with corresponding changes to recommendations 10 (customer due-diligence) and 15 (new technologies) and related Glossary definitions. The proposed revisions aim to better promote financial inclusion through increased focus on proportionality and simplified measures in the risk-based approach, and to give countries, supervisors, and financial institutions greater confidence and assurance when implementing simplified measures.
Read more.Topic : Financial Crime and Sanctions -
Outcomes from Financial Action Task Force Plenary: October 2024
October 25, 2024
The Financial Action Task Force has published the outcomes from its plenary meeting, which took place between October 23 and 25, 2024. Outcomes include:- the approval of the last two assessment reports in the FATF's fourth cycle of assessments. FATF will now focus on its new round which will deliver more focused, risk-based mutual evaluations;
- the release for public consultation of proposed revisions to the standards related to FATF's ongoing focus on financial inclusion (see update above). FATF also approved new guidance on national risk assessments to support countries to understand the illicit finance risks they face;
- discussing standards changes related to cross-border payment systems and progressing work to identify the latest terrorist financing and proliferation financing risks. FATF also commenced a project to review its processes to ensure that countries do not misuse the FATF requirements to restrict the activities of non-profit organizations;
- reporting on the value of the horizontal review of designated non-financial businesses and professional compliance related to corruption to support necessary reforms. FATF decided to continue discussing follow-up on this issue at its next meeting; and
- taking stock of actions taken to improve gender diversity in the FATF, discussing further proposals to strengthen this work. FATF plans to launch a second mentoring program to strengthen inclusivity and diversity within the FATF and Global Network, building on the WFGN initiative under the Singapore Presidency.
The next FATF plenary will be held in February 2025.Topic : Financial Crime and Sanctions -
UK Financial Conduct Authority Cracks Down on Illegal Financial Promotions by 'finfluencers'
October 22, 2024
The FCA has announced that it is interviewing 20 'finfluencers' under caution who may be touting financial services products illegally. 'Finfluencers' are social media personalities who use their platform to promote financial products and share insights and advice with their followers. Their target audience is often comprised of young people, who are increasingly being drawn into investment scams which may have been promoted on social media. The FCA states that it has also issued 38 alerts against social media accounts operated by finfluencers which may contain unlawful promotions. -
UK Joint Money Laundering Steering Group Finalizes Amendments to Guidance for Firms Operating in Wholesale Markets
September 30, 2024
The Joint Money Laundering Steering Group has published the amended version to Part II Sector 18 (wholesale markets) of its AML/CTF guidance for the financial services sector. Changes to the guidance include: (i) a new section relating to customer due diligence on authorized personnel acting on behalf of the customer. It includes a clarification that the identities of internal personnel who are authorized to sign contractual documents may be collected by a firm for AML/CTF purposes on a risk-based approach; and (ii) a new section on wholesale subscription finance in private capital funds. The revisions have been submitted to HM Treasury for Ministerial approval.Topic : Financial Crime and Sanctions -
UK Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 Published
September 12, 2024
The Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 (together with explanatory memorandum) have been laid in Parliament. The Regulations equip the soon to be launched Office of Trade Sanctions Implementation (OTSI) with its civil enforcement powers. Breach of trade, aircraft and shipping sanctions is already a criminal offence, but it is hoped the introduction of civil penalties will strengthen the U.K. government's enforcement capability. OTSI will be responsible for the civil enforcement of certain trade sanctions as they relate to U.K. services and overseas trade with a U.K. nexus. The office will be able to impose monetary penalties of up to £1 million, or 50% of the estimated value of the breach, whichever is higher. Where a civil monetary penalty can be imposed, breaches may be determined on a 'strict liability' basis. OTSI will also be empowered to make public disclosure of breaches. The Regulations introduce reporting obligations for relevant persons, and powers to request information. Failure to comply with either of these can amount to a criminal offence. The powers will come into effect on 10 October. To assist people in complying with the new regulations, the Department for Business and Trade has published statutory guidance. It covers the prohibitions and requirements imposed by the regulations and provides guidance on compliance, enforcement and the circumstances where they do not apply.Topic : Financial Crime and Sanctions -
UK Office of Financial Sanctions Implementation Annual Frozen Asset Review
September 11, 2024
The Office of Financial Sanctions Implementation has published a financial sanctions notice reminding firms of their annual frozen assets reporting requirement. Every year HM Treasury carries out a review to update its records to reflect any changes to these assets during the reporting period. As part of this review, HM Treasury requests all persons that hold or control funds or economic resources belonging to, owned, held, or controlled by a designated person, to provide a report to OFSI with the details of these assets. The deadline for submission is November 11, 2024. The report must include details of all funds or economic resources frozen in the U.K. as well as those overseas where these funds or economic resources are subject to U.K. financial sanctions legislation. Accounts blocked solely by other national authorities (e.g., Office of Foreign Assets Control) do not need to be reported. The report must include the value of all such assets as at close of business on September 30, 2024. Reports therefore must not be submitted before this date. Firms that submitted a report last year (other than a nil return) and no longer hold the frozen assets should submit a nil return.Topic : Financial Crime and Sanctions -
Financial Conduct Authority Talks about a Targeted and Outcomes-Based Approach to Tackling Financial Crime
September 5, 2024
The Financial Conduct Authority has published a speech by Sarah Pritchard, FCA Executive Director, Markets and International, on taking a targeted and outcomes-based approach to tackling financial crime. Points of interest in the speech include:- The FCA is using its powers more assertively than ever. In the last financial year, the FCA charged 21 individuals with financial crime offenses; the highest number of charges it has ever achieved in a single year.
- Using data and technology, the FCA has increased its ability to identify illegal financial promotions, including on social media.
- Using the FCA's own supervisory reach, the FCA has created a dedicated financial crime function within its Consumer Investments department—an area it has seen evolving threats of financial crime and fraud. Over the past 18 months the team has been out on unannounced spot visits, gathering evidence and intervening to prevent harm by, for example, imposing requirements on firm's permissions, compelling asset restrictions or banning firms from providing financial services.
Topic : Financial Crime and Sanctions -
EU Report on Payment Fraud
August 1, 2024
The European Central Bank and the European Banking Authority have published a joint report on payment fraud data. The report assesses payment fraud reported by the industry across the EEA and covers semi-annual data reported for the three reference periods H1 2022, H2 2022 and H1 2023, with a focus on the payment instruments of credit transfers, direct debits, card payments (from an EU/EEA issuing perspective), cash withdrawals and e-money transactions. Payment fraud amounted to EUR4.3bn in 2022 and EUR2.0bn in H1 2023.
The report examines the total number of payment transactions and the subset of fraudulent transactions in terms of value and volume. In addition to the aggregated values, the report also presents data based on volumes and sorted by type of payment instruments. The data shows that SCA-authenticated transactions featured lower fraud rates than non-SCA transactions, especially for card payments, both in terms of values and volumes. Furthermore, fraud shares for card payments, both in terms of values and volumes, were ten times higher when the counterpart is located outside the EEA, where the application of SCA is not legally required and may therefore not have been requested. The report considers this proof of the beneficial impact of the SCA requirements. The report also finds that losses due to frauds were distributed differently among liability bearers depending on the payment instrument.
The EBA and the ECB will continue to monitor fraud data and going forward will publish the aggregate data on an annual basis.Topic : Financial Crime and Sanctions -
UK Financial Markets Standard Board Publishes Spotlight Review on Pre-Hedging Practices
July 26, 2024
The Financial Markets Standard Board has published a spotlight review on pre-hedging practices. The FMSB is examining the practice as it considers, in principal markets, that there remains uncertainty as to how and when pre-hedging may be undertaken, the rationale and client benefits deriving from the activity as well as the distinction between inventory management, pre-hedging and front running. The spotlight review considers trading practices, across the size and liquidity spectrum, in fixed income, FX and exchange traded funds. It also considers evolving risk management practices around new issuances.
The spotlight review supplements existing FMSB guidance applicable to pre-hedging deriving from the FMSB's Standard for the execution of Large Trades in FICC markets with a series of considerations, derived from case studies, debated by FMSB's Pre-Hedging Working Group. The spotlight review is intended to advance the industry debate on pre-hedging but not codify standards of behavior. In due course, the FMSB will determine if standard-setting would be beneficial in this area, also taking into account international regulatory developments with regard to pre-hedging. -
UK Financial Conduct Authority Consults on Amendments to Guidance on Treatment of Domestic PEPs
July 18, 2024
The Financial Conduct Authority has published the findings of its multi-firm review into the treatment of Politically Exposed Persons and launched a consultation on proposed amendments to its related guidance. The review was required under the Financial Services and Markets Act 2023, following concerns from U.K. Parliamentarians that firms were not effectively applying the FCA's guidance. The FCA found that most firms in its review did not subject PEPs to excessive or disproportionate checks and none would deny them an account based on their status. However the FCA has identified areas for improvement and has called on firms to, among other things: (i) ensure their definition of a PEP, family member or close associate is tightened and in line with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (known as the MLRs) and the FCA's guidance; (ii) review the status of PEPs and their associates promptly once they leave public office; (iii) communicate to PEPs effectively and in line with the Consumer Duty, explaining the reasons for their actions where possible; (iv) effectively consider the actual level of risk posed by the customer, and ensure that information requests are proportionate to those risks; and (v) improve the training offered to staff who deal with PEPs. The FCA has provided detailed feedback to the firms that were reviewed and in a small number of cases, has instigated an independent and more detailed review of firms' practices.
Read more.Topic : Financial Crime and Sanctions -
European Banking Authority Announces Anti-Money Laundering Priorities for 2024/25
June 26, 2024
The European Banking Authority has published a press release welcoming the entry into force of the new EU framework establishing the Anti-Money Laundering and Countering the Financing of Terrorism Authority. The EBA also published a factsheet on how it is preparing for AMLA. Going forward, the EBA will retain its AML/CFT powers and mandates until December 2025 to minimize disruption and provide continuity, and it will also be working closely with AMLA. In particular, after transferring the powers that are specific to AML/CFT to AMLA, the EBA will remain responsible for addressing ML/TF risk across its prudential remit. The EBA will also be providing the European Commission with technical advice on important aspects of the future EU AML/CFT framework to ensure that AMLA can begin to operate efficiently and effectively as of its establishment. The EBA plans to provide this advice in October 2025. In the press release the EBA sets out its AML and CTF priorities for 2024/25, which include: (i) a methodology for selecting financial institutions for direct EU-level AML/CFT supervision; (ii) a common risk assessment methodology; (iii) information necessary to carry out customer due diligence; and (iv) criteria to determine the seriousness of a breach of AML/CFT provisions.Topic : Financial Crime and Sanctions -
Directive on Cross-Border Law Enforcement Access to Bank Account Registries Published in Official Journal of the European Union
June 19, 2024
Directive (EU) 2024/1654 has been published in the Official Journal of the European Union, amending Directive (EU) 2019/1153 regarding access by national regulators to centralized bank account registries through the interconnection system and technical measures to facilitate the use of transaction records. The amending Directive aims to ensure more effective investigations into illicit finance by making it easier to retrieve data across borders from centralized bank registries. It mandates EU Member States to ensure that the information from centralized registries is available through an access point to be developed and operated by the European Commission. The Directive enters into force on July 9, 2024, 20 days after publication in the Official Journal of the European Union. Member states are required to bring into force the laws, regulations, and administrative provisions necessary to comply with the Directive by July 10, 2027, with the exception of Article 1(4) and (5), which relates to the bank account registers interconnection system, in respect of which member states are required to bring into force the necessary measures by July 10, 2029.Topic : Financial Crime and Sanctions -
Package of EU Anti-Money Laundering Legislation Published
June 19, 2024
A package of anti-money laundering legislation has been published in the Official Journal of the European Union, which includes:- the Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (Regulation (EU) 2024/1624) (AML Regulation), which enters into force on July 9, 2024, 20 days after publication in the Official Journal of the European Union. It will apply from July 10, 2027, except in relation to football agents and certain transactions conducted by professional football clubs, to which it will apply from July 10, 2029;
- the Regulation establishing the Anti-Money Laundering Authority (Regulation (EU) 2024/1620) (AMLA Regulation), which enters into force on June 26, 2024, seven days after publication in the Official Journal of the European Union. It will apply from July 1, 2025, with the exception of Articles 1, 4, 49, 53 to 55, 57 to 66, 68 to 71, 100, 101, and 107, which will apply from June 26, 2024, and Article 103, which will apply from December 31, 2025.; and
- the Sixth Money Laundering Directive (MLD6) (Directive (EU) 2024/1640), which enters into force on July 9, 2024, 20 days after publication in the Official Journal of the European Union. Member states are required to bring into force the laws, regulations, and administrative provisions necessary to comply with MLD6 by July 10, 2027, with the exception of Article 74, for which the transposition deadline is July 10, 2025; Articles 11 to 13 and 15, for which the transposition deadline is July 10, 2026; and Article 18, for which the transposition deadline is July 10, 2029. MLD4 will be repealed with effect from July 10, 2027.
Topic : Financial Crime and Sanctions -
European Commission Report on Extension of Powers to Adopt Delegated Acts under the EU Market Abuse Regulation
June 17, 2024
The European Commission has published a report, addressed to the European Parliament and the Council of the European Union, on the delegation of power to adopt delegated acts conferred on the Commission under the EU Market Abuse Regulation. Under Article 35(2), the power to adopt delegated acts is conferred on the Commission for an initial period of five years, ending on December 31, 2024. In the report, the Commission explains why it considers that there is a clear need for the extension of this empowerment for a further period of five years. This is due to there being delegated acts that have not yet been adopted by the Commission—those under Articles 6(6) (extending the exemption from MAR to certain third-country designated public bodies that have entered into an agreement under the EU Emissions Trading Scheme Directive) and 38 (adjusting certain thresholds relating to reporting thresholds) of MAR. The Commission provides reasons as to why these have not yet been adopted and refers to the Listing Act legislative proposal for a Regulation containing amendments to MAR, in which co-legislators have agreed to renew the delegation of powers for a period of five years.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Statement on Good Practices for Pre-Close Calls
May 29, 2024
The European Securities and Markets Authority has published a statement on good practice in relation to "pre-close calls" (i.e. communication sessions between an issuer and analysts who generate reports on the issuer's financial instruments). The statement seeks to remind issuers about the applicable legislative framework for pre-close calls and encourages them to follow good practices when engaging in such calls, with the goal of maintaining fair, orderly, and effective markets. Following recent media reports suggesting a connection between episodes of high volatility in share prices and pre-close calls, ESMA reminds issuers that any disclosure of inside information should only take place in accordance with the EU Market Abuse Regulation. Consequently, issuers should only share non-inside information during these pre-close calls.
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European Banking Authority Reports on Virtual IBANs
May 24, 2024
The European Banking Authority has published a report on the issuance of virtual IBANs (vIBANs). The report summarizes the EBA's observations from its fact-finding exercise on the issuance and use by payment service providers of vIBANs. It highlights risks and challenges that vIBANs may present to consumers, financial institutions, national competent authorities and to the integrity of the overall EU financial system, based on the six most common vIBAN use cases in the EU. Uses of vIBANs include the automation of payment reconciliation and overcoming IBAN discrimination by associating the vIBAN with a particular Member State's IBAN country code.
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Court of Justice of the European Union Annuls Sanctions Measures
04/11/2024
The Court of Justice of the European Union has decided that the reasons for the EU sanctions measures designating Mr Fridman and Mr Aven (two of the shareholders of LetterOne) were not sufficiently substantiated and their inclusion on EU sanctions lists was not justified (Judgments T-301/22 and T-304/22). The ECJ has annulled the acts that subjected Mr Fridman and Mr Aven to sanctions for the period from February 28, 2022 to March 15, 2023.
Despite this judgment, these two individuals remain subject to EU sanctions. This is because they have also been sanctioned under Council Decision (CFSP) 2023/572 and Council Implementing Regulation (EU) 2023/571, which are more recent and so were not at issue in these proceedings. The two individuals have now separately challenged their designations under that legislation, but those cases remain to be heard (pending cases, Aven v Council, T-283/23, and Fridman v Council, T-296/23).
This ECJ judgment does not impact the U.K. sanctions regime, under which the two individuals remain sanctioned.Topic : Financial Crime and Sanctions -
HM Treasury Consults on Amending the Money Laundering Regulations
04/04/2024
HM Treasury has launched a consultation with proposals to improve the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (known as the MLRs). The consultation is wide-ranging, covering proposals to:- Ensure customer due diligence is more proportionate and effective.
- Strengthen system coordination to ensure continued coordination in the face of new and emerging threats, technological change and legislative changes.
- Clarify the scope of the MLRs, including as regards changing thresholds from Euro to Pound Sterling.
- Revise registration requirements for the Trust Registration Service to enhance transparency of higher risk trusts.
Topic : Financial Crime and Sanctions -
UK Legislates on Differentiating Risk of Domestic Politically Exposed Persons
12/22/2023
The Money Laundering and Terrorist Financing (Amendment) Regulations 2023, which amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (known as the MLRs), come into force on January 10, 2024. The Financial Services and Markets Act 2023 imposed on HM Treasury a duty to use its powers under the Sanctions and Anti-Money Laundering Act 2018 to amend the MLR customer due diligence measures required where a customer is a domestic (U.K.) politically exposed person (i.e., a PEP entrusted with prominent public functions by the U.K. government, as opposed to a foreign government). The Amendment Regulations fulfil that obligation, providing that unless there are other enhanced risk factors, the due diligence measures applicable to a domestic PEP are reduced compared to those applicable to a non-domestic PEP. The change follows concerns by many members of Parliament that banks and other financial institutions were imposing overly burdensome requirements for information and, in some instances, denying accounts to U.K. politicians and their family members, and also follows the furore over the de-banking by NatWest Bank of the prominent U.K. politician Nigel Farage, which led to the resignation of its CEO.
Read more.Topic : Financial Crime and Sanctions -
Draft UK Legislation on Revised Payment Service Contract Termination Rules Expected Before 2024
10/13/2023
HM Treasury has published a further policy statement on payment service contract termination rule changes, setting out its approach to implementation, timing and next steps. This latest policy statement follows the government's July policy statement in which it confirmed that it would bring forward legislation to enhance the requirements governing payment account terminations. This issue has become topical in light of the "de-banking" of higher risk or less profitable clients by several institutions and recent scandals in the U.K. involving account terminations of some politicians. The main changes being brought forward are:- A requirement for payment account providers to provide clear and tailored explanatory reasons to an account user for the termination. The requirement would not apply where it would be unlawful to provide such information, for example, under U.K. financial crime and anti-money laundering legislation.
- A 90-day notice period before a payment account is terminated by a provider, subject to situations where there is a serious and uncorrected breach by the payment user of the terms applying to the account. It would also be clarified that reasons such as brand protection would not be sufficient justification for a shorter notice period.
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UK Joint Money Laundering Steering Group Publishes Guidance on Travel Rule for Cryptoasset Exchange Providers and Custodian Wallet Providers
09/14/2023
The Joint Money Laundering Steering Group has published revisions to its Sector 22 Guidance on Cryptoasset exchange providers and custodian wallet providers along with a new Annex I, setting out guidance on the U.K. Travel Rule for cryptoassets. The Travel Rule was introduced under the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022, amending the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and requires certain identification information on the sender and recipient to accompany a transfer of a cryptoasset. The Travel Rule requirements have applied since September 1, 2023.
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FCA Reviews Treatment of Politically Exposed Persons
09/14/2023
The U.K. Financial Conduct Authority has launched a review of the treatment by regulated financial services firms of Politically Exposed Persons based in the U.K. Firms are currently obliged, under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, to conduct enhanced due diligence when dealing with PEPs. The FCA has existing Guidance on the treatment of PEPs for these purposes, which makes clear (amongst other things) that firms should adopt a proportionate and risk-based approach to the application of the MLRs. The FCA has been mandated to review this guidance under the Financial Services and Markets Act 2023, including an investigation into how firms are applying the guidance and consideration as to whether any amendments are needed. We discuss this mandate and the FSMA 2023 more generally in our client note, A Boost for UK Financial Services: The UK Financial Services and Markets Act 2023.
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UK Joint Money Laundering Steering Group Proposed Cryptoasset Travel Rule Guidance
08/14/2023
The U.K. Joint Money Laundering Steering Group opened a consultation on July 28, 2023 on guidance on the U.K. travel rule for cryptoasset transfers. The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 introduced the cryptoasset travel rule by amending the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, and firms will need to comply with the requirements from September 1, 2023. The travel rule requires certain identification information on the sender (originator) and recipient (beneficiary) to accompany a transfer of a cryptoasset. The JMLSG is proposing to add a new annex setting out guidance on the U.K. travel rule for cryptoassets, covering scope, information requirements, batch transfers, returns, unhosted wallet transfers, wallet attribution, linked transactions and use of a layer-2 solution such as the Lightning Network. The guidance also states that firms should consider communications from the Financial Conduct Authority on the sunrise issue, which refers to the impact of jurisdictions implementing the travel rule at different times. Firms may encounter issues when dealing with counterparties in jurisdictions that have not implemented the travel rule for cryptoassets, for example, when dealing with EU counterparties for which the EU travel rules for cryptoasset transfers will only apply from December 30, 2024. Responses to the JMLSG consultation may be submitted until August 25, 2023. -
UK Publishes Insider Dealing Offence Legislation
06/05/2023
On May 25, 2023, the final Insider Dealing (Securities and Regulated Markets) Order 2023 and its related explanatory memorandum were published. The Order will enter into force on June 15, 2023.
The legislation aligns the scope of trading venues covered by the U.K.'s criminal insider dealing regime under the Criminal Justice Act 1993 with the civil regime under the U.K.'s Market Abuse Regulation, and updates the criminal regime. Details of the amendments are discussed in our separate blog.Topic : Financial Crime and Sanctions -
UK Criminal Insider Dealing Offence Legislation to be Updated
05/10/2023
On April 20, 2023, the draft Insider Dealing (Securities and Regulated Markets) Order 2023 was published (the draft Order). The draft Order will generally align the scope of the U.K.'s criminal insider dealing regime under the Criminal Justice Act 1993 with that of the civil regime under the U.K.'s Market Abuse Regulation and update the criminal regime. The draft Order, which will come into effect 21 days after it is made, will revoke the outdated Insider Dealing (Securities and Regulated Markets) Order 1994 (the 1994 Order).
Read more.Topic : Financial Crime and Sanctions -
EU Travel Rule for Crypto-Assets Set to Apply from January 2025
05/02/2023
On April 20, 2023, the European Parliament announced that it had formally endorsed the draft Regulation on information accompanying transfers of funds and crypto assets (referred to here as the EU Travel Rule Regulation). The draft Markets in Crypto-Assets (MiCA) Regulation has also been adopted.
The existing EU Wire Transfer Regulation (EU WTR) requires EU Payment Service Provider to ensure that information on the payer and the payee accompanies a transfer of funds. The funds can be in any currency, and comprise banknotes and coins, scriptural money and electronic money.
The EU Travel Rule Regulation will extend the requirements to crypto assets and crypto-asset services providers (CASPs), (both as defined under the draft MiCA Regulation) with information on the originator and the beneficiary being required to accompany any transfers in crypto assets, regardless of whether they are domestic or cross-border. The requirements will not apply to person-to-person transfers of crypto assets where a CASP is not involved, or when both the originator and the beneficiary are providers of crypto-asset transfers acting on their own behalf.
The EU Travel Rule Regulation must still be published in the Official Journal of the European Union before it comes into effect. This is likely to be around July this year. At that time, the EU Travel Rule Regulation will repeal the EU WTR, however, the existing requirements on information accompanying transfers of funds will carry over to the new Regulation. The EU Travel Rule Regulation will apply from the same date that the MiCA Regulation applies, which is expected to be January 2025. -
UK Money Laundering Regulation Changes Announced for September 2022
06/15/2022
Following its 2021 consultation on targeted amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs), the U.K. government has published a consultation response which summarises the feedback to the consultation and sets out the government's approach to making changes to the statutory instrument. The amendments will be made in the draft Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022, which are intended, for the most part, to take effect from September 1, 2022. A summary of the changes is set out below. The government will also soon publish its response to the call for evidence on the U.K.'s anti-money laundering and counter terrorist financing regulatory and supervisory regime, which covered the overall effectiveness and extent of the regime, whether key elements operate as intended, and the structure of the supervisory regime.
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Government Details Proposed Financial Services and Markets Bill
05/10/2022
Following the Queen's speech yesterday, the government has published a briefing pack setting out details of the bills that it intends to introduce, including the so-called Brexit Freedoms Bill as well as key legislation relevant to financial services. The government will introduce a Financial Services and Markets Bill, which will, among other things:- Introduce new statutory objectives for the financial services regulators to support growth and international competitiveness.
- Implement the changes to the wholesale markets arising out of the Wholesale Markets Review. HM Treasury confirmed in March of this year that the changes that will be made by legislation and where powers will be delegated to the financial services regulators for rules to be made. Among the changes are the removal of the share trading obligation and the double volume cap, changes to the derivatives trading obligation, taking OTC derivatives that are economically equivalent to exchange traded commodity derivatives out of the position limits regime, and the establishment of a consolidated tape.
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Queen’s Speech Confirms Government Will Proceed with Brexit Freedoms Bill
05/10/2022
Prince Charles, Prince of Wales, delivered the Queen’s speech in which he announced that the government will be introducing the so-called Brexit Freedoms Bill, which was first announced by Prime Minister Boris Johnson on January 31, 2022, and is intended to make it easier to amend or remove retained EU laws to better suit the U.K.’s circumstances and policies. The Brexit Freedoms Bill will work in tandem with a government drive to reform, repeal and replace EU laws that are seen as outdated, cumbersome or otherwise not in the U.K.’s national interest.
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European Banking Authority Publishes Report on Non-Bank Lending Sector
05/04/2022
The European Banking Authority has published a report on the EU non-bank lending sector i.e., the growing number of financial intermediaries operating outside the EU financial services regulatory perimeter, including BigTech firms (e..g, Meta, Amazon and Google) and FinTech firms, which develop innovative technology for financial services.
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UK Financial Conduct Authority Acts to Improve Financial Crime Issues at Challenger Banks
04/22/2022
The U.K. Financial Conduct Authority has published the findings of its multi-firm review into financial crime controls at challenger banks. The FCA undertook the review in 2021 in response to the 2020 National Risk Assessment of money laundering and terrorist financing, which highlighted the risk that quick onboarding processes advertised by challenger banks could appeal to criminals. The FCA's review revealed that technology is being used well to identify and verify customers quickly and that there are not many differences between the financial crime risks facing challenger banks and those posed to traditional retail banks. However, there are several areas where improvements can be made, at the onboarding stage and beyond. The FCA has requested all challenger banks to review its findings and implement the changes necessary to mitigate the risk of financial crime. As firms grow, their financial crime control resources, processes and technology should be appropriately adapted.
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Financial Action Task Force Publishes Report on Effectiveness of FATF Standards
04/19/2022
The Financial Action Task Force has published a report on the effectiveness of FATF member states' efforts to tackle money laundering and counter terrorism financing. The report is part of the FATF's 2019 Strategic Review which aims to improve the FATF's processes to make FATF mutual evaluations more effective. Mutual evaluations assess the extent to which FATF member countries have implemented the FATF's 40 Recommendations.
Read more.Topic : Financial Crime and Sanctions -
UK Financial Regulators' Statement on Suspension of Nickel Trading on London Metal Exchange
04/04/2022
The U.K. Financial Conduct Authority, Prudential Regulation Authority and Bank of England have published a joint statement on the London Metal Exchange's suspension of nickel trading between March 8-16, 2022. Trading was suspended due to challenging commodity market conditions following Russia's invasion of Ukraine.
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UK Regulators Publish Statement on Sberbank CIB (UK) Limited Administration
04/01/2022
The FCA has announced that Sberbank CIB (UK) Limited, the U.K. arm of Sberbank's corporate and investment banking division, has entered special administration. The firm has found itself unable to make payments due to the sanctions imposed upon the broader Sberbank group.
Read more.Topic : Financial Crime and Sanctions -
Economic Crime (Transparency and Enforcement) Act 2022
03/15/2022
The Economic Crime (Transparency and Enforcement) Act 2022 has received Royal Assent. The Act is designed to increase transparency and enhance the U.K.'s mitigation of money laundering and sanctions evasion. The Act will establish a register for overseas entities and their beneficial owners who own land in the U.K., enhance the sanctions regime and reform measures on unexplained wealth orders. The government has also published a white paper, "Corporate Transparency and Register Reform", setting out its proposals for enhancing the Registrar's powers with a view to improving the transparency and accuracy of the Companies House Register.
Read more.Topic : Financial Crime and Sanctions -
UK Amends License for 30-Day Wind Down of VTB Bank Positions
03/07/2022
The U.K. Office of Financial Sanctions Implementation has published a revised General License under the Russia (Sanctions) (EU Exit) Regulations 2019. The License was first published on February 25, 2022, and allows individuals and entities to wind down transactions involving VTB Bank, including by closing out any positions. In addition, the License permits regulated financial institutions (authorized banks and investment firms, authorized or registered payment services firms and e-money institutions) and financial market infrastructure (recognized U.K. CCPs and CSDs and U.K.-recognized overseas CCPs and CSDs) to take reasonably necessary steps to effect such wind-downs. The revised license expands the definition of "subsidiary of VTB Bank" from VTB Capital plc (and any entity owned or controlled by VTB Capital plc incorporated in the U.K.) to include "an entity owned or controlled by" VTB Bank.
The License took effect from February 25, 2022, and expires on March 27, 2022. HM Treasury has power to amend, vary or revoke the License. OFSI has the power to issue General Licenses for country sanctions regimes under the Sanctions and Anti-Money Laundering Act 2018.Topic : Financial Crime and Sanctions -
UK Economic Crime Bill Introduced to Parliament
03/01/2022
The Economic Crime (Transparency and Enforcement) Bill has been introduced into Parliament, following the initial publication yesterday. The Bill is designed to increase transparency and enhance the U.K.'s mitigation of money laundering and sanctions evasion. The Bill will establish a register for overseas entities and their beneficial owners who own land in the U.K., enhance the sanctions regime and reform measures on unexplained wealth orders. On the same day, the government published a white paper, "Corporate Transparency and Register Reform", setting out its proposals for enhancing the Registrar's powers with a view to improving the transparency and accuracy of the Companies House Register.
Read more.Topic : Financial Crime and Sanctions -
European Supervisory Authorities Publish Report on Digital Finance
02/07/2022
The European Supervisory Authorities (the European Securities and Markets Authority, the European Insurance and Occupational Pensions Authority and the European Banking Authority) have published a joint report on digital finance and related issues, in response to the European Commission's Call for Advice on digital finance, which was published in February 2021. The Call for Advice sought input to advance the EU Digital Finance Strategy, which was launched in September 2020 and set out the EU's plan to review the EU financial services legislative framework in light of developments in digital finance in order to safeguard financial stability and protect consumers.
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European Securities and Markets Authority Publishes Final Report on Guidelines for Disclosure of Inside Information and Interactions with Supervisors
01/05/2022
The European Securities and Markets Authority has published its final Market Abuse Guidelines on the disclosure of inside information and interactions with national prudential regulators under the EU Market Abuse Regulation. The final guidelines implement the changes to the existing guidelines as proposed in ESMA's July 2021 consultation, with minor amendments.
Read more.Topic : Financial Crime and Sanctions -
European Banking Authority Publishes Opinion on Detrimental Impact of De-Risking by Financial Institutions
01/05/2022
The European Banking Authority has published an Opinion and related report on the detrimental impact of financial institutions' "de-risking" decisions under the EU Fourth Money Laundering Directive. De-risking involves financial institutions refusing to enter into, or terminating, business relationships with counterparties who are associated with higher money laundering or terrorist financing risk, in order to comply with requirements under MLD4. MLD4 mandates that financial institutions should establish policies and procedures to manage the risks to which they are exposed, including ML/TF risks. However, the EBA has found evidence of de-risking of entire categories of customers, without considering individual risk profiles. This can have detrimental effects, including on the EU's objectives on fighting financial crime and the stability of financial systems of EU Member States, as well as reducing financial inclusion.
Read more.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Issues Statement on Investment Recommendations on Social Media
10/28/2021
The European Securities and Markets Authority has issued a statement on the requirements under the EU Market Abuse Regulation for firms and individuals that make investment recommendations on social media. ESMA is concerned about the potential harm to retail investors who may base their investment decisions on information made available on social media sites, in particular in situations such as the Gamestop case. The EU rules, which are designed to prevent the misleading of investors, apply to anyone based in or outside the EU that distributes information proposing an investment decision about EU financial instruments listed in the EU or financial instruments that depend on or effect the price or value of a listed financial instrument.
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UK Government Launches Review of UK’s Anti-Money Laundering and Counter Terrorist Financing Regime
07/22/2021
The U.K. government has launched a review of the U.K.’s anti-money laundering and counter terrorist financing regulatory and supervisory regime with the publication of a call for evidence. The government is assessing the overall effectiveness and extent of the regime, whether key elements operate as intended, and the structure of the supervisory regime. On the same day, the government also published a consultation on proposed targeted changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, referred to as the MLRs. That consultation is focused on the changes needed to ensure the U.K. regime meets international standards. Responses to the call for evidence may be submitted until October 14, 2021. A final report on the findings of the review and, where relevant, possible reform will be published no later than June 26, 2022, in line with the review requirement in the MLRs.
Read more.Topic : Financial Crime and Sanctions -
UK Government Consults on Targeted Amendments to the Money Laundering Regulations
07/22/2021
The U.K. government has opened a consultation on proposed targeted changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, referred to as the MLRs. The consultation focuses on the time-sensitive changes that are needed to ensure that the U.K. requirements meet international standards set by the Financial Action Task Force and to strengthen the overall requirements. The government has also opened a call for evidence on the U.K.’s anti-money laundering and counter terrorist financing regulatory and supervisory regime, which is considering the overall effectiveness and extent of the regime, whether key elements operate as intended, and the structure of the supervisory regime. Responses to the MLRs’ consultation may be submitted until October 14, 2021. These MLR amendments will be implemented through secondary legislation due to be laid in Spring 2022.
Read more.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Launches Consultation on Revised Guidelines for Disclosure of Inside Information Under EU Market Abuse Regulation
07/08/2021
The European Securities and Markets Authority has launched a consultation on proposed revisions to the Guidelines for when issuers can delay the disclosure of inside information in accordance with the EU Market Abuse Regulation. Responses to the consultation should be submitted by August 27, 2021. ESMA intends to publish a final report including its amended Guidelines at the end of 2021.
Issuers of financial instruments that fall within the scope of the EU MAR must publicly disclose, as soon as possible, inside information that directly concerns them. "Inside information" is information that: (i) is not public; (ii) directly or indirectly relates to one or more issuers of financial instruments; (iii) is of a precise nature; and (iv) is likely, if made public, to have a significant effect on the relevant prices of those financial instruments or related derivative financial instruments.
Read more.Topic : Financial Crime and Sanctions -
UK Financial Services Act 2021 Published
04/29/2021
The U.K. Financial Services Bill has received Royal Assent from Her Majesty the Queen and has become an Act of Parliament, the Financial Services Act 2021. Some provisions of the Act came into force on the date of Royal Assent, with a limited number following on June 29, 2021. The majority of the Act will come into force on a date specified in regulations yet to be made by HM Treasury.
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European Banking Authority Publishes Opinion on Money Laundering Risks
03/03/2021
The European Banking Authority has published its latest biennial opinion on money laundering and terrorist financing risks affecting the EU financial sector. Key risks relate to: (i) virtual currencies; (ii) the provision of financial products and services through FinTech firms; (iii) weaknesses in counter-terrorism financing systems and controls; (iv) "de-risking" by firms which leads to riskier customers resorting to alternative payment channels; (v) supervisory divergence; (vi) crowdfunding platforms; (vii) divergent approaches to tackling tax-related crimes; and (viii) the COVID-19 pandemic.
Read more.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Proposes Improvements to Transparency Directive
03/03/2021
The European Securities and Markets Authority has written to the European Commission proposing a series of improvements to the EU Transparency Directive, taking account of lessons learned in the Wirecard case. Wirecard, a German payments group, collapsed in 2018 when it was revealed that €1.9bn was missing from its public accounts. Several of its senior managers remain under police investigation for alleged crimes including fraud and market manipulation. In ESMA's view, the case has highlighted the need for timely and effective enforcement of financial information and proposes the following amendments to the EU Transparency Directive to help achieve this.
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European Banking Authority Publishes Revised Guidelines on Risk Factors for Money Laundering and Terrorist Financing
03/01/2021
The European Banking Authority has published revised Guidelines on money laundering and terrorist financing risk factors for credit and financial institutions to consider when conducting business relationships and occasional transactions. The Guidelines will enter into force three months after their publication in all official EU languages and will replace the EBA's existing ML/TF Guidelines.
Read more.Topic : Financial Crime and Sanctions -
Financial Action Task Force Launches Consultation on Guidance on Proliferation Financing Risk Assessment and Mitigation
03/01/2021
The Financial Action Task Force has launched a consultation on its proposed non-binding Guidance on proliferation financing risk assessment mitigation. The FATF updated its Guidance for proliferation financing risks under Recommendation 1 and its Interpretive Note of the FATF Recommendations in October 2020. The new proposed Guidance is intended to provide a common understanding about how countries and firms can implement the new requirements.
Read more.Topic : Financial Crime and Sanctions -
UK Conduct Regulator Sets Out Supervision Strategy of Retail Banks
02/05/2021
The U.K. Financial Conduct Authority has published a letter addressed to the CEOs of retail banks setting out the FCA's approach to retail bank supervision in light of the COVID-19 pandemic.
In the letter, the FCA identifies the key risks of harm that retail banks' activities may pose over the next two years, sets out its expectations of the actions retail banks need to take to mitigate the risks and discusses the work that the FCA will undertake to ensure firms are meeting the expectations. The risks are grouped into the following four priority supervisory areas:
- ensuring fair treatment of borrowers, including those in financial difficulties;
- ensuring good governance and oversight of customer treatment and outcomes during business change over the next two years;
- ensuring operational resilience over the next two years and beyond; and
- minimizing fraud and other financial crime.
View the FCA's letter. -
UK Financial Conduct Authority Establishes Temporary AML Registration Regime for Crypto-Asset Businesses
12/16/2020
The U.K. Financial Conduct Authority has established a temporary registration regime for crypto-asset businesses that were operating in the U.K. prior to January 10, 2020. The regime will allow crypto-asset firms to continue providing services in the U.K., notwithstanding that they have not yet been registered with the FCA.
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Final Draft EU Technical Standards for SME Growth Markets Under Market Abuse Regulation
11/05/2020
The European Securities and Markets Authority has published its final report and final draft Technical Standards on the amendments to the Market Abuse Regulation for the promotion of SME Growth Markets. SME Growth Markets were a new sub-category of multilateral trading facility introduced by the revised Markets in Financial Instruments package in January 2018 to facilitate access to capital for SMEs. ESMA is mandated to prepare: (i) Regulatory Technical Standards on liquidity contracts; and (ii) Implementing Technical Standards on insider lists and to submit those to the European Commission by September 1, 2020. Due to the impact of the COVID-19 pandemic, the delivery of the final draft RTS and ITS have been delayed and ESMA acknowledges that it is unlikely that they will be adopted in time for the application of the amendments to MAR, which is January 1, 2021. The final report outlines ESMA's proposals and provides the final draft RTS and ITS that ESMA has submitted to the European Commission for consideration.
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Financial Action Task Force Updates Guidance for Proliferation Financing Risks
10/23/2020
Following its consultation earlier this year, the Financial Action Task Force has finalized amendments to Recommendation 1 and its Interpretive Note. Recommendation 1 provides guidance on assessing risks and applying a risk-based approach to money laundering and terrorist financing risks. The FATF has updated the Recommendation to require countries and the private sector to identify and assess risks of potential breaches, non-implementation or evasion of the targeted financial sanctions obligations referred to in Recommendation 7 linked to proliferation financing risks.
View the FATF's statement.
View the updated FATF Recommendations.Topic : Financial Crime and Sanctions -
UK Parliament Publishes Financial Services Bill for Post-Brexit Regulatory Framework
10/21/2020
The U.K. Government has published a Financial Services Bill setting out a proposed regulatory framework for the financial services industry following the U.K.'s exit from the EU. The Bill is part of the U.K.'s wider initiative under the Future Regulatory Framework Review to re-frame its regulatory framework. Although Brexit has brought challenges to the financial sector, there may also be post-Brexit opportunities for the U.K. to seize. The aim of these reforms is to cement the U.K.'s position as a global financial centre of excellence. A core piece of that will be to set conditions that continue attracting business to the U.K. and to look for opportunities to cut "red tape" whilst at the same time maintaining the U.K.'s globally recognized high regulatory standards.
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Financial Stability Board Publishes Final Recommendations on Global Stablecoins
10/13/2020
Following its consultation earlier this year, the Financial Stability Board has published a final report on the regulation, supervision and oversight of global stablecoin arrangements. In the report, the FSB discusses the characteristics of GSCs, the risks posed by GSCs, existing approaches to regulating and supervising GSCs and issues with cross-border supervision of GSCs. Alongside the report, the FSB has published a summary of the responses to its consultation.
Read more. -
EU Securities Authority Recommends Changes to EU Market Abuse Regulation
09/24/2020
The European Securities and Markets Authority has published a final report on the review of the Market Abuse Regulation. MAR requires the European Commission to report on certain aspects of the operation of MAR, including where appropriate, making recommendations for legislative change. ESMA's final report and recommendations will support the work by the Commission on producing that report. The proposals will mostly affect issuers of financial instruments admitted to trading or trading on a trading venue, investment firms and asset management firms.
Read more.Topic : Financial Crime and Sanctions -
UK Treasury Committee Seeks Answers from UK Bodies on FinCen Papers and Economic Crime
09/22/2020
The U.K. Treasury Committee has written to the U.K. Financial Conduct Authority, HM Revenue and Customs and the U.K. Department for Business, Energy and Industrial Strategy, seeking answers to a series of questions on the actions each of the bodies are taking to combat economic crime and the significance of the "FinCen files" leak. The FinCen files are essentially a series of leaked suspicious transaction reports originally sent by banks to the US Financial Crimes Enforcement Network between 2000-2017 notifying FinCen of suspicious transactions.
Read more.Topic : Financial Crime and Sanctions -
Financial Action Task Force Highlights Red Flag Indicators Associated With Virtual Assets
09/14/2020
The Financial Action Task Force has published a report on red flag indicators of money laundering and terrorist financing in virtual assets. The FATF highlights that although virtual assets have the potential to create efficiencies and enhance innovation, they can also be used by money launderers and terrorist financers to launder proceeds or finance illicit activities. The FATF recognizes that virtual assets may be used outside of the regulated financial system and to hide the origins or destination of funds. These factors make it harder for financial entities and regulators to identify suspicious activities. The report is therefore intended to assist financial institutions, virtual asset service providers, regulators and authorities to overcome these challenges.
Read more.Topic : Financial Crime and Sanctions -
European Banking Authority Publishes Advice on Steps to Strengthen the EU's AML/CTF Legislation
09/10/2020
The European Banking Authority has published an Opinion recommending that the European Commission establish a single rulebook on anti-money laundering and counterterrorist financing. The EBA’s Opinion, and report annexed to the Opinion, are in response to the Commission’s call for advice on defining the scope of application and the enacting terms of an AML/CTF regulation that is to be adopted. The EBA sets out how to address the gaps and vulnerabilities in the EU framework, mostly due to divergent national approaches across the EU. The EBA is proposing that in the areas where national differences and practices disadvantage the EU’s fight against AML/CTF, directly applicable rules should be introduced in a new EU regulation. According to the EBA, this would cover customer due diligence, AML/CTF systems and controls and certain key supervisory processes such as risk assessments, cooperation and enforcement.
Return to main website.Topic : Financial Crime and Sanctions -
UK Conduct Regulator Proposes to Extend Financial Crime Reporting Obligation
08/24/2020
The U.K. Financial Conduct Authority has launched a consultation proposing to extend the annual financial crime reporting obligation to regulated firms undertaking regulated activities that the FCA views to be potentially posing as a higher money laundering risk. Responses may be submitted until November 23, 2020. The FCA intends to publish its final policy and amended rules by Q1 2021.
The FCA introduced the annual financial crime reporting obligations in 2016 for banks, investment firms, building societies, mortgage lenders, large electronic money institutions, certain large consumer credit firms, life insurers and retail investment and mortgage intermediaries. Relevant firms must provide details annually on, among other things, the jurisdictions and types of customers as well as the number of suspicious activity reports to the FCA. The obligation only captures certain firms subject to FCA supervision under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations of 2017.
Read more.Topic : Financial Crime and Sanctions -
European Banking Authority Seeks to Promote RegTech Use
08/12/2020
The European Banking Authority has opened a consultation on RegTech and supporting the use of RegTech across the EU. Responses may be submitted until September 30, 2020. The EBA intends to report on the use of RegTech in the first half of 2021. The survey is focused on financial institutions and ICT third party providers. The EBA is seeking to understand the extent and impact of RegTech for regulatory, compliance and reporting requirements of regulated firms. In particular, the EBA is looking at mapping and understanding existing RegTech solutions, identifying barriers and risks relating to the use of RegTech and analyzing how to facilitate the application of RegTech across the EU. The consultation covers ongoing monitoring of business relationships and transactions for anti-money laundering obligations, creditworthiness assessments, compliance with security standards, including information security, cybersecurity and payment services and supervisory reporting.
View the EBA's survey. -
Wolfsberg Group Statement on Developing an Effective Anti-Money Laundering and Counter Terrorist Financing Program
08/12/2020
The Wolfsberg Group has published a statement on how financial institutions can develop an effective anti-money laundering and counter terrorist financing program. The Wolfsberg Group was established in 2002 and comprises thirteen banks. Its objective is to develop frameworks and guidance for the management of financial crime risks, providing an industry perspective to effective financial crime risk management.
Read more.Topic : Financial Crime and Sanctions -
European Banking Authority Call for Input on De-Risking
08/04/2020
The European Banking Authority has launched a call for input on 'de-risking', whereby financial institutions avoid, rather than manage, the risks associated with money laundering or terrorist financing by terminating business relations with entire regions or classes of customers. The EBA is aiming to establish why financial institutions choose to de-risk instead of managing the related risks and to better understand the impact on access to financial services. Responses to the call for input can be provided until September 11, 2020. The feedback received will assist the EBA in preparing its next Opinion on the money laundering or terrorist financing risks impacting the EU which is due in Q1 2021.
View the call for input on de-risking.Topic : Financial Crime and Sanctions -
Financial Action Task Force Publishes 12-Month Review on Revised FATF Standards for Virtual Assets
07/07/2020
The FATF has published the results of its 12-month review into the revised FATF standards published in June 2019, designed to help tackle money laundering and terrorist financing risks connected with virtual assets and virtual asset service providers. The FATF's revised standards introduced a new Interpretive Note to Recommendation 15 on New Technologies, which clarified how countries should apply the FATF standards to virtual assets and VASPs, as well as updated guidance on a risk-based approach for virtual assets and VASPs. When the revisions were published, the FATF undertook to conduct a 12-month review of the changes.
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Financial Action Task Force Report on Stablecoins
07/07/2020
The Financial Action Task Force has published a report on issues of anti-money laundering and counter-terrorism financing in relation to global stablecoins and stablecoins. The report was mandated by the G20 in October 2019, when it also published its own report on the impact of global stablecoins. The FATF uses the term "so-called stablecoins" in its report to avoid endorsing the use of the phrase "stablecoins", which it views as a marketing term used by promoters of such coins. The term "so-called stablecoins with the potential for mass production" refers to global stablecoins. The FATF has, in parallel, published a 12-month review of its revised FATF standards on virtual assets and virtual asset service providers setting out areas in which the FATF intends to provide updated guidance to cover newly identified risks and provide clarifications.
Read more.Topic : Financial Crime and Sanctions -
UK Government Publishes Global Human Rights Sanctions Regulations 2020
07/06/2020
HM Treasury has published the Global Human Rights Sanctions Regulations 2020, a new piece of U.K. legislation designed to target those involved in serious violations of human rights. The Regulations come into force on July 6, 2020. They apply to relevant conduct by any person across the whole of the U.K. but also have extra-territorial effect, additionally applying to conduct by U.K. persons (including U.K. incorporated companies and overseas branches of such companies) outside the U.K. and by any person in the territorial sea adjacent to the U.K.
Read more.Topic : Financial Crime and Sanctions -
Basel Committee on Banking Supervision Publishes Final Updated AML Guidelines
07/02/2020
The Basel Committee on Banking Supervision has published final updated guidelines on the "Sound management of risks related to money laundering and financing of terrorism". The updated guidelines apply to all banks, banking groups and relevant regulators.
The updated guidelines include detailed guidance on the interaction between prudential and AML/CFT supervision to enhance the effectiveness of the supervision of banks' AML/CFT regimes. The updated guidelines also merge and replace two other Basel Committee documents, namely Customer due diligence for banks (October 2001) and Consolidated KYC risk management (October 2004). The guidelines should be read in conjunction with other Basel Committee papers, such as the Core principles for effective bank supervision, as well as relevant guidance published by the Financial Action Task Force.
View the updated guidelines. -
Financial Action Task Force Sets out Priorities for 2020-2022
07/01/2020
The new German Presidency of the Financial Action Task Force commences today and has set out its objectives for 2020-2022.
Read more.Topic : Financial Crime and Sanctions -
Financial Action Task Force Consults on Updating Guidance for Proliferation Financing Risks
06/30/2020
The Financial Action Task Force has opened a consultation on amendments to Recommendation 1 and its Interpretive Note. Recommendation 1 provides guidance on assessing risks and applying a risk-based approach to money laundering and terrorist financing risks. The FATF is proposing to update the Recommendation to require countries and the private sector to identify and assess risks of potential breaches, non-implementation or evasion of the targeted financial sanctions obligations referred to in Recommendation 7 linked to proliferation financing risks. Responses to the consultation may be submitted until August 31, 2020. The FATF intends to consider the feedback at its plenary session in October 2020.
View the consultation paper.Topic : Financial Crime and Sanctions -
European Banking Authority Call for Input on Impact of De-Risking on Financial Institutions and Consumers
06/15/2020The European Banking Authority has launched a call for input to understand why financial institutions choose to “de-risk” (meaning they elect not to service a particular customer or category of customers on the basis of higher money laundering and terrorist financing risks) instead of managing the risks of working with those customers. Responses are sought from financial institutions and end users by September 11, 2020. The call for input will inform the EBA’s Opinion on the risks of money laundering and terrorist financing affecting the EU’s financial sector.
View the EBA's call for input.Topic : Financial Crime and Sanctions -
UK Government Amends Sanctions Legislation
06/13/2020
HM Treasury has published the Sanctions (EU Exit) (Miscellaneous Amendments) Regulations and the Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations, amending certain aspects of the U.K. sanctions regime. The legislation is made under the Sanctions and Anti-Money Laundering Act 2018, which was introduced to enable the U.K. Government to implement international sanctions following its departure from the EU. The majority of the SAMLA provisions entered into force on November 22, 2018.
Read more.Topic : Financial Crime and Sanctions -
UK Joint Money Laundering Steering Group Publishes Revised Guidance
06/01/2020
The Joint Money Laundering Steering Group has published amendments to its Guidance following its consultation launched on February 3, 2020. The revisions to the Guidance account for changes introduced by The Money Laundering and Terrorist Financing (Amendment) Regulations 2019, which came into force on January 10, 2020. The 2019 Regulations amend the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to incorporate changes arising from the EU's Fifth Anti-Money Laundering Directive.
The JMLSG's consultation on proposed new Guidance on how the U.K. Money Laundering Regulations apply to crypto-asset exchange providers and custodian wallet providers closed on May 18, 2020. The final new Guidance is still to be published.
The JMLSG is currently consulting on draft guidance on Pooled Client Accounts, with comments due by June 10, 2020.
View the June 2020 JMLSG Guidance.
View details of the JMLSG's consultation on pooled client accounts.
View details of the JMLSG's consultation on crypto-asset exchange provider and custodian wallet provider guidance.Topic : Financial Crime and Sanctions -
UK Joint Money Laundering Steering Group Consults on Pooled Client Accounts Guidance
05/14/2020
The U.K. Joint Money Laundering Steering Group has launched a consultation on draft guidance on Pooled Client Accounts. The JMLSG Guidance is provided for firms in the financial sector. A PCA is a bank account opened with a financial institution by a customer, to administer funds that belong to the customer's clients. The customers clients' money will be co-mingled but the customer's clients will not be able to directly instruct the financial institution to carry out transactions. The JMLSG is proposing guidance on the risks, risk assessments, written agreements and due diligence that might be needed when a financial institution opens and administers a PCA for a customer. The consultation closes on June 10, 2020.
View the consultation paper.Topic : Financial Crime and Sanctions -
Bank for International Settlements Reports on Financial Crime During COVID-19
05/14/2020
The Bank for International Settlements has published a report on financial crime during the COVID-19 pandemic. The Report provides an overview of the increase in financial crime observed since the COVID-19 outbreak, which includes an increase in cyber threats, greater misuse of online financial services and virtual assets to move illicit funds and possible corruption associated with government stimulus funds. The Report also describes the cyber resilience measures proposed by national and international agencies and the AML actions taken by supervisory bodies, including the issuance of public statements to raise awareness of COVID-19-related AML risks, provision of guidance on the application of existing AML/CTF frameworks and coordination with the financial sector for the reporting of COVID-19-related fraud.
Read more. -
European Banking Authority to Act on Dividend Arbitrage Trading Schemes
05/12/2020
In response to the November 2018 request of the European Parliament to conduct an enquiry into dividend arbitrage trading schemes, the European Banking Authority has published a report (dated April 28, 2020) on the approach of national regulators across the EU to tackle market integrity risks associated with dividend arbitrage trading schemes. The EBA has also published a ten-point Action Plan to address the risks arising from such schemes. Both the report and Action Plan accompanied the EBA's letter to the European Parliament that describes its actions and the steps it intends to take in the future on this issue.
The report sets out the findings arising from the enquiry, which consisted of surveys of national authorities responsible for anti-money laundering and counter terrorist financing and of national prudential regulators. The EBA found that dividend arbitrage trading schemes are not possible in all EU member states and that, where they are possible, they are not always regarded as a tax crime. The EBA concluded that AML and prudential authorities approach dividend arbitrage trading schemes in different ways and there are variations in the extent to which the handling of the proceeds from these schemes by financial institutions constitutes money laundering.
Read more. -
UK Conduct Regulator Issues Guidance on Financial Crime Controls and Information Security During COVID-19
05/06/2020
The U.K. Financial Conduct Authority has issued guidance on financial crime controls and information security for financial services firms during COVID-19. The FCA notes the increase in cyber-crime during the COVID-19 pandemic, the risks of which may be magnified by operational disruptions arising from working from home arrangements. Firms are expected to be proactive in managing the increased risks during this period, including being vigilant about the potential increase in cyber risks, ensuring they maintain appropriate governance and oversight arrangements, reviewing the impact of COVID-19 on their information security defenses and ensuring that general notification requirements are followed and significant cyber incidents are reported.
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EU Consultation on SME Growth Markets
05/06/2020
The European Securities and Markets Authority has launched a consultation on the functioning of the small and medium-sized Growth Markets regime under the Markets in Financial Instruments Directive II and on draft technical standards for the promotion of the use of SME Growth Markets to be developed under the Market Abuse Regulation. SME Growth Markets were a new sub-category of multilateral trading facility introduced by MiFID II in January 2018 to facilitate access to capital for SMEs. The consultation closes on July 15, 2020.
Read more. -
Financial Action Task Force Reports on Financial Crime During COVID-19
05/04/2020
The Financial Action Task Force has published a report on financial crime (including money laundering and terrorism financing activities) during COVID-19, identifying challenges, good practices and policy responses to the emerging threats and vulnerabilities.
The increased threats identified include fraud from criminals attempting to profit from the pandemic, a spike in cyber crime, particularly phishing emails and spam campaigns and a corresponding impact on other predicate crimes including human trafficking, exploitation of workers, online child exploitation and organized property crime. In conjunction, confinement and social distancing measures designed to combat COVID-19 are impacting government and private sector capacity to implement AML and CTF obligations.
Read more. -
Financial Stability Board Consults on Global Stablecoins
04/14/2020
The Financial Stability Board has launched a consultation on global stablecoin arrangements. The consultation is in response to the G20 mandating the FSB to analyze potential regulatory issues posed by global stablecoins and to advise on multilateral responses. Responses to the consultation should be submitted by July 15, 2020. The FSB's final report is expected to be published in October 2020.
Read more. -
Financial Action Task Force Issues Statement on Remaining Vigilant to AML and CFT Risks During the COVID-19 Pandemic
04/01/2020
The Financial Action Task Force has published a statement on measures to combat illicit financing during the coronavirus pandemic. The key messages are that the FATF supports the use of the flexibility built into the risk-based approach to anti-money laundering and counter-financing terrorism. However, it warns financial institutions to remain vigilant to new and emerging finance risks arising due to COVID-19, such as frauds arising due to difficulties in customer due diligence in person or reductions of monitoring due to remote working, or due to possible risks of fraud in government cash handout schemes. It reminds firms that they should ensure that they continue to effectively mitigate risks and are able to detect and report suspicious activities. In addition, the FATF urges financial institutions to use responsible digital customer onboarding and the delivery of financial services wherever possible and refers institutions to the FATF's recently released Guidance on Digital ID. Furthermore, the FATF encourages countries and financial institutions to consider appropriate use of simplified due diligence measures to assist in the delivery of government benefits established in response to the pandemic.
View the FATF's statement.
View details of the FATF's Guidance on Digital ID.
Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center. -
UK Conduct Regulator Dear CEO Letter to Firms on Consumer Protection During COVID-19 Pandemic
03/31/2020
The U.K. Financial Conduct Authority has published a Dear CEO letter addressed to firms providing services to retail investors on the actions they should be taking to protect consumers during the COVID-19 pandemic. Firms are expected to provide strong support and service to consumers, to be transparent with their customers and to report to the FCA immediately if they foresee themselves getting into financial difficulty.
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UK Joint Money Laundering Steering Group Consults on Crypto-Asset Exchange and Custodian Wallet Provider Guidance
03/18/2020
The U.K. Joint Money Laundering Steering Group has launched a consultation on its proposed new Guidance on how the U.K. Money Laundering Regulations apply to crypto-asset exchange providers and custodian wallet providers. The proposed Guidance will form a new Sector 22 section in Part II of the existing JMLSG Guidance. Comments on the proposed Guidance should be submitted by May 18, 2020.
Read more. -
Guidance Published on Digital Identification Technologies for Anti-Money Laundering Purposes
03/06/2020
The Financial Action Task Force has published Guidance on how digital identification technologies can be used to conduct some aspects of customer due diligence for anti-money laundering purposes. The FATF presents a risk-based approach to the use of digital ID software, relying on a set of open source, consensus-driven assurance frameworks and technical standards for digital ID systems. In addition, the FATF sets out a series of recommendations for relevant authorities, regulated entities (meaning financial institutions, virtual asset service providers and designated non-financial businesses and professions) and digital ID services providers. The Guidance is non-binding, however, it clarifies the FATF's standards.
View the FATF's Guidance on digital ID. -
EU Consultation on Revised Risk Factor Guidelines for Assessing Money Laundering Risks
02/05/2020
The European Banking Authority has launched a consultation on proposed revisions to the Risk Factor Guidelines for financial institutions to assess money laundering and terrorist financing risks. The proposed changes aim to take into account the most recent revisions to the EU Anti-Money Laundering Directive (i.e. 5MLD) and newly identified risks, including those specified in the EBA's implementation reviews. The consultation closes on July 6, 2020.
Read more.Topic : Financial Crime and Sanctions -
UK Joint Money Laundering Steering Group Proposes Amendments to Guidance
02/03/2020
The Joint Money Laundering Steering Group has opened a consultation on proposed amendments to its Guidance. The revisions to the Guidance are to account for changes introduced by The Money Laundering and Terrorist Financing (Amendment) Regulations 2019. The Regulations amend the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, incorporating changes arising from the EU’s Fifth Anti-Money Laundering Directive.
Read more.Topic : Financial Crime and Sanctions -
UK Government Launches Consultation on Application of EU Fifth Money Laundering Directive to Trusts
01/24/2020
HM Treasury and HM Revenue and Customs have launched a consultation on the implementation of rules governing the registration of trusts under the EU Fifth Anti Money Laundering Directive. Responses to the consultation should be submitted by February 21, 2020.
Read more.Topic : Financial Crime and Sanctions -
International Organization of Securities Commissions Recommends UTC Clock Synchronization to Facilitate Market Abuse Monitoring
01/16/2020
The International Organization of Securities Commissions has published a report in which it recommends that where jurisdictions require clock synchronization for trading purposes, clocks should be synchronized to Coordinated Universal Time (UTC). In its 2013 report - Technological Challenges to Effective Market Surveillance – Issues and Regulatory Tools (FR04/13) – IOSCO recommended the introduction of a requirement for trading venues and their participants to synchronize the business clocks used to record the date and time of a reportable event. The practice assists regulators in monitoring the markets for market abuse and identifying market abuse. Certain jurisdictions have already implemented clock synchronization according to UTC, including Australia, Canada and the EU.
View IOSCO's report. -
Bank of England and UK Conduct Regulator Announce Proposals for Financial Sector Data Reforms
01/07/2020
The Bank of England and U.K. Financial Conduct Authority have published a series of proposals setting out their plans to enhance their data and analytics capabilities. The proposals include a revised FCA data strategy, a BoE discussion paper on transforming data collection and a viability report published by the FCA and BoE, together with seven regulated firms, on the possibilities of digital regulatory reporting. The FCA and BoE depend on data to conduct their supervisory responsibilities.
Read more. -
New EU Regulation Enhances European Supervisory Authorities' Powers
12/27/2019
An EU Regulation has been published amending the European Supervisory Authorities' powers under various pieces of EU legislation. The Regulation grants ESMA additional powers to monitor market data and authorize benchmark administrators under the Markets in Financial Instruments Regulation and the Benchmarks Regulation, respectively. It also amends the legislation founding the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, granting them additional powers to facilitate their supervisory duties. The Regulation will enter into force on December 30, 2019. The provisions regarding ESMA's enhanced supervisory powers over market data and benchmarks will apply from January 1, 2022. All other provisions regarding the European Supervisory Authorities' enhanced powers will apply from January 1, 2020.
Read more. -
UK Secondary Legislation Published Implementing EU Fifth Money Laundering Directive
12/20/2019
The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 have been published, amending the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The amending Regulations incorporate changes made to EU legislation under the EU’s Fifth Anti-Money Laundering Directive. The majority of the amending Regulations provisions will come into force on January 10, 2020, with the exception of those governing: (i) customer due diligence on anonymous prepaid cards; and (ii) requests for information about accounts and safe-deposit boxes, which will come into force on July 10, 2020 and September 10, 2020 respectively.
Read more.Topic : Financial Crime and Sanctions -
European Supervisory Authorities Publish Guidelines on AML/CTF Cooperation
12/16/2019
The European Banking Authority, European Insurance and Occupational Pensions Authority and European Securities and Markets Authority (collectively known as the European Supervisory Authorities) have published joint guidelines aimed at enhancing cooperation between national regulators in combating anti-money laundering and counter-terrorist financing. The EU Fourth Money Laundering Directive requires national regulators to cooperate in their AML/CTF supervision of entities that operate on a cross-border basis.
Read more.Topic : Financial Crime and Sanctions -
EU Report on Accepted Market Practices Under the Market Abuse Regulation
12/13/2019
The European Securities and Markets Authority has published an annual report to the European Commission on the application of accepted market practices under the Market Abuse Regulation. The Market Abuse Regulation provides certain prohibitions against market manipulation. Accepted market practices, which are established by national regulators and notified to ESMA, provide a defense against any allegations of market manipulation.
Read more.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Publishes Final Report on Suspicious Transaction Reporting Under the Market Abuse Regulation
12/12/2019
The European Securities and Markets Authority has published its final report on the compliance of Member States with suspicious transaction and order reports under the Market Abuse Regulation, in which it sets out the results of its peer review into certain aspects of the STOR framework. Experts from national regulators and ESMA were appointed to conduct the review and issued a self-assessment questionnaire to all 31 EEA national regulators, as well as conducting on-site visits to six national regulators.
Read more.Topic : Financial Crime and Sanctions -
New EU Regulation on Promotion of Small- and Medium-Sized Enterprise Growth Markets
12/11/2019
A new Regulation amending the revised Markets in Financial Instruments Directive, Market Abuse Regulation and Prospectus Regulation has been published in the Official Journal of the European Union, introducing changes to support small- and medium-sized enterprise growth markets as trading venues.
Read more. -
EU Council Pushes for Further Harmonization of EU Anti-Money Laundering Rules
12/05/2019
The Council of the European Union has adopted strategic priorities for reforms to the EU's anti-money laundering and countering the financing of terrorism regime and has called upon the European Commission to put those priorities into action.
Read more.Topic : Financial Crime and Sanctions -
UK Conduct Regulator to be Appointed as Supervisor of UK Cryptoasset Businesses
12/02/2019
The U.K. Financial Conduct Authority will be appointed as the supervisor of U.K. cryptoasset businesses under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 as a result of amendments that will be made to the Money Laundering Regulations due to come into force on January 10, 2020. The amendments are being made in order to implement the EU’s Fifth Money Laundering Directive, which Member States must introduce as part of their national laws by January 2020.
Read more.Topic : Financial Crime and Sanctions -
UK Conduct Regulator Consults on Guidance on Managing Inside Information
11/27/2019
The U.K. Financial Conduct Authority has published a newsletter for primary market participants seeking feedback on draft best practice guidance for government departments, industry regulators and public bodies on the identification, control and disclosure of inside information. Comments on the best practice note should be submitted by January 15, 2020.
The FCA determined that new, up-to-date guidance on inside information was required to reflect recent legal and regulatory developments, including the introduction of the Market Abuse Regulation in July 2016. Certain of these developments are directly applicable to the actions of government departments, industry regulators and public bodies. The guidance is targeted at these entities and feedback on the guidance is therefore sought particularly from them. The note sets out certain relevant aspects of the Market Abuse Regulation and provides suggestions for how these entities can identify inside information that they become privy to, including questioning whether the information has been made public, whether it is precise and whether a reasonable investor might use it as part of the basis of an investment decision. It also provides suggestions on controlling and handling inside information once it has been identified and on the systems and controls that should be adopted around disclosing the information.
View the FCA's guidance.Topic : Financial Crime and Sanctions -
Basel Committee on Banking Supervision Publishes Consultation on Coordination of Prudential and AML/CFT Supervision
11/08/2019
The Basel Committee on Banking Supervision has published a consultation paper on the “Introduction of guidelines on interaction and cooperation between prudential and anti-money laundering/counter-terrorism financing supervision”. Under the consultation paper, the Basel Committee proposes to amend its guidelines on the “Sound management of risks related to money laundering and financing of terrorism” to include guidance on the interaction between prudential and AML/CFT supervision in a bid to enhance the effectiveness of the supervision of banks’ AML/CFT regimes. Responses to the consultation should be submitted by February 6, 2020.
Read more. -
Financial Action Task Force Consults on Digital Identity in Customer Due Diligence Guidance
10/31/2019
The Financial Action Task Force is seeking feedback from private sector stakeholders on its draft guidance on the use of digital identity systems in customer due diligence. The guidance will supplement Recommendation 10 of the FATF's Recommendations regarding customer due diligence and demonstrates how authentication of customer identities in the digital finance and digital ID context supports broader anti-money laundering/counter-terrorism financing efforts. Stakeholders should submit responses to the consultation by November 29, 2019. The FATF intends to make further amendments to its draft guidance at its February 2020 meetings.
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Basel Committee on Banking Supervision Considers Key Supervisory and Policy Initiatives
10/31/2019
The Basel Committee on Banking Supervision met on October 30-31, 2019 to discuss key policy and supervisory issues, including: (i) a proposed consultation on adjustments to the credit valuation adjustment risk framework; (ii) a proposed consultation on revised market risk and sovereign exposure disclosure requirements; (iii) a proposed discussion paper on the prudential treatment of cryptoassets; (iv) a proposed consultation on guidelines for enhanced cooperation between prudential regulatory authorities and anti-money laundering/counter-terrorism financing authorities; and (v) its reports into the implementation of the Net Stable Funding Ratio and large exposures standards in Argentina and China. All of the proposed consultation papers, as well as the NSFR/large exposures reports, are expected to be published in November 2019.
Other topics under discussion included benchmark rate reforms, the implementation of the Basel Committee's guidance on managing foreign exchange settlement risk and the usability of capital buffers. On the latter subject, the Basel Committee has also published a newsletter reiterating the importance of the capital buffer framework and emphasizing that the buffers are designed to be usable. The Basel Committee has announced that Canada will host the 21 International Conference of Banking Supervisors on October 21-22, 2020.
View the Basel Committee's press release on its October 30-31 2019 meeting.
View the Basel Committee's newsletter on capital buffers.
View details of the 21 International Conference of Banking Supervisors. -
European Banking Authority Urges EU Legislative Update for Cross-Border Banking and Payment Services in the Digital Era
10/29/2019
The European Banking Authority has published a report identifying potential barriers to customer choice and the cross-border provision of banking and payment services in the EU, together with proposals for how to overcome these issues. Building on the EBA's FinTech Roadmap and the European Commissioner's Consumer Financial Services Action Plan, the report sets out the areas where the institutions, including FinTech firms, may face challenges when seeking to provide intra-EU cross-border services, focusing on authorizations and licensing, consumer protection and conduct of business requirements and anti-money laundering and countering the financing of terrorism. The EBA makes recommendations for where changes to EU primary legislation or further guidelines could address the issues to enhance the EU's single market.
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Financial Action Task Force Publishes Best Practices for Beneficial Ownership Transparency
10/24/2019
The Financial Action Task Force has published best practices on beneficial ownership for legal persons. Global standards require authorities to be able to ascertain the ultimate owner of a company or foundation to provide transparency and mitigate against the use of legal persons for financial crime purposes. The FATF's Best Practices document identifies the issues faced in achieving transparency of beneficial ownership and provides recommendations for an effective system that ensures accurate and up-to-date information to authorities in a timely manner. The FATF highlights that using a multi-pronged approach with numerous information sources is considered more effective and the document sets out the key features of an effective multi-pronged system.
View the FATF best practices on beneficial ownership for legal persons.Topic : Financial Crime and Sanctions -
Final EU Technical Standards on Cooperation Arrangements with Third-Country Regulators on Market Abuse Issues
10/08/2019
The European Securities and Markets Authority has published a final report and final draft Regulatory Technical Standards on supervisory cooperation between EU national regulators and third-country national regulators. The Market Abuse Regulation requires national regulators, where necessary, to enter into cooperation arrangements with supervisory authorities in non-EU countries for the exchange of information and enforcement of market abuse obligations. ESMA is charged with preparing draft RTS containing a template for those cooperation arrangements. ESMA's template provides a flexible approach for national regulators by allowing only parts of the template to be used, depending on what is deemed as necessary by a national regulator.
ESMA's preparation of the draft RTS was delayed so that ESMA could take into account the entry into force of the EU General Data Protection Regulation. The draft RTS requires national regulators to have safeguards in place for the transfer of data from the EU to a third-country where the transfer of data takes place in the usual course of business and practice, and in the absence of an equivalence decision.
The final draft RTS have been submitted to the European Commission for adoption.
View the final report and draft RTS.Topic : Financial Crime and Sanctions -
European Supervisory Authorities Publish Opinion on AML/CTF Risks in EU Financial Sector
10/04/2019
The European Supervisory Authorities have published a joint opinion on the current anti-money laundering and counter-terrorist financing risks posed to the EU financial sector. The opinion is published in accordance with the requirements of the Fourth Anti-Money Laundering Directive, which requires the ESAs to publish a joint opinion on the AML/CTF risks affecting the EU’s financial sector every two years. The most recent previous opinion was published in February 2017.
Read more.Topic : Financial Crime and Sanctions -
EU Proposals on Amending the Market Abuse Regulation
10/03/2019
The European Securities and Markets Authority has launched a consultation on proposed changes to the EU Market Abuse Regulation. MAR requires the European Commission to report on certain aspects of the operation of MAR, including where appropriate, making recommendations for legislative change. The proposals will mostly affect issuers of financial instruments admitted to trading or trading on a trading venue, investment firms and asset management firms. ESMA is holding a public hearing on the proposals on November 5, 2019, and the consultation closes on November 29, 2019. ESMA expects to submit its report to the Commission in Spring 2020.
Read more.Topic : Financial Crime and Sanctions -
Council of the European Union Issues Note on Strategic Priorities for AML and CTF
09/30/2019
The Presidency of the Council of the European Union has issued a note inviting Ministers of the Permanent Representatives Committee to consider certain issues regarding the EU anti-money laundering and counter-terrorism financing framework. In July 2019, the European Commission published a Communication and a series of reports assessing the EU implementation of EU AML and CTF requirements and discussing whether further action is needed to improve the EU’s AML/CTF framework. In its Communication, the Commission identified certain issues that were likely to impede the effectiveness of the framework.
Read more.Topic : Financial Crime and Sanctions -
European Banking Authority Publishes Strategic Focus Areas for 2020
09/27/2019
The European Banking Authority has published its 2020 Work Programme. The Programme details six strategic areas of focus for 2020 and these are:
- Support the development of the risk reduction package and the implementation of the global standards in the EU. The EBA will work on developing level 2 legislation required by the revised Capital Requirements Regulation and Directive, the revised Bank Recovery & Resolution Directive and the new Covered Bonds Directive and Investment Firm Regulation and related Directive (the latter two have not yet entered into force). The EBA will continue to work on the implementation of the market risk requirements, following the finalization of the Basel Committee on Banking Standard's fundamental review of the trading book (FRTB). In particular, in 2020, the EBA anticipates implementing the reporting requirement and certain aspects of the FRTB revisions for the internal model approach and for the treatment of non-trading book positions subject to FX or commodity risk. Another priority will be finalization of the EBA's roadmap for the internal ratings-based approach for calculating minimum capital requirements for credit risk.
- Providing efficient methodologies and tools for supervisory convergence and stress testing. The EBA intends to consult on Pillar 2 changes during 2020 and will conduct the 2020 stress test for EU banks.
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UK Prudential Regulator Writes to Banks on Prudential Supervision of Money Laundering and Terrorist Financing Risks
09/05/2019
The Prudential Regulation Authority has published a "Dear CEO" letter sent to all PRA-regulated banks and investment firms (firms that are subject to the Capital Requirements Regulation) on the prudential supervision of money laundering and terrorist financing risks. The PRA reminds firms of the Opinion published by the European Banking Authority on July 24, 2019, which invited national prudential supervisors to (i) make clear to institutions the expectation that prudential supervisors should be aware of AML/CTF risks that may affect the institutions they oversee; and (ii) notify institutions that AML/CTF concerns will be taken into account in determining prudential supervision.
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UK Regulator Provides Guidance on Regulatory Perimeter and Crypto-Assets
07/31/2019
The U.K. Financial Conduct Authority has published a Policy Statement and final Guidance on Crypto-assets. The Policy Statement summarizes the feedback received to the FCA's consultation on draft Guidance and sets out the FCA's response to that feedback. The final Guidance is, for the most part, the same as that on which the FCA consulted, except the FCA has made some drafting changes to provide further clarity and has added some guidance on stablecoins and airdrops. In addition, the FCA has revised the taxonomy by making a distinction between: (i) unregulated tokens, which are exchange tokens and utility tokens; and (ii) regulated tokens, which are security and e-money tokens.
The Guidance is intended to clarify the FCA's expectations for firms carrying on crypto-asset activities within the U.K. by providing insight for market participants on whether certain crypto-assets are within the FCA's regulatory perimeter or are otherwise regulated. The FCA highlights that the Guidance should be used by firms to understand the regulatory status of their crypto-asset activities, but assessing whether a crypto-asset or related activity is within the regulatory perimeter can only be done on a case-by-case basis. Firms should also refer to the FCA's Perimeter Guidance Manual (PERG) in its Handbook, and where firms need further clarification, they should contact the FCA and/or obtain external legal advice.
The Guidance provides an overview of the U.K. regulatory perimeter and discusses relevant concepts, such as "by way of business." It also refers to the territorial scope of the regulatory perimeter, referring to the detailed guidance in PERG and highlighting that where part of an activity is carried on outside the U.K., a firm may still be carrying on a regulated activity in the U.K.
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European Commission Assesses Risks to EU of AML and CTF
07/24/2019
The European Commission has published a Communication and a series of reports assessing the EU implementation of anti-money laundering and terrorist financing requirements and discussing whether further action is needed to improve the EU's AML/CTF framework. The Communication summarizes the reports and the Commission's conclusions. The Commission notes that some of the shortcomings identified in the reports may have been remedied through the Fourth AML Directive, and that others may still be mitigated through the implementation of the Fifth AML Directive, due to be implemented by member states by January 2020.
Read more.Topic : Financial Crime and Sanctions -
European Banking Authority Publishes Opinion on Relation of Prudential Objectives to Anti-Money Laundering and Counter-Terrorism Financing
07/24/2019
The European Banking Authority has published an Opinion signaling the importance of money laundering and terrorism financing risks in the prudential supervision of EU Member States. The Opinion invites national prudential supervisors to make clear to institutions in their jurisdictions the expectation that prudential supervisors should be aware of AML/CTF risks that may affect the institutions they oversee.
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UK Conduct Regulator Publishes New Measure of Market Cleanliness
07/09/2019
The U.K.'s Financial Conduct Authority has published details of its Abnormal Trading Volume ratio, a new metric by which the FCA intends to measure "market cleanliness". Market cleanliness refers to the level of market abuse activities, such as insider dealing or market manipulation, affecting transactions in the market. The FCA currently monitors market abuse using a variety of tools, including the mandatory submission of suspicious transaction and order reports by those involved in executing certain types of financial market transactions.
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HM Treasury Publishes Report on Activities of Anti-Money Laundering and Counter-Terrorist Financing Supervisory Bodies
07/08/2019
HM Treasury has published a report on the activities undertaken by the U.K.'s anti-money laundering and counter-terrorist financing supervisory bodies in 2017-2018. The report follows the publication of the Financial Action Task Force's Mutual Evaluation Report, published in December 2018. The Mutual Evaluation Report found that the U.K.'s AML/CTF regime was the strongest of all the countries assessed by the FATF. However, the report still identified shortcomings in regulated firms' compliance with the Money Laundering Regulations 2017 and the performance of supervisory bodies responsible for overseeing AML/CTF activity.
Read more.Topic : Financial Crime and Sanctions -
UK Regulator Secures Insider Dealing Conviction
06/27/2019
The U.K. Financial Conduct Authority has secured convictions against two individuals accused of insider dealing. Fabiana Abdel-Malek, a former senior compliance officer at the London office of a major European headquartered bank, and Walid Anis Choucair, her family friend, were both sentenced to three years' imprisonment for insider dealing.
Read more.Topic : Financial Crime and Sanctions -
Financial Action Task Force Publishes Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers
06/21/2019
The Financial Action Task Force has published the outcomes of its third and last Plenary meeting under the U.S. Presidency in Orlando on June 19-21, 2019. The FATF considered key issues such as strategic initiatives, mutual evaluations and the upcoming focus areas under the Chinese Presidency.
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European Commission Publishes Report on Implementation of Wire Transfer Regulation
06/20/2019
The European Commission has published a report detailing: (i) the extent to which Member States have implemented the sanctions and monitoring sections of the EU Wire Transfer Regulation; and (ii) the particular sanctioning activities that national regulators have adopted under the Regulation. The Commission was obliged to provide the report to the European Parliament and Council of the European Union under the Wire Transfer Regulation. Although Member States are not obliged to take specific steps in response to the report's findings, the Commission concludes the report by stating its intention to continue to support Member States in their implementation of the Wire Transfer Regulation and reserves the right to take further measures to ensure the Regulation is correctly implemented by all Member States.
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UK Law Commission Makes Recommendations to Improve Anti-Money Laundering Regime
06/18/2019
The U.K.'s Law Commission has published a report, entitled "Anti-money Laundering: the SARS Regime", setting out recommendations to improve the prevention, detection and prosecution of money laundering and terrorism financing in the U.K. The Law Commission began a review in 2017 into the U.K. anti-money laundering regime, focusing on the suspicious activity reporting (SAR) process and taking into account EU and U.K. anti-money laundering legislation and related legislation, such as the General Data Protection Regulation. Following the consultation, the Commission has decided not to recommend amendments to the primary legislation, but instead that more detailed guidance should be issued. As a result, and for example, new exceptions from the reporting regime will not be proposed, as has been argued by some aspects of industry for reports on low-value transactions or reports on issues which are already in the public domain. The Commission is making several recommendations to improve the existing system, including:- The establishment of a new Advisory Board to supervise the development of guidance and to advise the Secretary of State on potential improvements to the regime, including in relation to emerging threats.
- A new online SAR report that is easier to use with the aim of ensuring more consistent data is provided to the U.K. Financial Intelligence Unit through these reports.
- Creating an obligation for the Government to issue statutory guidance on key legal concepts within the framework so as to improve certainty around the obligation to report suspicious activities.
View the report.Topic : Financial Crime and Sanctions -
UK Parliamentary Committee Report Criticizes UK's Post-Brexit Sanctions Policy
06/12/2019
The U.K. Foreign Affairs Committee has published a critical report on the U.K. government's plans for the future of sanctions policy following Brexit. Currently, the U.K. must comply with economic and financial sanctions agreed at EU-level. Following the U.K.'s exit from the EU, it will regain autonomy over sanctions policy, but the Foreign Affairs Committee report reveals a lack of high-level thought on policy, a muddled position on key issues, including the implementation of EU sanctions into U.K. law following Brexit, the U.K.'s ability to impose "Magnitsky" sanctions (sanctions imposed upon individuals accused of human rights violations), and the extent to which the U.K.'s future sanctions policy should be coordinated with allies' policies, and a lack of cross-departmental government coordination in developing a coherent U.K. sanctions policy.
Read more.Topic : Financial Crime and Sanctions -
UK Regulator Publishes Thematic Review of Money-Laundering Risks in Capital Markets
06/10/2019
The U.K. Financial Conduct Authority has published a report on its thematic review assessing money-laundering risks posed to capital markets. The review involved 19 participants including investment banks, recognised investment exchanges, trade bodies, a custodian bank, clearing and settlement houses, inter-dealer brokers and trading firms. The report sets out what the FCA found in its review, the AML risks that were identified and fictitious case studies identifying different AML scenarios that firms may use to inform their own procedures. The FCA expects firms to review their AML systems, taking this report into account. It is considering its supervisory approach, including the possibility of utilising data supplied under MiFID II to mitigate money-laundering risks.
Read more.Topic : Financial Crime and Sanctions -
G20 Finance Ministers and Central Bank Governors Meet in Japan
06/09/2019
The G20 Finance Ministers and Central Bank Governors have published a Communiqué from the most recent G20 Summit held in Japan.
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Financial Stability Board Delivers Report on Crypto-Assets
05/31/2019
The Financial Stability Board has published a report on crypto-assets outlining the actions being undertaken by various international organizations in response to the challenges posed by crypto-assets and the FSB's own proposed course of action for the year ahead. The report will be delivered to G20 Finance Ministers and Central Bank Governors at the next G20 meeting in Japan on June 8-9, 2019.
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Financial Stability Board Reports on Progress to Address Correspondent Banking Declines
05/29/2019
The Financial Stability Board has published two reports as an update on the work to address correspondent banking declines - the "FSB Action Plan to Assess and Address the Decline in Correspondent Banking - Progress Report" and "Remittance Service Providers' Access to Banking Services: Monitoring of the FSB's Recommendations".
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European Banking Authority Confirms 2019 Focus
05/29/2019
The European Banking Authority has published its annual report for 2018, setting out details of the work it undertook in 2018 and its focus areas in 2019. The EBA will, in 2019, focus on: (i) finalizing the guidelines on loan origination as part of its contribution to tackling non-performing loans in the EU; (ii) implementing the changes arising from the revised Capital Requirements Regulation, which was published in the Official Journal of the European Union on June 7, 2019; (iii) implementing the new Investment Firm Regulation and Directive by preparing various technical standards, guidelines and reports; (iv) preparing technical standards and guidelines, as required under the EU Securitization Regulation, that facilitate the use of internal models for banks investing in securitization positions; (v) assisting with the EU's implementation of Basel IV; (vi) the impact of FinTech, in particular, on payment institutions' and e-money institutions' business models; (vii) identifying regulatory and supervisory areas affected by the use of big data and developing best practices and principles for the application and implementation of data analytics by institutions; (viii) continuing to assess the risks of crypto-assets; (ix) supporting the European Commission's work on sustainable finance; and (x) improving the supervision of anti-money laundering and counter terrorism financing.
View the EBA's annual report 2018. -
UK Secondary Legislation Published to Combat Cyber-Attacks
05/21/2019
The Cyber-Attacks (Asset-Freezing) Regulations 2019 have been made and will come into force on June 11, 2019.
The U.K. Regulations put in place measures applicable to U.K. nationals, U.K. incorporated entities and certain regulated institutions that will help enforce the financial sanctions provisions of the EU's new Cyber-Attacks Regulation, which came into force on May 18, 2019. The Cyber-Attacks Regulation is designed to combat cyber-attacks emanating from outside the EU against EU institutions and Member States. Its provisions include granting the Council of the European Union the ability to freeze assets of persons or entities suspected of involvement in such attacks. In order to enforce the sanctions regime throughout the EU, Member States are required to put in place legislation specifying the penalties that will be imposed upon those found to be implicated in a breach of the EU Cyber-Attacks Regulation.
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EU Council Regulation to Combat Cyber-Attacks Published
05/17/2019
The EU Council Regulation concerning restrictive measures against cyber-attacks threatening the European Union or its Member States came into force on May 17, 2019 and will apply directly across the EU from May 18, 2019.
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European Commission Seeks Advice from European Securities and Markets Authority on Review of the Market Abuse Regulation
05/15/2019
The European Commission has issued a formal request for advice to the European Securities and Markets Authority on the appropriateness of certain provisions under the Market Abuse Regulation. The Commission will use ESMA's feedback to inform a report it is mandated to submit to the European Parliament and Council by July 3, 2019. The Commission will also consider proposing further legislative amendments beyond the provisions it is mandated to review and has included these in its formal request for ESMA's advice. The Commission has requested ESMA to submit its contribution by December 31, 2019 to allow time for adoption of the report by the relevant institutions.
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New EU Regulatory Technical Standards under the Money Laundering Directive
05/14/2019
An EU Delegated Regulation under the Fourth Money Laundering Directive has been published in the Official Journal of the European Union. The Delegated Regulation sets out Regulatory Technical Standards specifying the measures that EU credit and financial institutions subject to the Fourth Money Laundering Directive should take to handle money laundering and terrorist financing risks arising where a majority-owned subsidiary or branch established in a non-EU country is prohibited from implementing policies its EU parent has put in place to comply with EU regulations.
Read more.Topic : Financial Crime and Sanctions -
Guidance on Post-Brexit Counter-Terrorism Regulations Issued by UK Government
05/03/2019
The Foreign and Commonwealth Office has issued guidance on the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019, the proposed U.K. regulations that will govern the U.K.'s application of international sanctions following the U.K.'s withdrawal from the EU. The Regulations will apply within the U.K. and relate to the conduct of U.K. persons (i.e. British nationals and legal entities incorporated in the U.K.), wherever those persons may be situated in the world (including branches of U.K. companies operating overseas).
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EU Opinion on the Nature of Passports of Payment and Electronic Money Institutions Using Agents and Distributors
04/24/2019
The European Banking Authority has published an opinion on the nature of passport notifications for agents and distributors under the revised Payment Services Directive, the Electronic Money Directive and the Fourth Money Laundering Directive. The Opinion is addressed to national regulators in the EU of payment institutions and electronic money institutions but is also useful for PIs and EMIs providing services on a cross-border basis within the EU.
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UK Government Consults on Implementation of the EU Fifth Money Laundering Directive
04/15/2019
HM Treasury launched a consultation on its proposed options for transposing the Fifth Money Laundering Directive into U.K. law. 5MLD makes a number of changes to the European Anti-Money Laundering and Counter-Terrorist Financing regime set out in the Fourth Money Laundering Directive. EU Member States are required to transpose 5MLD into national laws, which must take effect by January 10, 2020. HM Treasury is consulting on how it proposes to effect the transposition, in particular where the U.K. has discretion as to how certain aspects are implemented and where gold plating provisions are proposed. Notably, the U.K. government intends to implement 5MLD irrespective of when the U.K. leaves the EU, and is committed to implementing the Financial Action Task Force's standards, focusing on those areas highlighted in the FATF's mutual evaluation report of the U.K.'s AML/CTF regime. Responses to the consultation were to be submitted by June 10, 2019.
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Financial Action Task Force Reports to G20
04/08/2019
The Financial Action Task Force has published a Report to G20 Finance Ministers and Central Bank Governors on its ongoing work to fight money laundering and terrorist financing. The report summarizes the FATF's work priorities under the U.S. presidency and sets out areas in which the FATF will work in the near future. These include:- Work on virtual assets: the FATF continues to closely monitor risks involving virtual assets (the FATF uses this term to cover both virtual currencies and crypto assets). In this area, by June 2019, the FATF intends to address the challenges that arise in investigations and confiscation and update its 2015 Risk-based Approach Guidance on Virtual Currencies. The FATF will also review and consider the scope of the activities and operations that are covered by its Recommendations and Glossary.
- Improving transparency and availability of beneficial ownership information: the FATF intends to improve transparency and availability of beneficial ownership information through its mutual evaluation framework and will continue its work, initiated in February 2019, on identifying best practices on beneficial ownership to ensure legal entities are not misused for money laundering or terrorist financing and beneficial ownership information is freely available to national authorities. The work in this area is expected to be finalized by October 2019.
View the report.Topic : Financial Crime and Sanctions -
Financial Action Task Force Publishes Outcomes Of Its February 2019 Plenary Meeting
02/22/2019
The Financial Action Task Force has published the outcomes from its Plenary meeting that took place in Paris on February 20-22, 2019. The FATF considered key issues such as the operations and streamlining of the FATF, major and other strategic initiatives and mutual evaluations.
One of the major strategic initiatives covered by the Plenary was the FATF's work on mitigating money laundering and terrorist financing risks associated with virtual asset activities. The FATF published an amended Recommendation 15 in October 2018, clarifying that its standards apply to exchanges, wallet providers and providers of financial services for Initial Coin Offerings. The FATF has now published a draft Interpretative Note to Recommendation 15 to further clarify how the FATF Standards apply to activities involving virtual assets. The Interpretative Note has been finalized except for one section, which will be the subject of a public consultation in May this year. That section concerns the duty of virtual asset service providers to obtain and hold originator and beneficiary information on virtual asset transfers and submit such information to beneficiary service providers and counterparts (if any) as well as provide it on request to appropriate authorities. Following the consultation, the FATF intends to fully finalize the Interpretative Note and adopt it in June 2019.
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UK Conduct Regulator Consults on Guidance on Crypto-Assets and the UK Regulatory Perimeter
01/23/2019
The U.K. Financial Conduct Authority has launched a consultation on proposed Guidance on whether certain crypto-assets fall within the U.K.'s regulatory perimeter (CP19/3). The FCA's consultation is in response to one of the commitments made by the U.K. Cryptoasset Taskforce last year in its final Cryptoassets Report. The Taskforce was established in March 2018 and comprises representatives from HM Treasury, the FCA and the Bank of England. The FCA's consultation closes on April 5, 2019. The FCA intends to publish the final Guidance on the existing regulatory perimeter in relation to crypto-assets by summer 2019.
The FCA's proposed Guidance is intended to help firms determine whether certain crypto-assets fall within the FCA's regulatory perimeter. However, the FCA notes that assessing whether a crypto-asset is within the perimeter can only be done on a case-by-case basis and that the responsibility for ensuring that it has the correct permissions lies with the firm undertaking the activity. A firm that undertakes a regulated activity without the requisite permissions will be in breach of the 'general prohibition' in the Financial Services and Markets Act 2000. Any such breach by a person is a criminal offence and the person may be imprisoned or fined, or both. The consultation is relevant to a wide range of consumers, stakeholders and firms, in particular firms that issue or create crypto-assets, firms that market, sell, buy, hold or store crypto-assets, financial advisors, investment managers and investment exchanges.
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EU Report on Accepted Market Practices in Accordance with the Market Abuse Regulation
01/16/2019
The European Securities and Markets Authority has published its annual report to the European Commission on the application of accepted market practices under the EU Market Abuse Regulation. The Market Abuse Regulation provides certain prohibitions against market manipulation. Accepted market practices, which are established by national regulators and notified to ESMA, provide a defense against any allegations of market manipulation. In particular, a dealing on a financial market which was carried out for legitimate reasons and in line with an established AMP, will not be found to constitute market manipulation. In the report, ESMA identifies AMPs which were established before the Market Abuse Regulation came into force, or which became effective after that date.
Read more.Topic : Financial Crime and Sanctions -
Basel Committee on Banking Standards Finalizes Basel Market Risk Framework
01/14/2019
Following its consultation from March to June last year, the Basel Committee on Banking Standards has announced the final revisions to the Basel III market risk capital framework. At the same time, it has also announced its 2019 priorities.
The objective of the Basel market risk framework is to ensure that banks hold enough regulatory capital to protect against losses arising from movements in market prices of instruments held in their trading book. Certain changes to the 2016 market risk framework are to:
- Clarify the scope of application. The Committee has provided further guidance on the regulatory book to which instruments should be assigned in circumstances where instruments could go into more than one book and has revised the treatment of structural foreign currency positions. The revised framework also allows equity investments in funds to be allocated to the trading book, provided that a bank: (i) is able to "look through" to the fund's underlying assets; or (ii) has access both to daily price quotes and to the information contained in the mandate of the fund.
- Revise the internal model approach to address implementation challenges, in particular, by amending the profit and loss attribution (PLA) test metric and failure consequence.
- Amend the standardized model approach. The approach to measuring risk factor losses was too high in relation to the actual risk and there was unnecessary operational burden. The changes in the standardized approach include widening the scope of currency pairs that are considered liquid in the FX risk class to ensure more currency pairs are subject to lower risk weights and introducing new "index" buckets for equity and credit spread risks so that each underlying position in an index does not need to be identified.
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New UK Economic Crime Strategic Board
01/14/2019
The U.K. Government has announced the establishment of a new government taskforce to fight against financial crime. The new taskforce, the Economic Crime Strategic Board, is part of the Government's Serious and Organised Crime Strategy. It will set priorities, direct resources and scrutinise performance against the economic crime threat. The Board includes chief executives from Barclays, Lloyds and Santander and senior representatives from UK Finance, the National Crime Agency and the Solicitors Regulation Authority, Accountants Affinity Group and National Association of Estate Agents.
View the announcement.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Publishes Recommendations on Crypto-Assets and Initial Coin Offerings
01/09/2019
The European Securities and Markets Authority has published a report on the application and suitability of the EU securities regulatory framework to crypto-assets, including Initial Coin Offerings. The report is in response to the European Commission's request in its FinTech Action Plan 2018. Like the European Banking Authority, which published a report on the same day in relation to banking sector issues, ESMA found that EU activities related to crypto-assets are fairly low and do not present any financial stability risks.
ESMA's report focuses on the legal qualification of crypto-assets under EU financial securities laws and highlights that this may differ across EU member states because it will be subject to the national laws implementing EU legislation. ESMA notes that there is currently no legal definition of crypto-assets and that a key consideration is whether a crypto-asset qualifies as a financial instrument under the revised Markets in Financial Instruments package. Where a crypto-asset qualifies as a MiFID financial instrument, the full requirements under various securities legislation may apply, subject to any applicable exemptions. According to ESMA, the rules in the Prospectus Directive would apply to an issue of crypto-assets offered to the public, including through an ICO, where the instruments are transferable securities.
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European Banking Authority Reports on EU Regulatory Perimeter for Crypto-Assets
01/09/2019
The European Banking Authority has published a report on the application and suitability of the EU bank regulatory framework for crypto-assets. The report is in response to the European Commission's request in its FinTech Action Plan 2018. The report confirms that EU activities related to crypto-assets are fairly low and do not present any financial stability risks. The European Securities and Markets Authority also published a similar report covering Initial Coin Offerings issues within its remit on the same day.
The EBA's report sets out the EBA's findings, the issues arising from the results, the EBA's advice to the Commission and the steps that the EBA intends to take in 2019. The EBA mapped the applicability to crypto-assets and crypto-asset activities of the EU Anti-Money Laundering Directive, the Capital Requirements Directive and Regulation, the second Electronic Money Directive and the second Payment Services Directive.
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UK Sanctions and Anti-Money Laundering Act 2018 Sanctions Provisions Brought Into Force
11/21/2018
The Sanctions and Anti-Money Laundering Act 2018 (Commencement No.1) Regulations 2018 were made on November 21, 2018, bringing into force the majority of the sanctions provisions of the Act with effect from November 22, 2018.
The Act's provisions empower the U.K. Government to make sanctions regulations to be imposed, where appropriate, to comply with United Nations obligations or other international obligations, to further the prevention of terrorism, for the purposes of national security or international peace and security, or to further foreign policy objectives. The Act also empowers the U.K. Government to create, amend and update regulations for the detection, investigation and prevention of money laundering and terrorist financing and for the purposes of implementing standards published by the Financial Action Task Force relating to combating threats to the integrity of the international financial system.
The Act received Royal Assent and came partly into force on May 23, 2018. Provisions in force from November 22, 2018 are:- sections 1 to 31;
- sections 33 to 48;
- sections 57 and 58;
- section 59(4) (to the extent that it relates to Schedule 3, paragraphs 1 to 7 and sub-paragraphs 8(1) to 8(3)); and
- Schedule 1.
The remaining Provisions of the Act that will be brought into force at a later date include the provisions related to anti-money laundering.
View the Commencement Regulations (SI 2018/1213).
View the Sanctions and Anti-Money Laundering Act 2018. -
Financial Stability Board Progress Report on Addressing Correspondent Banking Decline
11/16/2018
The Financial Stability Board has published a progress report addressed to the G20 Finance Ministers and Central Bank Governors on the FSB's four-point action plan to assess and address the decline in correspondent banking relationships. The progress report is accompanied by an update to the Correspondent Banking Data Report published by the FSB March 2018. The updated data report includes additional data from July - December 2017 derived from information provided by SWIFT to the FSB, through the intermediation of the National Bank of Belgium. The data report shows a further decline in active correspondent banking relationships in 2017.
Read more.Topic : Financial Crime and Sanctions -
UK Legislation Published to Onshore Anti-Money Laundering and Counter-Terrorism Financing Legislation for Brexit
11/13/2018
HM Treasury has published a draft of the Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018, along with explanatory information. The draft Regulations will primarily be relevant for payment service providers, anti-money laundering/counter-terrorism financing supervisory authorities and firms that are regulated through the U.K.'s AML/CTF regime. The draft Regulations introduce no material policy changes. Their purpose is to correct deficiencies in U.K. law and retained EU law to ensure that the U.K. AML/CTF regime continues to function effectively after the U.K.'s withdrawal from the EU.
The draft Regulations amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs), which transposed into U.K. law the provisions of the EU Fourth Money Laundering Directive (4MLD). The draft Regulations also amend the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 and the revised EU Funds Transfer Regulation (Regulation (EU) 2015/847). This EU Regulation gives legal effect to Financial Action Task Force Recommendation 16, on the information accompanying electronic transfers of funds. Additionally, the draft Regulations revoke Commission Delegated Regulation (EU) 2018/1108, which sets out Regulatory Technical Standards for central contact points under 4MLD.
Read more. -
EU Countering Money Laundering By Criminal Law Directive Will Apply From December 2020
11/12/2018
The EU Countering Money Laundering by Criminal Law Directive has been published in the Official Journal of the European Union. The Directive will complement the Fifth Money Laundering Directive, which was adopted in May 2018.
The U.K., Ireland and Denmark have not adopted the new Directive. In the U.K., this mirrors the approach taken by the U.K. in relation to EU criminal sanctions for market manipulation where it has implemented its own national regime.
The new Directive will enter into force on December 3, 2018. EU member states that have adopted the Directive must transpose the new provisions into national law by December 3, 2020.
Read more.Topic : Financial Crime and Sanctions -
Draft EU Guidelines on Supervisory Cooperation on Anti-Money Laundering and Countering the Financing of Terrorism
11/08/2018
The Joint Committee of the European Supervisory Authorities have launched a consultation on draft joint guidelines on the cooperation and information exchange between national regulators supervising banks and other financial institutions for compliance with Anti-Money Laundering and Countering the Financing of Terrorism rules. The Fourth Money Laundering Directive requires that EU member states allow, without undue restriction, the exchange of information and provision of assistance between national regulators. The ESA's proposed guidelines aim to set out how that can be achieved in practice. The ESAs are proposing that a college of supervisors should be established where a financial institution is supervised in three or more EU member states. The draft guidelines set out rules on the establishment and operation of the colleges. For firms that do not require a college but which operate in two member states, the ESAs propose a process for the bilateral exchange of information between national regulators.
The consultation closes on February 8, 2019.
View the consultation paper.Topic : Financial Crime and Sanctions -
Financial Action Task Force Publishes Final Guidance on a Risk-Based Approach for the Securities Sector
10/25/2018
The Financial Action Task Force has published the finalized version of its Guidance on a Risk-Based Approach for the Securities Sector. The finalized Guidance was adopted at the FATF's plenary meeting held on October 17—19, 2018. The FATF has developed the Guidance in conjunction with the private sector, to assist governments, regulators, Financial Intelligence Units and participants in the securities sector to adopt a risk-based approach to anti-money laundering and countering the financing of terrorism.
The final Guidance sets out the key principles involved in applying a risk-based approach to AML and CTF. Separate sections provide specific guidance to securities providers and intermediaries and to securities supervisors on the effective implementation of a risk-based approach. Annexes provide examples of supervisory practices that have been adopted and examples of suspicious activity indicators relevant to securities.
The Guidance is non-binding. It should be read in conjunction with the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation and the 2009 Report on Money Laundering and Terrorist Financing.
View the final Guidance.
View details of the consultation on draft Guidance.
View details of further outcomes of the FATF's October 2018 plenary.Topic : Financial Crime and Sanctions -
European Banking Authority Sets Out Its Work Priorities for 2019
10/23/2018
The European Banking Authority has published its Work Programme for 2019, setting out details of, and planned main outputs from, 37 separate work streams across the following five key strategic priorities:
- Leading the Basel III implementation in the EU.
- Understanding risks and opportunities arising from financial innovation.
- Collecting, disseminating and analyzing banking data.
- Ensuring a smooth relocation of the EBA to Paris.
- Fostering the increase of the loss-absorbing capacity of the EU banking system.
The EBA also confirms that work related to Brexit will remain a horizontal priority for the EBA in 2019 and explains that the EBA's other activities may be affected in the future by Brexit-related developments. Should that be the case, any substantial change in the work programme will be communicated in due time, in order to seek steering and approval from its Management Board and Board of Supervisors.
View the EBA's 2019 Work Programme. -
UK Serious Fraud Office Charges Former Banker With Conspiracy To Defraud For Manipulation of Euro Interbank Offered Rate
10/21/2018
The U.K. Serious Fraud Office has charged a former banker with conspiracy to defraud, as part of its investigation into the manipulation of the Euro Interbank Offered Rate.
The former banker was arrested in Italy in August 2018 after his trip to the country activated a European Arrest Warrant that had been secured by the SFO in 2016. Italian authorities ruled on October 12, 2018 that he should be extradited to the U.K. and he was charged with conspiracy to defraud at Westminster Magistrates’ court on October 20, 2018.
The next hearing will take place at Southwark Crown Court on October 24, 2018.
View the SFO's announcement.Topic : Financial Crime and Sanctions -
EU Supervisory Authority Reports on ICO and Crypto-Asset Risks and Potential Regulation
10/19/2018
The European Securities and Markets Authority has published an own-initiative report prepared by its Securities and Markets Stakeholder Group. The purpose of the report is to provide advice to ESMA on steps it might take to contain the risks of Initial Coin Offerings and crypto-assets, on top of existing regulation.
In the report, the term “crypto-assets” is used to refer to coins, tokens, virtual and cryptocurrencies or other digital or virtual assets collectively. The acronym "ICO" is used to refer to an initial offering of any crypto-asset. The report sets out a taxonomy of crypto-assets, based on the distinction between payment tokens, utility tokens, asset tokens and hybrids used by the Swiss Financial Market Supervisory Authority (FINMA).
Read more. -
Financial Action Task Force Clarifies Virtual Asset Regulation
10/19/2018
The Financial Action Task Force has published the outcomes of its plenary on October 17-19, 2018. The FATF considered key issues such as the operations and streamlining of the FATF, major and other strategic initiatives and mutual evaluations.
One of the major initiatives covered by the plenary was the regulation of virtual assets. The G20 Finance Ministers & Central Bank Governors communiqué following their July 2018 Buenos Aires meeting called on the FATF to clarify, by October 2018, how its global anti-money laundering and counter-terrorist financing standards apply to crypto assets. At its October plenary, the FATF adopted amendments to the FATF Recommendations and Glossary at the plenary and issued a statement on the regulation of virtual assets. The FATF has done this to clarify that its standards apply to exchanges, wallet providers and providers of financial services for Initial Coin Offerings. Jurisdictions should therefore ensure that virtual asset service providers are subject to AML/CTF regulations. However, jurisdictions are able to choose which category of regulated entity virtual asset service providers should fall into.
Read more.Topic : Financial Crime and Sanctions -
UK Government's Guidance on Approach to Sanctions in a 'Hard Brexit' Scenario
10/12/2018
The U.K. Foreign and Commonwealth Office has published guidance on the U.K. government's approach to implementing sanctions in the event that no deal is agreed between the EU and the U.K. on the U.K.'s exit from the EU. If there is no deal, the U.K. will leave the EU on March 29, 2019.
The U.K. currently implements sanctions agreed by the UN Security Council, according to international law requirements, and the EU, as provided for in EU legislation and U.K. implementing legislation. In the event of a "hard Brexit," the U.K. would continue to implement sanctions agreed by the UN Security Council and would have the power to adopt other sanctions under the Sanctions and Anti-Money Laundering Act 2018. The FCO would publish the names of individuals and organizations subject to U.K. sanctions.
Read more. -
European Supervisors Announce 2019 Work Priorities
10/09/2018
The Joint Committee of the European Supervisory Authorities (that is, the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority) has published its 2019 Work Programme. EIOPA will Chair the Joint Committee in 2019. The Work Programme provides details of the Joint Committee's key workstreams for 2019.
Read more. -
UK Office of Financial Sanctions Implementation Publishes First Annual Review
10/05/2018
The U.K. Office of Financial Sanctions Implementation has published its Annual Review for the period from April 2017 to March 2018. OFSI was established in March 2016 with the objective of raising awareness of financial sanctions, assessing and addressing suspected sanctions breaches and providing a professional service to the public and industry. The Annual Review provides an overview of:- U.N. and EU financial sanction regimes implemented by OFSI;
- OFSI's work on asset freezing and a breakdown of funds frozen;
- action taken by OFSI following reports of suspected breaches of financial sanctions;
- licenses issued by OFSI during the period; and
- awareness-raising activities.
View the Annual Report. -
UK Regulator Finds E-Money Firms Have Effective Anti-Money Laundering Controls
10/03/2018
The Financial Conduct Authority has published a report on the outcome of its thematic review into money laundering and terrorist financing risks in the e-money sector. The report focuses on e-money products, including prepaid cards and digital wallets. The FCA assessed the anti-money laundering and counter-terrorist financing controls of 13 authorized Electronic Money Institutions and registered small Electronic Money Institutions. The review included consideration of business models that involve distributing e-money through agents and distributors.
The FCA's review did not cover activities that are not regulated by the FCA (for instance, gift cards that can be used only within a limited network or prepaid products denominated in a cryptocurrency) or money remittance services provided by the EMIs.
Read more. -
US Federal Financial Regulatory Agencies Release Joint Statement on Sharing Bank Secrecy Act Resources
10/03/2018
The U.S. Board of Governors of the Federal Reserve System, Financial Crimes Enforcement Network, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and National Credit Union Administration released an interagency statement regarding the sharing of Bank Secrecy Act resources among banks through collaborative arrangements intended to improve efficiency, reduce costs, and benefit from specialized expertise by pooling resources among banks.
Read more.Topic : Financial Crime and Sanctions -
US Federal Judge Affirms Commodity Futures Trading Commission's Authority to Police Virtual Currency Fraud
09/26/2018
The U.S. District Court for the District of Massachusetts issued an order confirming that the Commodity Futures Trading Commission maintains the authority to police virtual currency fraud. The order was issued in response to a motion to dismiss charges against My Big Coin Pay, Inc. and several individuals for operating a fraudulent virtual currency scheme through which they solicited customers to purchase a virtual currency known as My Big Coin (MBC).
The CFTC's initial enforcement order, filed in January 2018, accused the defendants of operating a fraudulent virtual currency scheme through which they solicited more than $6 million from customers throughout the U.S. by making false and misleading claims that MBC was actively being traded, was backed by gold and could be used anywhere MasterCard credit cards were accepted. The defendants also were alleged to have misrepresented MBC's daily trading price in reports on its website, when no daily trading price existed because MBC was not actively being traded.
Read more. -
UK Conduct Regulator Consults on its Approach to Technical Standards and Guidelines Under the Revised Payment Services Directive
09/17/2018
The U.K. Financial Conduct Authority has launched a consultation on its approach to implementing Regulatory Technical Standards and related Guidelines developed by the European Banking Authority to supplement provisions of the revised Payment Services Directive. The FCA's consultation focuses in particular on the RTS for strong customer authentication and common and secure open standards of communication. These RTS impose obligations on payment service providers to increase the security of customers' payments made by card and other means and also set out requirements on account servicing payment service providers (ASPSPs) relating to the third party providers of Account Information Services (AIS) and Payment Initiation Services (PIS) that were brought within the regulatory regime by PSD2.
The consultation includes proposals on new fraud reporting requirements reflecting PSD2 fraud reporting guidelines published by the EBA in July 2018. The FCA is also consulting on proposed changes to its Payment Services and E-Money Approach Document to reflect other legislative changes and clarify its expectations.
The EBA consulted between June and August 2018 on proposed Guidelines on aspects of the RTS. The FCA's proposed implementation approach is premised on the assumption that the final Guidelines will be largely as consulted on and the FCA will adjust its approach if necessary when the finalized Guidelines are published.
Read more. -
European Commission Proposes Enhancements to the European Banking Authority's Supervisory Powers for Anti-Money Laundering
09/12/2018
The European Commission has published a Communication setting out a broad strategy for strengthening the EU's framework for anti-money laundering supervision. The Communication is accompanied by a fact sheet setting out Questions and Answers on the strategy.
The Commission notes that, despite the recent strengthening of the EU's framework, through the Fourth Money Laundering Directive (4MLD) and the forthcoming Fifth Money Laundering Directive (5MLD), there are concerns that gaps remain in the EU's supervisory framework. The Commission highlights that there is no clear articulation between the prudential and anti-money laundering rules for financial institutions. It identifies shortcomings in the reaction time of national supervisors and in the level of cooperation and information sharing both between prudential and anti-money laundering supervisors and on a cross-border basis between EU supervisors and other supervisors based both within and outside the EU. While the Commission recognizes that 5MLD will remove certain obstacles to cooperation between anti-money laundering and prudential supervisors, it also notes that further steps are necessary to ensure effective supervisory cooperation, especially where financial institutions operate across borders.
Read more. -
Financial Action Task Force Publishes Report on Professional Money Laundering
07/26/2018
The Financial Action Task Force has published a report on professional money laundering. The report is intended to assist authorities to target professional money launderers and the structures that they set up and use to launder money and to disrupt the organizations of their criminal clients. PMLs are referred to by the FATF as "individuals, organisations and networks that are involved in third-party laundering for a fee or commission." PMLs specialize in providing professional money laundering services, such as locating investments or purchasing assets, establishing companies or legal arrangements, acting as nominees, recruiting and managing networks of cash couriers or money mules, providing account management services and creating and registering financial accounts. By providing detailed explanations of the roles performed by PMLs, the FATF aim to facilitate the identification and understanding of how PMLs operate. The report provides recent examples of financial organizations acquired by criminal operations or co-opted to aid money laundering and focuses on some of the common methods used to launder funds, such as trade-based money laundering, account settlement mechanism and underground banking.
Read more.Topic : Financial Crime and Sanctions -
UK Secondary Legislation Published to Align Ring-Fencing With Financial Sanctions Legislation
07/24/2018
The Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) (Amendment) Order 2018 has been made and will come into force on October 31, 2018.
The Amendment Order amends the definition of a "core deposit" (set out in The Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014) for the purposes of the U.K. framework for the ring-fencing of retail from wholesale/investment banking. Under the U.K. framework, if a deposit is not a "core deposit," then carrying on the regulated activity of accepting deposits in relation to that non-core deposit can take place in the non-ring-fenced bank.
Read more. -
G20 Sets October 2018 Deadline for Financial Action Task Force to Clarify AML/CTF Standards For Crypto Assets
07/23/2018
The G20 Finance Ministers & Central Bank Governors have issued a communiqué following their meeting in Buenos Aires on July 21 - 22, 2018. Among other things, the communiqué requests that the Financial Action Task Force clarify, by October 2018, how its global anti-money laundering and counter-terrorist financing standards apply to crypto assets.
The FATF's global standards (also known as the 40 Recommendations) promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. However, the FATF standards do not refer explicitly to crypto assets or the associated service providers and intermediaries, which creates uncertainty as to the scope of AML/CTF obligations that may apply to them.
Read more. -
UK Proposals for a Register of Beneficial Ownership for Foreign Entities
07/23/2018
The U.K.'s Government Department for Business, Energy & Industrial Strategy has launched a consultation on a draft Bill that would introduce a register of beneficial owners for overseas legal entities that own U.K. property. Since April 6, 2016, the U.K. has required U.K. companies, limited liability partnerships and societates europaeae to establish and maintain a register of persons with significant control over them and since June 30, 2016 and those entities have been required to file such information with Companies House where it is publicly available on the People with Significant Control register.
Currently, information about overseas owners of land or property is often limited to the entity's name and territory of incorporation and it is unclear who ultimately owns and/or controls the entity. The aim of the draft Bill is to prevent and combat the use of land in the U.K. by overseas entities for the purposes of laundering money or investing illicit funds.
Read more.Topic : Financial Crime and Sanctions -
UK Law Commission Seeks Input on Proposals for Reform of Anti-Money Laundering and Counter-Terrorism Financing Law in England and Wales
07/20/2018
The Law Commission has published a substantial consultation paper entitled "Anti-Money Laundering: the SARs Regime," seeking views on proposals to reform the law of England and Wales governing anti-money laundering. In particular, the report considers issues around Suspicious Activity Reports, which are the mechanism by which the private sector make disclosures relating to money laundering and terrorism financing.
The Law Commission has identified a number of legal difficulties that arise from the current regime and, following extensive fact-finding meetings with stakeholders, it has also identified a number of issues in the current regime that are causing particular practical difficulties. In the consultation paper, the Law Commission: (i) identifies the most pressing problems and proposes provisional solutions to improve the current regime; (ii) consults on reforming the consent regime within the Proceeds of Crime Act 2002 (POCA), which sets out the process whereby an individual who suspects that they are dealing with the proceeds of crime can seek permission to complete a transaction by disclosing their suspicion to the U.K. Financial Intelligence Unit of the National Crime Agency; and (iii) seeks to generate and consider ideas for long term reform.
Read more.Topic : Financial Crime and Sanctions -
Financial Action Task Force Reports to G20 and Announces Priority Work for 2018-2019
07/19/2018
The Financial Action Task Force has published its report to the G20 Finance Ministers and Central Bank Governors. The report gives an overview of recent FATF work and its proposed next steps in its current workstreams. The United States takes over the FATF Presidency for the period July 2018 to June 2019 and has separately published a document summarizing its priority and other initiatives for the duration of its presidency.
Read more. -
EU Final Guidelines on Fraud Reporting Under the Payment Services Directive
07/18/2018
The European Banking Authority has published final Guidelines on fraud reporting under the revised Payment Services Directive. PSD2 aims to increase the security of electronic payments and decrease the risk of fraud. The Directive, which has applied since January 13, 2018, requires Payment Service Providers to provide, at least on an annual basis, data on fraud relating to different means of payment to their national regulator. The regulators must in turn provide such data in aggregated form to the EBA and the European Central Bank. Existing data reporting practices vary across the EU. The EBA has worked with the ECB to develop these Guidelines to ensure that data is reported consistently and that the data is comparable and reliable.
The final Guidelines are addressed to PSPs, except account information service providers, and to their national regulators. The Guidelines cover payment transactions that have been initiated and executed, including the acquiring of payment transactions for card payments, identified by reference to: (a) fraudulent payment transactions data over a defined period of time; and (b) payment transactions over the same defined period. The Guidelines also set out how national regulators should aggregate the data.
Read more. -
Financial Action Task Force and Egmont Group Publish Research Findings on Concealment of Beneficial Ownership
07/18/2018
The Financial Action Task Force has issued a detailed report on the concealment of beneficial ownership, assessing how legal persons, legal arrangements and professional intermediaries can help criminals conceal wealth and illicit assets. The aim of the report is to help national authorities including financial intelligence units, financial institutions and other professional service providers in understanding the nature of the risks that they face. The report was prepared in conjunction with the Egmont Group of financial intelligence units.
The FATF and the Egmont Group together identified the need for further analysis of the vulnerabilities associated with beneficial ownership, with a particular focus on the involvement of professional intermediaries, to guide global responses. Their joint report brings together the results of analysis of open-source research, public intelligence reports, classified intelligence holdings and public and private sector experience and expertise. It sets out a comprehensive overview of the main characteristics and vulnerabilities that lead to the misuse of legal persons and arrangements, and the exploitation of professional intermediaries, to conceal beneficial ownership.
The report identifies a number of issues for consideration to help address the vulnerabilities associated with the concealment of beneficial ownership.
View the FATF-Egmont Group report.Topic : Financial Crime and Sanctions -
Financial Action Task Force Seeks Input on Draft Risk-Based Approach Guidance for the Securities Sector
07/06/2018
The Financial Action Task Force has published for consultation draft Risk-Based Approach Guidance for the securities sector. The FATF is developing the Guidance to assist countries, regulators, Financial Intelligence Units and participants in the securities sector to adopt a risk-based approach to anti-money laundering and countering financing of terrorism. The draft Guidance aims to assist in the risk-based design and implementation of applicable AML/CFT measures by providing general guidelines and examples of current practices and facilitate the effective implementation and supervision of national AML/CFT measures by focusing on risks and on mitigation measures. The FATF is also hoping that the draft Guidance will aid the development of a common understanding of what the risk-based approach to AML/CFT entails in the context of the securities sector. The Guidance will not be binding once it is finalized. The draft Guidance should be read in conjunction with the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation and the 2009 Report on Money Laundering and Terrorist Financing.
Read more.Topic : Financial Crime and Sanctions -
UK Prudential Regulator Sets out Expectations on Firms' Exposures to Crypto-Assets
06/28/2018
The U.K. Prudential Regulation Authority has published a "Dear CEO" letter, addressed to the Chief Executive Officers of banks, insurance companies and designated investment firms. The purpose of the letter is to remind firms of their relevant obligations under the PRA rules and to communicate the PRA's expectations regarding firms' exposures to crypto-assets.
Crypto-assets have exhibited high price volatility and relative illiquidity and may also be vulnerable to fraud and manipulation, which raises concerns about potential misconduct and poses issues for market integrity. The PRA's letter does not define crypto-assets, but the Financial Conduct Authority uses this term to refer to any publicly available electronic medium of exchange that features a distributed ledger and a decentralized system for exchange. The FCA recently published a "Dear CEO" letter outlining best practice for firms in handling the financial crime risks that crypto-assets can pose.
Read more. -
EU's Fifth Money Laundering Directive to Enter into Force July 2018
06/19/2018
The Fifth Money Laundering Directive has been published in the Official Journal of the European Union and will enter into force on July 9, 2018. Member States must transpose the directive into their national laws within 18 months of that date. 5MLD makes a number of changes to the European Anti-Money Laundering and Counter-Terrorist Financing regime set out in the Fourth Money Laundering Directive.
The key changes introduced by 5MLD are:
1. Extending the scope of "obliged entities" to include providers of exchange services between virtual and fiat currencies as well as custodian wallet providers. These entities will need to register in their home Member State.
2. Harmonizing the application of enhanced customer due diligence for third countries that are determined by the European Commission to be high risk countries. Member States will be able to apply additional measures, where appropriate.
Read more. -
UK Financial Conduct Authority Sets out Good Practice for Handling Financial Crime Risks from Crypto-Assets
06/11/2018
The U.K. Financial Conduct Authority has published a "Dear CEO" letter to U.K. authorized banks, setting out its views on best practice that banks should adopt for handling the financial crime risks that may be posed by so-called crypto-assets. The FCA uses this term to refer to any publicly available electronic medium of exchange that features a distributed ledger and a decentralized system for exchange. Crypto-assets include crypto-currencies, a well-known example of which is Bitcoin. The FCA acknowledges that crypto-assets can be used without any criminal motives. However, the fact that crypto-assets can be held relatively anonymously and can be readily transferred between countries can make them attractive for criminal purposes. Banks should adopt proportionate measures to mitigate the risk that they are used to facilitate financial crimes involving crypto-assets.
Read more. -
EU Agrees Countering Money Laundering by Criminal Law Directive
06/07/2018
The Council of the European Union and the European Parliament have announced their agreement on new EU criminal sanctions for money laundering. The proposed Countering Money Laundering by Criminal Law Directive will complement the Fifth Money Laundering Directive, which was adopted in May 2018.
The new Directive establishes minimum rules on the definition of criminal offences and sanctions in the area of money laundering. Member states will be required to implement national laws providing for money laundering offences by individuals to be punishable by a maximum term of imprisonment of at least four years. National laws will continue to provide for additional measures, such as fines, temporary or permanent exclusion from public tender procedures, grants and concessions, and national laws will also provide for national courts to take into account any aggravating factors for sentencing.
Read more.Topic : Financial Crime and Sanctions -
European Commission Proposes Legislation to Promote SME Growth Markets
05/24/2018
The European Commission has published a proposal for a Regulation to amend the Market Abuse Regulation and the new Prospectus Regulation. The aim of the proposed Regulation is to promote the use of SME Growth Markets by making technical adjustments to the MAR and the new PR to make the regulatory framework applying to listed Small and Medium-sized Enterprises more proportionate and to foster the liquidity of equity instruments listed on SME Growth Markets, while maintaining a high level of investor protection and market integrity. The proposed Regulation is in line with the objectives of the EU Capital Markets Union of reducing the overreliance on bank funding and diversifying market-based sources of financing for European companies.
SME Growth Markets are a new sub-category of multilateral trading facility introduced by the revised Markets in Financial Instruments Directive in January 2018. Companies listed on an SME Growth Market are required to comply with MAR and the PR and are impacted by some aspects of MiFID II. The adjustments in the proposal for a Regulation are designed to lower the administrative burden and costs for issuers on SME Growth Markets stemming from compliance with MAR and the PR and to address regulatory shortcomings in MAR that can affect the liquidity of SME financial instruments. The European Commission has also published a separate proposal for a regulation amending delegated legislation under MiFID II to address regulatory barriers to the take-up of the SME Growth Markets.
Read more. -
UK Sanctions and Anti-Money Laundering Act 2018 Receives Royal Assent
05/23/2018
The Sanctions and Anti-Money Laundering Act 2018 has received Royal Assent and came partly into force on May 23, 2018. The majority of the provisions of the Act will enter into force on a day appointed by the Secretary of State. The Act will provide a domestic sanctions framework after the U.K. leaves the EU, enabling the U.K. to continue to meet its international obligations and use sanctions as a national security and foreign policy tool.
The Act's provisions empower the U.K. Government to make sanctions regulations to be imposed, where appropriate, to comply with United Nations obligations or other international obligations, to further the prevention of terrorism, for the purposes of national security or international peace and security, or to further foreign policy objectives. The Act also empowers the U.K. Government to create, amend and update regulations for the detection, investigation and prevention of money laundering and terrorist financing and for the purposes of implementing standards published by the Financial Action Task Force relating to combating threats to the integrity of the international financial system.
View the Sanctions and Anti-Money Laundering Act 2018. -
New Memorandum of Understanding Signed Between UK Financial Conduct Authority and Insolvency Service
05/21/2018
The U.K. Financial Conduct Authority and the Insolvency Service have signed a Memorandum of Understanding to establish a framework for their cooperation in matters of common interest.
Both the FCA and the IS have statutory powers of investigation and enforcement under their respective enabling legislation. Both organizations are also legally obliged, from May 25, 2018, to handle personal information according to the requirements of the EU General Data Protection Regulation.
The areas of cooperation include misconduct, investigations and enforcement within their respective remits.
The MoU outlines the structure and process for the FCA and IS to be able to exchange information (including personal data) and intelligence, in a lawful and proportionate manner, to further their respective objectives. The MoU includes details of the circumstances in which the FCA will be permitted to disclose confidential information (such disclosure generally being prohibited under the Financial Services and Markets Act 2000) and outlines how each of the two organizations will treat information that is subject to legal professional privilege, including the circumstances in which privilege might be waived. The FCA and IS have agreed to apply a number of principles for the exchange and use of information, including the sharing of intelligence, the use of information for investigations and enforcement or other action, how data security controls will be applied and how data breaches will be handled.
The FCA and IS will monitor the effectiveness of the MoU and review it from time to time as necessary. The MoU has been published on the website of each organization.
View the MoU. -
Updated Guidance on Monetary Penalties for Financial Sanctions Breaches Published by UK Office of Financial Sanctions Implementation
05/21/2018
The Office of Financial Sanctions Implementation has published an updated version of its guidance on monetary penalties for breaches of financial sanctions. The guidance was first published in April 2017. The update sets out more detail on OFSI's expectations around voluntary disclosure of breaches of financial sanctions. The chapter on the right of individuals to appeal to the Upper Tribunal has also been updated.
View the updated guidance.Topic : Financial Crime and Sanctions -
UK Joint Money Laundering Steering Group Publishes Revised AML/CTF Guidance For Asset Finance and Syndicated Lending
05/17/2018
The U.K. Joint Money Laundering Steering Group has finalized minor changes to Part II of its anti-money laundering and counter-terrorist financing guidance in relation to two sectors, namely asset finance and syndicated lending.
The JMLSG consulted on the proposed changes in a consultation that closed on March 30, 2018. The revisions do not make substantive changes to the existing guidance. Instead, the revised guidance provides clarification on the workings of these two sectors, how to identify customers and how risks should be assessed.
View the JMLSG announcement.
View details of the JMLSG consultation.Topic : Financial Crime and Sanctions -
FinCEN Provides Temporary Exception Under the Beneficial Ownership Rule for CDs and Loan Accounts that Automatically Rollover or Renew
05/16/2018
The U.S. Financial Crimes Enforcement Network announced that it was granting a 90-day exception from compliance with the beneficial ownership requirements under its Customer Due Diligence Requirements for Financial Institutions rule.
Read more.Topic : Financial Crime and Sanctions -
EU Fifth Money Laundering Directive Adopted
05/14/2018
The Council of the European Union has adopted the EU's Fifth Money Laundering Directive, following the agreement reached between the European Parliament and the Council in December 2017. 5MLD will amend the existing EU Money Laundering Directive.
Read more. -
FFIEC Publishes Customer Due Diligence and Beneficial Ownership Overviews and Examination Procedures
05/11/2018
The U.S. Board of Governors of the Federal Reserve System, U.S. Office of the Comptroller of the Currency, and U.S. Federal Deposit Insurance Corporation published the customer due diligence and beneficial ownership examination sections of the Federal Financial Institutions Examination Council BSA/AML Examination Manual.
Read more.Topic : Financial Crime and Sanctions -
Final Global Strategy to Address Wholesale Payments Fraud
05/08/2018
Following a consultation late last year, the Committee on Payments and Market Infrastructure has published the final strategy for reducing the risk of wholesale payments fraud related to endpoint security. The strategy is directed to all relevant public and private sector stakeholders in reducing the risk of wholesale payments fraud, including the operators of wholesale payments systems and messaging networks, their participants and relevant regulators and authorities responsible for supervising these operators and participants.
The strategy comprises seven elements that are intended to work holistically for preventing, detecting, responding to and communicating about wholesale payments fraud. The elements are:
1. Identifying and understanding the range of risks;
2. Establishing endpoint security requirements;
3. Promoting adherence;
4. Providing and using information and tools to improve prevention and detection;
5. Responding in a timely way to potential fraud;
6. Supporting ongoing education, awareness and information-sharing; and
7. Learning, evolving and coordinating.
The CPMI and each of its member central banks have committed to promoting the effective operationalization of the strategy within and across jurisdictions and systems. They will be monitoring progress in 2018 and 2019 with a view to assessing whether further action is needed.
View the strategy. -
European Commission Adopts Delegated Legislation on Central Contact Points for AML/CTF Purposes
05/07/2018
The European Commission has adopted a draft delegated regulation under the Fourth Money Laundering Directive. The draft regulation sets out Regulatory Technical Standards on the criteria that EU Member States should use when deciding whether or not payment service providers or electronic money institutions that are headquartered in another EEA Member State and that operate establishments (other than a branch) in their territory should appoint a central contact point for compliance with anti-money laundering and counter-terrorist financing obligations. The draft regulation also sets out RTS on the functions that may be entrusted to such a central contact point.
The draft regulation will now be subject to a three-month scrutiny period by the European Parliament and the Council of the European Union. Following this period, should neither of the co-legislators object, the draft regulation will then be published in the Official Journal of the European Union and enter into force twenty days later. Once in force, the delegated regulation will have direct effect across the EU.
View the draft delegated regulation.Topic : Financial Crime and Sanctions -
FINRA Updates AML Rules to Conform to Upcoming Customer Due Diligence Requirements
05/03/2018
The Financial Industry Regulatory Authority published amendments to FINRA Rule 3310, the anti-money laundering compliance program rule. The FINRA amendments seek to harmonize Rule 3310 with the Customer Due Diligence Requirements for Financial Institutions rule issued by the U.S. Financial Crimes Enforcement Network on May 11, 2016. Amended Rule 3310 requires firms to conduct ongoing customer due diligence, establish procedures to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile, conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, maintain and update customer information, including information regarding the beneficial ownership of legal entity customers. Amended Rule 3310 becomes effective on May 11, 2018, which coincides with the compliance date for FinCEN’s CDD Rule.
View full text of Regulatory Notice 18-19.Topic : Financial Crime and Sanctions -
Financial Action Task Force Publishes Outcomes of its 2018 Private Sector Consultative Forum
04/24/2018
The Financial Action Task Force held its annual private sector consultative forum in Vienna on April 23 – 24, 2018. The annual forum provides a platform for the FATF to learn more about the private sector's views and concerns on issues related to anti-money laundering and countering the financing of terrorism. Attendees at the forum included representatives from the financial sector and other businesses and professions subject to AML/CTF obligations.
Read more. -
UK Regulator Warns CEOs of Listed Companies About Their Obligations on Irredeemable Preference Shares
04/19/2018
The U.K. Financial Conduct Authority has published a "Dear CEO" letter to the Chief Executive Officers of U.K. listed companies on capital instruments expressed to be perpetual, irredeemable or in some other way that suggests permanence. The FCA wishes to ensure that investors have access to all the information necessary for them to be able to assess properly the risks and rewards attaching to such shares. The letter lists the information that listed companies may wish to make readily accessible to all holders and potential holders of such shares, including:- the terms and conditions of the instrument as included in the original prospectus or similar document issued at the time of the offer or admission of the shares, and details of any changes made after the issue of the shares;
- the articles of association of the issuer, particularly the articles relevant to the shares concerned; and
- a Q&A or similar publication.
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European Commission Proposes Legislation Broadening Access to Centralized Financial Information
04/17/2018
The European Commission has published a proposal for a directive aimed at increasing security within EU member states and across the EU by improving access to financial information, including bank account information, to the relevant authorities and bodies in charge for the prevention, investigation and prosecution of serious forms of crimes. It is envisaged that this will enhance their ability to conduct financial investigations and analysis and improve their cooperation. In addition, the proposal contains measures to improve the ability of Financial Intelligence Units to carry out their tasks under the 4th Money Laundering Directive.
Currently, most EU national authorities competent for the prevention, detection, investigation or prosecution of criminal offences do not have direct access to information on the identity of bank account holders held in centralized account registries or data retrieval systems. Indeed, such registries and systems are currently only operational in 15 EU member states and the relevant authorities only have direct access in 6 of those member states. This lack of, or lack of access to, centralized information means the relevant authorities must send blanket information requests to all financial institutions. Delays in replies to these blanket requests can significantly hamper criminal investigations.
Read more.Topic : Financial Crime and Sanctions -
US Financial Crimes Enforcement Network Releases Customer Due Diligence FAQs
04/03/2018
The U.S. Financial Crimes Enforcement Network released answers to 37 frequently asked questions regarding its final rule on Customer Due Diligence Requirements for Financial Institutions, which was published in the Federal Register on May 11, 2016 and amended on September 29, 2017. This is the second series of FAQs FinCEN has released. The FAQs cover various topics in connection with the requirement that financial institutions obtain beneficial ownership information for legal entity customers, including the beneficial ownership threshold and its interaction with other AML program obligations, collection and verification of identifying information, particularly for legal entity customers with complex ownership structures and the definition of “legal entity customer,” including the treatment of foreign financial institutions. The FAQs also provide guidance regarding the beneficial ownership certification requirement, including when a single customer opens multiple accounts and in respect of product or service renewals, obligations to update beneficial ownership information and requirements to understand the nature and purpose of the customer relationship.
View FinCEN FAQs.Topic : Financial Crime and Sanctions -
UK Regulator Proposes Guidance on Obligations to Counter Insider Dealing and Market Manipulation
03/27/2018
The Financial Conduct Authority has launched a consultation on adding a proposed chapter on insider dealing and market manipulation to its Financial Crime Guide. The Financial Crime Guide is not part of the FCA's rules but it is a guide to assist firms in implementing the regulator's rules. A firm that does not comply with the Guide is not necessarily deemed by the FCA to be in breach of the rules. However, the FCA expects firms to use the guide to inform their financial crime systems and controls.
The FCA is proposing to add a new chapter on insider dealing and market manipulation to the Financial Crime Guide. The EU Market Abuse Regulation, which applies directly across the EU, requires firms arranging or executing transactions to establish and maintain effective arrangements, systems and controls to detect and report suspicious transactions. The FCA emphasizes that the U.K. rules extend these obligations under MAR and require firms to also counter the risk of financial crime. The FCA explains that this 'countering' obligation extends to insider dealing and market manipulation.
The consultation paper also covers other minor amendments proposed by the FCA, including updating the Guide to reflect the introduction of the Money Laundering Regulations 2017 and removing outdated references on Sanctions.
Responses to the consultation are due by June 28, 2018. The FCA intends the final revised Guide to come into effect on October 1, 2018
View the consultation paper.
View the existing Financial Crime Guide.Topic : Financial Crime and Sanctions -
Financial Action Task Force Launches Survey on Correspondent Banking Guidance
03/23/2018
The Financial Action Task Force has launched an online private sector survey on correspondent banking and the usefulness of its 2016 Guidance on correspondent banking services. The Guidance was published in response to increased concerns about so-called "de-risking," whereby financial institutions avoid, rather than manage, the risks associated with money laundering or terrorist financing by terminating business relations with entire regions or classes of customers. The FATF considers that de-risking is inconsistent with FATF Recommendations, that it has negatively impacted correspondent banking and that it may result in financial transactions being directed into less regulated areas, which would reduce transparency and increase exposure to money laundering and terrorist financing risks.
The FATF wants to assess whether its Guidance is helping to address the de-risking issues. The survey is intended to track their understanding of adoption and usefulness of the guidance.
The survey is open until April 16, 2018.
View the survey.
View the 2016 Guidance on correspondent banking.Topic : Financial Crime and Sanctions -
Wolfsberg Group Issues Frequently Asked Questions on Country Risk
03/20/2018
The Wolfsberg Group has published a set of Frequently Asked Questions on financial crime country risk. Country risk is the additional risk created by investing in, or lending cross border to, a foreign country in the context of credit facilities.
The FAQs cover: (i) the meaning of country risk in the context of financial crime compliance; (ii) the data sources that should be considered when developing a methodology to assess country risk; (iii) the frequency with which data sources should be refreshed; (iv) how sanctions should be considered in country risk methodologies; (v) the models or methodologies available to financial institutions to measure country risk, and how (and how frequently) financial institutions should test and validate their effectiveness; (vi) matters to be considered when purchasing and using an off-the-shelf commercial product to determine financial crime country risk ratings; (vii) whether there is standard or conventional methodology to assess country risk; (viii) how missing data points should be dealt with; (ix) whether overrides or discretionary risk rating changes should be allowed; (x) who should maintain ownership of the organization's FCCR Methodology; (xi) who uses the assessment results and how are the ratings disseminated; (xii) how the FCCR rating methodology should drive customer due diligence and enhanced due diligence requirements; and (xiii) whether a financial institution should have a country risk assessment expressed as a country risk rating.
Read more.Topic : Financial Crime and Sanctions -
G20 Communiqué Calls for Recommendations for Regulation of Crypto-Assets
03/18/2018
The G20 has published a Communiqué following the meeting of Finance Ministers & Central Bank Governors in Buenos Aires on March 19 – 20, 2018.Among other things, the Communiqué states that the G20 welcomes the finalization of Basel III and remains committed to full, timely and consistent implementation and finalization of the reforms. The G20 looks forward to the outcome of the evaluation of the reforms to identify and address any unintended consequences, which is being led by the Financial Stability Board.
The G20 also commits to continue to address the decline in correspondent banking relationships. It welcomes the FSB's March 2018 progress report on correspondent banking and calls on the FSB to monitor, with the FATF, the International Monetary Fund, the World Bank Group and the Global Partnership for Financial Inclusion, the adoption of the recommendations in the FSB's March 2018 report "Stocktake of Remittance Service Providers' Access to Banking Services."
Read more. -
Financial Action Task Force Report to G20 Finance Ministers and Central Bank Governors
03/16/2018
The Financial Action Task Force has published its report to G20 Finance Ministers and Central Bank Governors, in advance of their meeting in Buenos Aires scheduled for March 19 – 20, 2018. In the report, the FATF reiterates its commitment to tackle all sources, techniques and channels used in terrorist financing and to continue its work to increase financial transparency and improve the environment for remittances.
The report gives an overview of the FATF's recent work by providing stock-takes on the following workstreams:- strengthening the FATF's institutional basis, governance and capacity;
- countering the financing of terrorism and proliferation;
- improving transparency and the availability of beneficial ownership information;
- supporting financial inclusion and access to regulated financial services;
- bank de-risking and the impact on remittances;
- FATF engagement with judges and prosecutors to improve the effectiveness of the criminal justice system; and
- the risks and opportunities of FinTech, RegTech and virtual currencies.
Read more
Topic : Financial Crime and Sanctions -
Financial Stability Board Action Plan on Access to Banking Services by Remittance Providers
03/16/2018
The Financial Stability Board has published two reports relating to its actions to address the decline in correspondent banking. The first report is a progress report addressed to the G20 Finance Ministers and Central Bank Governors on the FSB's four-point action plan to assess and address the decline in correspondent banking relationships. It sets out the actions taken since the FSB's July 2017 progress report and describes the work that remains to be completed at international level and implemented at national level by regulators and banks. That work includes:- Implementing the recommendations and action plan on access to banking services by remittance providers (set out in the second report, which is described below);
- National implementation of the new Financial Action Task Force and revised Basel Committee guidance on correspondent banking, which the FSB thinks can mostly be achieved by national regulators issuing statements to clarify their expectations so that they are reflected in supervisory practices as well as banks' risk management practices;
- Improving efficiencies in and enhancing standardization of Know Your Customer utilities, including encouraging the use of the Wolfsberg Correspondent Banking Due Diligence Questionnaire; and
- Progressing the enhancement and further development of solutions to capture the trade finance components of correspondent banking.
Topic : Financial Crime and Sanctions -
UK Joint Money Laundering Steering Group Consults on Revised AML/CTF Guidance for Asset Finance and Syndicated Lending
03/08/2018
The U.K. Joint Money Laundering Steering Group has launched a short consultation on minor changes to Part II of its anti-money laundering and counter-terrorist financing guidance in relation to two sectors, namely asset finance and syndicated lending.
In the press release announcing the draft revised guidance, the JMLSG clarifies that the revisions do not make substantive changes to the existing guidance. Instead, the proposals provide clarification on the workings of these two sectors, how to identify customers and how risks should be assessed.
The JMLSG invites comments on the proposed revisions by March 30, 2018.
View the consultation.Topic : Financial Crime and Sanctions -
Financial Stability Board Releases Updated Data Report on Correspondent Banking
03/06/2018
The Financial Stability Board has published an update to its correspondent banking data report. The latest data report updates the data report the FSB published in July 2017 alongside a report for the G20 on progress made on the four point action plan the FSB launched in November 2015 to address the decline in correspondent banking relationships. The latest data report updates the July 2017 data report with additional information provided by SWIFT incorporating the period from January to June 2017.This new data reveals the average number of active corridors per country (that is, direct relationships between countries, measured by the flow of SWIFT messages) increased in the first half of 2017 in Oceania, Eastern Europe, and Northern America but declined in the rest of the Americas and of Europe, as well as Africa and Asia. There was continued reduction in the total number of active correspondents (as measured by the number of banks that have sent or received messages corridor by corridor in a given month). This decline in active correspondents has not resulted in a lower number of payment messages (volume) or a lower underlying value of the messages processed through SWIFT, leading the FSB to conclude that the higher volume of messages could in part reflect a lengthening of payment chains, as previously discussed in its July 2017 report. Concentration levels of correspondent banking remain high.
Read more.Topic : Financial Crime and Sanctions -
Wolfsberg Group Updates Correspondent Banking Due Diligence Questionnaire
03/06/2018
The Wolfsberg Group has published an updated version of its Correspondent Banking Due Diligence Questionnaire (dated February 22, 2018). The CBDDQ has been enhanced and expanded in line with regulatory expectations on strengthening and building due diligence tools. The Group has also published guidance on completing the CBDDQ, frequently asked questions and a glossary. The CBDDQ is intended to provide a standardized document for use by those needing to conduct due diligence on correspondent banks. Over time, it is hoped that use and availability of the CBDDQ may, among other things, help prevent unnecessary de-risking.
The Wolfsberg Group was established in 2002 and comprises thirteen banks. Its objective is to develop frameworks and guidance for the management of financial crime risks. The CBDDQ is intended to support the work on de-risking in correspondent banking by the Financial Stability Board, the Financial Action Task Force and the Committee on Payments and Market Infrastructures.
View the updated CBDDQ (version 1.2).
View the completion guidance.
View the FAQs.
View the Glossary.Topic : Financial Crime and Sanctions -
UK Joint Money Laundering Steering Group Obtains Ministerial Approval for Updated Guidance
03/05/2018
Read more.
The U.K.’s Joint Money Laundering Steering Group has confirmed that it has received approval from HM Treasury for the final revised guidance it published in December 2017 on anti-money laundering and counter-terrorist financing for the financial services sector. The revisions to the guidance align it with the provisions of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which is the UK implementing legislation for the Fourth EU Money Laundering Directive (4MLD) and the revised Wire Transfer Regulation (WTR) which came into effect on June 26, 2017. 4MLD seeks to give effect to the updated Financial Action Task Force (FATF) global standards which promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. WTR sets out the minimum requirements that are essential to ensure the traceability of transfers of funds.Topic : Financial Crime and Sanctions -
Final EU Standards on Cooperation among National Regulators under the Market Abuse Regulation
02/27/2018
A Commission Implementing Regulation providing Implementing Technical Standards on the procedures and forms for exchange of information and assistance between national regulators under the Market Abuse Regulation has been published in the Official Journal of the European Union. MAR, which entered into force on July 3, 2016, requires national regulators to cooperate with each other in investigations and on supervision and enforcement matters by exchanging information, taking statements from individuals, conducting on-site inspections or investigations and in the recovery of monetary sanctions. The new ITS describe the procedures to be followed by national regulators when making, acknowledging, processing and replying to requests for assistance and when unsolicited assistance is provided and contain standard forms for national regulators to use when doing so.
The ITS enters into force on February 28, 2018 and apply directly across the EU.
View the Commission Implementing Regulation.Topic : Financial Crime and Sanctions -
Final Draft EU Standards on Cooperation of National Regulators and the European Securities and Markets Authority with other EU Authorities under Market Abuse Regulation
02/06/2018
The European Securities and Markets Authority has published a final report and final draft Implementing Technical Standards on forms and procedures for cooperation of National Regulators and ESMA with other EU Authorities under the Market Abuse Regulation. MAR, which entered into force on July 3, 2016, requires national regulators and ESMA to cooperate and exchange information with certain EU authorities in investigations and on supervision and enforcement matters by exchanging information, taking statements from individuals and conducting on-site inspections or investigations. The other authorities are the European Commission, the Agency for Cooperation of Energy Regulators, national regulatory authorities responsible for related spot markets and, in relation to emission allowances, the auction monitor and relevant auction national regulators. The final draft ITS describe the procedures to be followed for making, acknowledging, processing and replying to requests for assistance and when unsolicited assistance is provided and contain standard forms to be used when doing so. The European Commission has three months to consider whether to adopt the ITS.
View the final report and draft ITS.Topic : Financial Crime and Sanctions -
UK Government Publishes Guidance for Financial Institutions on Sharing of Information on Suspected Money Laundering or Terrorist Financing
02/01/2018
The U.K. Home Office has published guidance on sharing of information within the regulated sector under the Criminal Finances Act 2017. The CFA 2017 amends the Proceeds of Crime Act 2002 and the Terrorism Act 2000 to allow banks and other financial institutions to voluntarily share information with each other about a suspicion that a person is engaged in money laundering or a terrorist financing offense. The National Crime Agency is also permitted to request banks and financial institutions to voluntarily share information. The new information sharing provisions cover the entire regulated sector. However, implementation is being phased in, starting with banks and financial institutions.
The guidance confirms that sharing of information is voluntary and does not change the mandatory obligation to file a Suspicious Activity Report if appropriate. It also confirms that in sharing information, firms must ensure that they comply with data protection requirements, including under the incoming General Data Protection Regulation. In addition, the guidance confirms that where information is shared in good faith under the relevant CFA 2017 provisions, the POCA 2002 tipping off offense does not apply.
The guidance sets out the roles and responsibilities of firms involved in information sharing, the processes and procedures for submitting notifications and disclosures to the NCA and the interaction of the new provisions with the existing money laundering provisions.
View the guidance.Topic : Financial Crime and Sanctions -
European Commission Hints at Future Changes to the Second Electronic Money Directive
01/25/2018
The European Commission has published a report to the European Parliament and the Council of the European Union on the implementation and impact of the second Electronic Money Directive, known as 2EMD. 2EMD establishes a legal framework for the issuance and redemption of e-money and covers the rights and obligations linked to the redemption of funds by consumers, the licensing of e-money institutions and the prudential requirements applicable to e-money institutions, which updates the regime under the first Electronic Money Directive to align it with requirements on payment institutions under the revised Payment Services Directive. It applies to e-money service providers in the EEA. The regime has been sparsely used in practice, with few firms operating under its auspices.
2EMD requires the Commission to assess its implementation and impact and to propose legislative changes, if appropriate. The report was due on November 1, 2012, however, the Commission delayed its publication because a majority of member states had failed to transpose 2EMD into their national laws by the transposition date of April 2011. The Commission also wanted to take into account the impact of PSD2, which includes numerous cross-references to 2EMD.
Read more. -
European Supervisory Authorities Deliver Opinion on Benefits, Risks and Challenges of Innovative Customer Due Diligence Solutions
01/23/2018
The Joint Committee of European Supervisory Authorities has published an Opinion addressed to EU national regulators to develop a common understanding of the appropriate use, by credit and financial institutions, of innovative methods to meet Customer Due Diligence obligations.
All firms that are subject to the Fourth Money Laundering Directive must put in place effective policies and procedures, including effective CDD procedures, to address the risk that their businesses may be used for money laundering or for terrorist financing purposes. 4MLD is "technology neutral" and does not set out specific steps or procedures that must be followed for CDD. There is scope, therefore, for new ways to verify customers' identity, for example non-face-to-face verification using traditional identity documents (such as passports) through portable devices or verification via centralized databases. Innovative means such as artificial intelligence are also increasingly used for monitoring customer relationships, for risk assessment and in decision-making processes.
The ESAs recognize that innovative solutions can improve the effectiveness and efficiency of AML/CFT controls and firms often use innovative solutions to meet demand for improved customer experience and costs savings. The ESAs believe that firms should not be prevented from using such solutions, provided that proper safeguards have been put in place to mitigate the ML/TF risk associated with the firm's business relationships and risk profile. The ESAs' Opinion highlights additional factors that national regulators can take into account when assessing the adequacy of any proposed use of innovative CDD solutions. These include: oversight and control mechanisms; the quality and adequacy of CDD measures; the reliability of CDD measures; delivery channel risk; and geographical risks.
View the Opinion. -
Final EU Guidelines for Payment Service Providers on Preventing Terrorist Financing and Money Laundering in Electronic Fund Transfers
01/16/2018
The Joint Committee of the European Supervisory Authorities has published final Guidelines on preventing terrorist financing and money laundering in electronic fund transfers under the EU Wire Transfer Regulation. The Wire Transfer Regulation, which applied from June 26, 2017, requires payment service providers, among other things, to have effective procedures to detect transfers of funds that lack the required information on the payer and the payee and to determine whether to execute, reject or suspend a transfer of funds that lacks that information.
The Guidelines set out the factors that payment service providers should consider when establishing and implementing procedures to detect and manage transfers of funds which do not have the required payer and payee information to ensure that their procedures are effective. The Guidelines also specify what a payment service provider should do to manage the risk of money laundering or terrorist financing where that information is missing or incomplete. Further, the Guidelines will assist payment service providers to determine which fund transfers fall within the scope of the Wire Transfer Regulation and how the exemptions might apply. National regulators are required to use the Guidelines when assessing the adequacy of a payment service provider's procedures.
The Guidelines will apply to all payment service providers and intermediary payment service providers as well as their national regulators from July 16, 2018.
View the Guidelines.Topic : Financial Crime and Sanctions -
Financial Action Task Force Reports on Financing of Recruitment to Terrorist Organizations
01/12/2018
The Financial Action Task Force has published a Report on the financing of recruitment for terrorist purposes, as part of its strategy on combating terrorist financing. The Report has been compiled using input from relevant authorities and country experts from jurisdictions within the FATF Global Network, including the Asia Pacific, Eurasian, Middle-East and North African regions.
The Report examines the typical methods of recruitment to terrorist organizations and the costs associated with those methods. Recruitment methods vary from region to region. Techniques include recruitment via religious groups in some regions and online recruitment via social media in others. The Report also presents case study data on the sources of funds available to terrorist recruiters and the general expenditures involved in the recruitment process.
The Report concludes by recommending improved inter-agency and international co-operation to share information and analyze suspected recruiters and financial supporters of terrorist organizations. The Report recommends that national operational and security agencies engage more with the private sector, non-profit organizations and social media and other internet providers, by providing better contextual information and guidance to enable those providers to identify the financial flows associated with terrorist recruitment.
View the Report.Topic : Financial Crime and Sanctions -
UK Joint Money Laundering Steering Group Publishes Final Revised Guidance for Financial Services
12/21/2017
The Joint Money Laundering Steering Group has published final revised guidance on anti-money laundering and counterterrorist financing for the financial services sector. The revised guidance will only replace the existing guidance once it has been approved by HM Treasury, however, the JMLSG notes that firms may use the revised version if they wish to.
View JMLSG's announcement.Topic : Financial Crime and Sanctions -
European Commission Consults on Improving the SME Markets
12/18/2017
The European Commission has published a consultation paper in which it seeks views on the main challenges for SME-dedicated markets and possible changes to EU legislation that might help build the EU high-growth SME markets. The consultation paper follows previous consultations and papers relating to the Capital Markets Union Action Plan.
The consultation focuses on SME Growth Markets, a new type of trading venue introduced under the Markets in Financial Instruments package. The consultation paper is split into two sections, the first of which considers the main drivers behind the downward trend of SME initial public offerings and bond issuances. The second section considers specific regulatory barriers to SME markets, small issuers and the local ecosystems surrounding SME markets. In particular, the Commission is seeking views on the MiFID II provisions which set the scope of SME Growth Markets, the market requirements for SME issuers to be assisted by a key adviser, delisting rules on SME Growth Markets and transfer of listings.
Read more. -
UK Publishes New Anti-Corruption Strategy
12/11/2017
The U.K. Government has published a U.K. Anti-Corruption Strategy 2017 to 2022 setting out how the U.K. Government intends to combat corruption over the next five years. The Strategy identifies the following six priorities:
1. Reduce the insider threat in high risk domestic sectors;
2. Strengthen the integrity of the United Kingdom as an international financial centre;
3. Promote integrity across the public and private sectors;
4. Reduce corruption in public procurement and grants;
5. Improve the business environment globally; and
6. Work with other countries to combat corruption.
In strengthening the United Kingdom’s position as an international financial centre, the Government intends to ensure greater transparency over ownership and control of legal entities, stronger enforcement, enhanced anti-money laundering and counter-terrorist financing measures and a better means for sharing information between the public and private sectors.
View the strategy.Topic : Financial Crime and Sanctions -
EU Final Draft Technical Standards on Mitigating Money Laundering and Terrorist Financing in Third Countries
12/06/2017
The Joint Committee of the European Supervisory Authorities has published a final Report and final draft joint Regulatory Technical Standards on the measures that financial institutions should take to mitigate the risks of money laundering and terrorist financing where a third country's laws do not permit the application of group-wide policies and procedures. The Fourth Money Laundering Directive, which entered into force on June 26, 2015, requires a financial institution to put policies and procedures in place to mitigate and manage the money laundering and terrorist financing risks to which it is exposed. Where a financial institution is part of a group, the policies and procedures must be implemented at group level. Additional policies and procedures must be implemented where a financial institution has a branch or majority-owned subsidiary in a third country whose laws do not allow the implementation of group-wide policies.
Read more.Topic : Financial Crime and Sanctions -
UK Regulator Warns of Risks of Investing in Cryptocurrency CFDs and Binary Options
11/14/2017
The UK Financial Conduct Authority has issued two consumer warnings on the risks of investing in contracts for differences relating to cryptocurrencies (that is, digital assets such as Bitcoin or Ethereum) and the risks of trading binary options.
Read more. -
European Securities and Markets Authority Issues Alerts to Firms and Investors on Initial Coin Offerings
11/13/2017
The European Securities and Markets Authority has published a statement alerting investors about the high risks of investment in Initial Coin Offerings, including the risk of total loss of their investment. The statement is accompanied by an alert to EU firms involved in ICOs reminding them of their regulatory obligations.
Read more. -
US Office of Foreign Assets Control Amends Cuba Sanctions Program, Implementing Trump Directive
11/09/2017
The Office of Foreign Assets Control has amended the Cuban Assets Control Regulations to implement changes to the Cuba sanctions program announced by President Trump in June of this year, which aimed to reinforce certain policies that had been relaxed by the Obama Administration. Most significantly, President Trump directed OFAC to impose new travel restrictions and curtail transactions with businesses controlled by the Cuban military, intelligence, and security sectors - a prohibition many companies feared would heavily impact the tourism industry.
According to OFAC, the changes are "intended to channel economic activities away from the Cuban military, intelligence, and security services, while maintaining opportunities for Americans to engage in authorized travel to Cuba and support the private, small business sector in Cuba." The new regulations impose new travel restrictions on Americans and prohibit direct financial dealings with more than 80 hotels and dozens of other companies considered to be tied to Cuba's military, intelligence, or security services.
Read more.Topic : Financial Crime and Sanctions -
Financial Action Task Force Supplements its Guidance to Promote Financial Inclusion
11/03/2017
The Financial Action Task Force has published a 2017 Supplement to the 2013 Guidance on AML/CFT Measures and Financial Inclusion. The 2013 Guidance sets out how anti-money laundering and counter terrorist financing measures could be designed to achieve financial inclusion without compromising financial crime fighting. The 2017 Supplement is intended to encourage financial inclusion by providing examples of how countries have adapted their customer due diligence measures for this purpose through simplified CDD or alternative forms of identity verification.
View the FATF Supplement.
View the 2013 Guidance.Topic : Financial Crime and Sanctions -
Financial Action Task Force Guidance on Private Sector Information Sharing
11/03/2017
The Financial Action Task Force has published new Guidance on private sector information sharing in the context of anti-money laundering and counterterrorist financing. The Guidance is intended to improve information sharing, which is a key part of the FATF Recommendations and Immediate Outcomes, by assisting national regulators and financial institutions to implement the FATF Recommendations. This non-binding Guidance discusses the obstacles to information sharing at a group-wide level and between different financial institutions. Those include different legal frameworks for data protection and privacy, financial secrecy laws, operational issues, such as IT capability and lack of policies and procedures, and, for national regulators, implementing consolidated supervision. The Guidance also includes examples of how some countries have addressed these challenges.
View the FATF Guidance.Topic : Financial Crime and Sanctions -
UK Government Publishes 2017 National Risk Assessment of Money Laundering and Terrorist Financing
10/26/2017
HM Treasury has published a National Risk Assessment of money laundering and terrorist financing for 2017. The 2017 NRA identifies risks that have changed since the first NRA was published in 2015, assesses the UK's current understanding of these risks and discusses the high-risk areas in more detail. The key findings of the 2017 NRA for the financial services sector include:
1. The steps to address the risks of money laundering and terrorist financing to the financial services sector are starting to take effect but the risk profile has not moved significantly yet. However, there is now an increased understanding of the varying risk profiles across different parts of the sector.
2. The risks of money laundering and terrorist financing to the retail banking sector are both high, mostly due to the criminal intent to exploit retail banking products and the increasing speed and volume of transactions.
Read more.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Launches Next Stage of EU Reporting System
10/16/2017
The European Securities and Markets Authority has announced the launch of the second phase of its Financial Instrument Reference Database (FIRDS). FIRDS covers the requirements under both the Markets in Financial Instruments Regulation and the Market Abuse Regulation for reference data collection, transparency reporting obligations, submission of the Double Volume Cap data and the transaction exchange reporting mechanism. With the launch, ESMA is providing access to the database holding the currently available reference data that market participants will use to identify instruments subject to the reference data reporting requirements. The aim of the launch is to assist market participants in preparing their systems in advance of the obligation coming into effect on January 3, 2018.
View ESMA's announcement. -
Wolfsberg Group Adopts New Standards on Correspondent Banking and Payment Transparency
10/15/2017
The Wolfsberg Group has published two new standards, the Correspondent Banking Due Diligence Questionnaire (CBDDQ) and the revised Payment Transparency Standards. The Wolfsberg Group was established in 2002 and comprises thirteen banks. Its objective is to develop frameworks and guidance for the management of financial crime risks. Both of the new standards are intended to support the work on de-risking in correspondent banking by the Financial Stability Board, the Financial Action Task Force and the Committee on Payments and Market Infrastructure.
View the CBDDQ.
View the revised Payment Transparency Standards.Topic : Financial Crime and Sanctions -
Global Standard Setter Consults on Strategy to Address Wholesale Payments Fraud
09/28/2017
The Committee on Payments and Market Infrastructures is consulting on a possible strategy to improve the security of wholesale payments involving banks, financial market infrastructures and other financial institutions. The CPMI is a global standard setter, mandated to promote the safety and efficiency of payment, clearing, settlement and related arrangements. It formed a task force in 2016, to look into the evolving threat and increasing sophistication of wholesale payments fraud. The CPMI taskforce undertook a stocktake of current practices. The resulting discussion note highlights for consultation seven elements relating to preventing, detecting, responding to and communicating about wholesale payments fraud.
Stakeholders are invited to provide input on the proposed strategy by November 28, 2017. Consultation responses will contribute to guidance on the seven elements, which the CPMI aims to develop by early 2018.
View the CPMI Discussion Note. -
UK Government Publishes its Response to Public Consultation on the UK's Future Sanctions Framework
08/02/2017
The UK Government has published its response to its April 2017 public consultation which sought views on the legal measures that would be needed in order to continue to be able to impose and implement sanctions following the UK's withdrawal from the European Union. Due to the fact that many of the current sanctions regimes are established via powers in the European Communities Act 1972, the UK will need new legal powers to replace these once that Act is repealed and the April 2017 consultation set out proposals for a new sanctions framework to address this need. The Government intends to introduce a Sanctions Bill during the current Parliamentary session which will ensure that the UK has the necessary legal powers to implement sanctions after the UK's exit from the EU. The Bill will also give the UK greater flexibility in choosing when and how to introduce new measures. The Government proposes that the Bill will create new powers to impose, implement and enforce sanctions regimes, drawing on the current EU model. Additionally, new asset-freezing provisions will make it easier to stop suspected terrorists from accessing their money. Flexibility will be provided by introducing an annual review of regimes to ensure that they remain appropriate and by provisions that will enable the government to issue exemptions when needed, for example in delivering humanitarian aid in regions affected by sanctions. The Bill will also provide a framework for individuals and organisations to challenge any sanctions imposed on them.
View Government's Press Release.
View Government Response to Consultation.Topic : Financial Crime and Sanctions -
Final EU Standards on Cooperation between National Regulators and the European Securities and Markets Authority on Market Abuse Matters
06/30/2017
Implementing Technical Standards on the procedures and forms for national regulators exchanging information with the European Securities and Markets Authority under the Market Abuse Regulation have been published in the Official Journal of the European Union. MAR, which entered into force on July 3, 2016, requires EU national regulators to submit information annually to ESMA on sanctions, investigations and other measures imposed by them. The ITS require national regulators to designate single points of contact for providing the information, provide the dates by which reports are due to ESMA and contain the forms for regulators to provide the information. The ITS will enter into force on July 20, 2017.
View the ITS.Topic : Financial Crime and Sanctions -
Final Draft EU Standards on Cooperation among National Regulators under the Market Abuse Regulation
06/01/2017
The European Securities and Markets Authority has published a final Report and final draft Implementing Technical Standards on the procedures and forms for national regulators to use when exchanging information with each other under the Market Abuse Regulation. MAR, which entered into force on July 3, 2016, requires national regulators to cooperate with each other in investigations and on supervision and enforcement matters by exchanging information, taking statements from individuals, conducting on-site inspections or investigations and the recovery of monetary sanctions. The final draft ITS describe the procedures to be followed by national regulators when making, acknowledging, processing and replying to requests for assistance and when unsolicited assistance is provided and contain standard forms for national regulators to use when doing so. The European Commission has three months to consider whether to adopt the ITS.
View ESMA's Report.Topic : Financial Crime and Sanctions -
EU Systems for Market Abuse Notifications Ready
05/30/2017
The European Securities and Markets Authority has announced that its IT system for the collection of financial instrument reference data under the Market Abuse Regulation will become operational from July 17, 2017. The IT system is known as Financial Instrument Reference Data System - FIRDS. MAR requires market operators of exchanges and investment firms and market operators operating multilateral trading facilities and organised trading facilities to notify their national regulator of any financial instrument for which a request for admission to trading is made, which is admitted to trading or is traded for the first time. This notification will be made to national regulators or via FIRDS for those jurisdictions where the national regulator has delegated the task to ESMA. All notifications must be made in accordance with the relevant secondary EU legislation setting out the timing, format and templates. Notifications are required for admissions and trades from July 3, 2016 which is when MAR became applicable across the EU. ESMA is required to publish the information on its website.
View ESMA's announcement.Topic : Financial Crime and Sanctions -
Joint Money Laundering Steering Group Consults on Proposed Revisions to Part II and III of the UK Financial Services Guidance
05/09/2017
The Joint Money Laundering Steering Group has published and opened up for consultation its proposed revisions to Parts II and III of its Guidance on the prevention of money laundering and the financing of terrorism for the UK financial services industry. This follows on from the recent consultation on Part I, which closed on April 28, 2017. The proposed revisions will align the JMLSG Guidance with the proposed Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, on which the Government recently consulted. The draft Regulations are intended to implement into UK laws the EU Fourth Money Laundering Directive and are due to take effect by June 26, 2017 at the same time as 4MLD.
Read more.Topic : Financial Crime and Sanctions -
EU Opinion on Accepted Market Practices for Liquidity Contracts
04/25/2017
The European Securities and Markets Authority has published an opinion addressed to national regulators on points of convergence for Market Abuse Regulation-accepted market practices for liquidity contracts.
Read more.Topic : Financial Crime and Sanctions -
Draft EU Guidelines for Payment Service Providers on Preventing Terrorist Financing and Money Laundering in Electronic Fund Transfers
04/05/2017
The Joint Committee of the European Supervisory Authorities has published a consultation on proposed guidelines on preventing terrorist financing and money laundering in electronic fund transfers under the EU Wire Transfer Regulation. The Wire Transfer Regulation, which is applicable from June 26, 2017, requires payment service providers, among other things, to have effective procedures to detect transfers of funds that lack the required information on the payer and the payee and to determine whether to execute, reject or suspend a transfer of funds that lacks that information. The proposed guidelines aim to assist payment service providers in complying with these obligations under the Wire Transfer Regulation. The guidelines will set out the factors that payment service providers should consider when establishing and implementing procedures to detect and manage transfers of funds which do not have the required payer and payee information. They will also specify what a payment service provider should do to manage the risk of money laundering or terrorist financing where that information is missing or incomplete. The proposed guidelines are also intended to assist national regulators to assess the adequacy of a payment service provider's procedures.
View the consultation paper.Topic : Financial Crime and Sanctions -
UK Office of Financial Sanctions Implementation Able to Impose Penalties for Serious Financial Sanctions Breaches
04/03/2017
The UK HM Treasury's Office of Financial Sanctions Implementation can impose penalties for serious financial sanctions breaches under the Policing and Crime Act 2017. Penalties can be up to £1 million or 50% of the breach, whichever is higher. The monetary penalties regime created under the 2017 Act is an alternative to criminal prosecution for breaches of financial sanctions, which are punishable upon conviction by up to seven years in prison. The UK Government ran a consultation from December 1, 2016 to January 26, 2017 on the process for imposing monetary penalties for breaches of financial sanctions. The Treasury has since published guidance which gives an explanation of its powers to impose penalties, a summary of its compliance and enforcement approach, an overview of how the OFSI will assess whether to apply a monetary penalty and what factors the OFSI will take into account in doing so, an overview of the process that will decide the level of penalty and an explanation of how the OFSI will impose a penalty, including timescales at each stage and rights of review and appeal.
View HM Treasury's Guidance.Topic : Financial Crime and Sanctions -
Joint Money Laundering Steering Group Consults on Proposed Revisions to Part I of the UK Financial Services Guidance
03/21/2017
The Joint Money Laundering Steering Group has published and opened up for consultation its proposed revisions to Part I of its Guidance on the prevention of money laundering and the financing of terrorism for the UK financial services industry. The proposed revisions will align the JMLSG Guidance with the proposed Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, on which the Government recently consulted. The draft Regulations are intended to implement into UK laws the EU Fourth Money Laundering Directive and are due to take effect by June 26, 2017 at the same time as 4MLD.
Read more.Topic : Financial Crime and Sanctions -
UK Government Publishes Red Tape Review of UK Anti-Money Laundering and Counter Financing of Terrorism Regime
03/16/2017
The UK Government has published a review of the UK's Anti-Money Laundering and Counter Financing of Terrorism regime. The document summarizes the views and evidence submitted by businesses to the UK Government's Cutting Red Tape review on the impact of the current Regime. Businesses such as banks, financial institutions and businesses who are asked to comply with banks' and financial institutions' requirements under the Regime. The UK Government launched the CRT Review in 2015 seeking evidence of any needless and ineffective burdens associated with the UK AML/CTF Regime.
Read more.Topic : Financial Crime and Sanctions -
UK Regulator Publishes Draft Guidance on Treatment of Politically Exposed Persons
03/16/2017
The Financial Conduct Authority has published draft Guidance on the treatment of politically exposed persons under the UK draft Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The draft Regulations were published by HM Treasury on March 15, 2017. Politically exposed persons or "PEPs" are people who hold high public office. The Money Laundering Regulations 2007 impose an obligation on firms to undertake enhanced due diligence measures when dealing with PEPs who are located outside of the UK, as well as family members and close associates of PEPs. PEPs, as well as their families and persons known to be close associates, have been recognized by the Financial Action Task Force as requiring enhanced scrutiny by firms as PEPs may be in position to abuse their public office for private gain.
Read more.Topic : Financial Crime and Sanctions -
UK Government Consults on Draft Money Laundering Regulations
03/15/2017
The UK Government has published draft Money Laundering Regulations 2017 alongside a consultative document. Publication of the draft Regulations follows a consultation launched by HM Treasury on September 15, 2016, entitled "Transposition of the Fourth Money Laundering Directive," where it outlined how the UK Government intended to transpose the 4MLD and the Fund Transfer Regulation. The 4MLD builds on the Third Money Laundering Directive and Money Laundering Regulations, imposing new requirements on businesses and amends some of the existing obligations. The FTR updates the rules contained in the 2006 regulation relating to the information on payers and payees that accompanies transfers of any currency, with a view to preventing, detecting and investigating money laundering and terrorist financing. The FTR applies to the transfer of funds where at least one of the payment service providers involved in the transfer is established in the EU. This consultation outlines the responses submitted to the 2016 consultation and the UK Government's policy decisions following that consultation and requests feedback on further policy questions and the draft Regulations.
Read more.Topic : Financial Crime and Sanctions -
UK Financial Conduct Authority Publishes Final Changes to Rules on Delaying Disclosure of Information
02/24/2017
The Financial Conduct Authority published a Policy Statement and final changes to rules on delaying the disclosure of inside information in the Disclosure Guidance and Transparency Rules. Minor changes have been made since the FCA's consultation last year. The Market Abuse Regulation requires issuers publicly to disclose inside information which directly concerns them as soon as possible. MAR obliges the European Securities and Markets Authority to prepare Guidelines which further specify when an issuer might delay disclosure of inside information. ESMA's Guidelines, published on November 20, 2016, explain what would be considered a "legitimate interest", allowing an issuer to delay disclosure of inside information. It also provides a non-exhaustive indicative list of legitimate interests of the issuer that are likely to be prejudiced by the immediate disclosure of inside information and the situations in which delay of disclosure is likely to mislead the public, which include situations where the inside information which the issuer intends to delay disclosure of is materially different from the issuer's previous public announcement. ESMA's Guidelines have applied directly across the EU since January 10, 2017. The FCA has confirmed that it will comply with ESMA's Guidelines and the changes to the FCA's rules ensure that compliance. The final rules have been in force since February 24, 2017.
View the Policy Statement and final rules.
View ESMA's Guidelines.Topic : Financial Crime and Sanctions -
European Supervisory Authorities Warn that Further Steps are Required on AML/CFT
02/20/2017
The European Supervisory Authorities published a joint Opinion on the risks of money laundering and terrorist financing affecting the EU’s financial sector. The ESAs - the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority - are required by the Fourth Money Laundering Directive to prepare the Opinion. The Opinion is intended to inform the European Commission's assessment of the AML and CFT risks affecting the EU financial market, inform the ESA's work on enhancing supervisory convergence and assist national regulators applying the risk-based approach to AML/CFT supervision. The Opinion sets out the AML/CFT risks that the EU financial sector is exposed to which include, amongst other things, ineffective systems and controls, regulatory arbitrage, lack of access to intelligence on terrorist suspects and the movement of high-risk transactions out of the regulated sector. The ESAs conclude that more is needed to ensure that the EU's AML and CFT defenses are effective, particularly as Member States move to a more risk-based AML/CFT regime. Some existing initiatives will help to address the risks, such as the proposed amendments to the Fourth Money Laundering Directive and the relevant Guidelines issued by the ESAs. However, the ESAs consider that enforcement agencies could assist by ensuring that financial institutions have timely access to relevant information, that national regulator could proactively raise awareness of supervisory expectations, including by providing targeted guidance, that national regulators should collect AML/CFT data in a more consistent manner to facilitate comparisons and track progress and that the EU authorities should identify ways to ensure that the EU's AML/CFT laws and guidelines are implemented effectively and consistently across the EU.
View the Opinion.Topic : Financial Crime and Sanctions -
EU Consultation on Proposed Draft Technical Standards on Central Contact Points for AML and CFT Purposes
02/10/2017
The Joint Committee of the European Supervisory Authorities launched a consultation on proposed Regulatory Technical Standards on the criteria for when a central contact point is appropriate and the functions of the central contact point. The Fourth Money Laundering Directive requires electronic money issuers and payment service providers with their headquarters in one EU member state and one or more establishments in other EU member states (other than as a branch) to appoint a central contact point in those other member states to ensure compliance with anti-money laundering and counter-financing terrorism rules and to facilitate supervision by the national authorities, including by providing documents and information on request. The ESAs (comprised of the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority) have published a proposed draft RTS which supplements those requirements by setting out the criteria that member states should consider when deciding whether a central contact point should be established and what functions it should carry out. If a member state does not require a central contact point to be established, the draft RTS would not apply. Each member state will be required to decide who the central contact point should be and how it should be set up.
View the consultation paper.Topic : Financial Crime and Sanctions -
European Authority Rules Out Regulating Distributed Ledger Technology for Now
02/07/2017
The European Securities and Markets Authority published a Report on the application of Distributed Ledger Technology to the securities markets. Distributed ledgers, sometimes referred to as blockchains, are essentially records or ledgers of electronic transactions that are maintained by a shared or distributed network of participants instead of a centralized entity. ESMA consulted in late 2016 on how DLT applies to securities markets. The Report provides ESMA's analysis of the key risks and benefits of DLT as applied to securities markets and how DLT maps to existing EU regulation.
ESMA is of the view that DLT could provide a number of benefits to securities markets but is also concerned that it may introduce new risks or magnify existing risks. Benefits of DLT include more efficient clearing and settlement services, enhanced reporting and supervision functions at firms and regulators for data sharing and risk management purposes, reduced costs related to the development of recovery plans in a cyber-attack or system breakdown scenario, reduced counterparty risk and enhanced collateral management. ESMA is concerned with a variety of risks, in addition to the well-documented issues of cyber security and fraud, such as the possible ramifications for market fairness and competition as well as financial instability.
Read more.Topic : Financial Crime and Sanctions -
UK Policing and Crime Act Receives Royal Assent
01/31/2017
The Policing and Crime Act 2017 was enacted. The Act has wide reaching implications, including for the financial services industry. Among other things, the Act creates new civil monetary penalties and increases the maximum term of imprisonment for breaches of financial sanctions in the UK. The new monetary penalties regime will be administered by the Office of Financial Sanctions Implementation, which was established on March 31, 2016 and sits within HM Treasury. The OFSI may impose a monetary penalty if it is satisfied, on the balance of probabilities, that a breach has been committed and the offending person knew or had reasonable cause to suspect that their actions would be in breach of the obligations under the financial sanctions legislation. The maximum term on conviction for indictment has been set at seven years, and at six months for summary conviction.
Read more.Topic : Financial Crime and Sanctions -
State Financial Regulators Release Anti-Money Laundering Compliance Tool
01/31/2017
State financial regulators released a new, voluntary tool designed to help banks and non-depository financial institutions better manage Bank Secrecy Act/Anti-Money Laundering risk. The BSA/AML Self-Assessment Tool was developed by the Conference of State Bank Supervisors and state regulators and aims to help institutions better identify, monitor and communicate BSA/AML risk. In this way, the tool is intended to reduce uncertainty surrounding BSA/AML compliance and encourage greater transparency within the financial sector.
View the CSBS press release regarding the BSA/AML Self-Assessment Tool.Topic : Financial Crime and Sanctions -
Final Guidelines on Disclosure of Information on Commodity Derivatives and Spot Markets Take Effect
01/17/2017
The European Securities and Markets Authority published translations of the final Guidelines on information expected or required to be disclosed on commodity derivatives markets or related spot markets under the Market Abuse Regulation in the official languages of the EU. MAR replaced the current Market Abuse Directive and its implementing legislation from July 3, 2016. The publication of the translations triggers the application of the Guidelines from March 17, 2017. The Guidelines are relevant to national regulators and to commodity derivatives market participants such as investors, financial intermediaries, operators of trading venues and persons professionally arranging and executing transactions in commodity derivatives. National regulators have until March 17, 2016 to advise ESMA whether or not they intend to comply with the final Guidelines.
Read more.Topic : Financial Crime and Sanctions -
The US Office of Foreign Assets Control Issues Guidance for Compliance with US Sanctions Laws
01/12/2017
The US Office of Foreign Assets Control issued a guidance document regarding the provision of certain legal and compliance services by US attorneys and compliance personnel respect to US Sanctions laws. Contemporaneous with the issuance, the US Treasury Department also published new FAQs on the guidance. In the press release accompanying the issuance of the guidance, OFAC made clear that the guidance does not reflect a change in OFAC’s policy, but is published in order to respond to inquiries received by OFAC.
View text of the OFAC guidance.Topic : Financial Crime and Sanctions -
New York State Department of Financial Services Announces that Anti-Terrorism Transaction Monitoring and Filtering Program Regulation is in Effect
01/05/2017
The New York State Department of Financial Services (NYSDFS) Superintendent Maria T. Vullo announced that the Department’s transaction monitoring and filtering program regulation took effect as of January 1st. Under the final regulation, institutions regulated by the NYSDFS must: maintain programs to monitor and filter transactions for potential Bank Secrecy Act and anti-money laundering violations and suspicious activity reporting; maintain a filtering program to prevent transactions that are prohibited by the Office of Foreign Assets Control; and submit a confirmation to the NYSDFS regarding compliance with the final rule.
View Shearman & Sterling client alert on the final rule.
View press release.Topic : Financial Crime and Sanctions -
The US Office of Foreign Assets Control Published Updated Iranian Transactions and Sanctions Regulations
12/22/2016
OFAC published updated regulations on Iranian Transactions and Sanctions Regulation. The amended regulation narrows the definition of “goods of Iranian origin” and “Iranian-origin goods,” allowing for the export and reexport of medical devices and agricultural commodities to Iran. Further, the amended regulation expands the definition of “non-Iranian goods” to include goods transported on a vessel or aircraft through Iranian territorial waters or stopped at a port or place in Iran en route to a destination outside of Iran that have not otherwise come into contact with Iran.
View text of the OFAC regulation.
View FAQs on the regulation.Topic : Financial Crime and Sanctions -
Delay to Certain Draft Technical Standards Supplementing the EU Fourth Anti-Money Laundering Directive
12/22/2016
The Joint European Supervisory Authorities published an open letter notifying the European Commission that they would be unable to meet the deadline of December 26, 2016 for submitting final draft Regulatory Technical Standards supplementing the Fourth Anti-Money Laundering Directive. The 4AMLD mandates the ESAs (made up of the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority) to draft RTS on the measures that banks and other financial institutions should undertake to manage the potential risks of money laundering and terrorist financing where they have branches or majority-owned subsidiaries in third countries that prohibit the implementation of AML and CTF measures consistent with those required by 4AMLD. The delay is attributed to the ESAs' prioritization of other mandates under the 4AMLD for the Joint Committee Work Programme 2016. The ESAs deprioritized the draft RTS as enquiries with regulators and ESA stakeholder groups suggested that there were no countries that prohibited the requisite implementation of AML and CFT measures. Consequently, unlike under other mandates under the 4AMLD, the draft RTS would have limited application in practice. The ESAs intend to start working on the mandate in 2017 and expect to be able to submit final draft RTS by December 31, 2017.
View the letter.Topic : Financial Crime and Sanctions -
European Commission Publishes Proposed Directive on Countering Money Laundering by Criminal Law
12/21/2016
The European Commission published a legislative proposal for a Directive on countering money laundering by criminal law. The proposed Directive is intended to harmonize and establish minimum rules concerning the definition of criminal offenses and sanctions in the area of money laundering. The proposed Directive would implement international obligations such as the Warsaw Convention and Financial Action Task Force recommendations.
The proposed Directive provides for three specific money laundering activities that, when conducted intentionally, would be punishable as a criminal offense. Member States would be able to impose more stringent rules, for example, by making money laundering committed recklessly or by serious negligence a criminal offense.
Read more.Topic : Financial Crime and Sanctions -
Financial Stability Board Publishes 2017 Plan to Address Decline in Correspondent Banking
12/19/2016
The Financial Stability Board published an updated progress report outlining its action plan to assess and address the decline in correspondent banking. Correspondent banking relationships enable banks to access financial services in different jurisdictions and provide cross-border payment services to their customers. There has been an increasing concern about the decline in the number of correspondent banking relationships because the ability to send and receive international payments could be impacted, which may have repercussions on growth and the stability and integrity of the financial system. The FSB presented a four point action plan to the G20 in November 2015. The progress report describes the progress that has been made and outlines the deliverables for 2017 to further address the issues.
Read more.Topic : Financial Crime and Sanctions -
US Financial Crimes Enforcement Network Extends Timing of Report of Foreign Bank and Financial Accounts Filings
12/16/2016
US Financial Crimes Enforcement Network (FinCEN) announced that it is granting a further extension of time for certain Report of Foreign Bank and Financial Accounts (FBAR) filings. The extension was announced in light of the notice of proposed rulemaking FinCEN issued on March 10, 2016, which proposes to revise regulations implementing the Bank Secrecy Act regarding FBARs. Specifically, one of the proposed amendments in the notice would expand and clarify the exemptions for certain US persons with signature or other authority but no financial interests over foreign financial accounts. On December 8, 2015 FinCEN issued Notice 2015-1 to extend filing date for FinCEN Form 114 - FBAR for some individuals with signature authority over but no financial interest in one or more foreign financial accounts to April 15, 2017 (and has granted identical extensions that applied to similarly situated individuals since 2011). FinCEN is now further extending the filing due date to April 15, 2018, for individuals whose filing due date for reporting signature authority was previously extended by Notice 2015-1. This extension applies to reporting of signature authority held during the 2016 calendar year, as well as all reporting deadlines extended by previous Notices 2015-1, 2014-1, 2013-1, 2012-1 and 2012-2, along with Notices 2011-1 and 2011-2. For all other individuals with an FBAR filing obligation, the filing due date remains April 15, 2017.
View FinCEN Notice.
Topic : Financial Crime and Sanctions -
UK Government Consults on Imposing Financial Penalties for Breach of Financial Sanctions
12/01/2016
The Office of Financial Sanctions Implementation (OFSI), which is a part of HM Treasury, published the UK Government's proposed approach to imposing financial penalties for breach of financial sanctions. OFSI was established earlier in 2016 and has responsibility for ensuring that sanctions are "properly understood, implemented and enforced in the UK". Financial sanctions may include prohibitions on the transfer of funds to a sanctioned country, freezing of the assets of a government, corporate entities or citizens of a particular country or targeted freezing of assets of individuals or legal entities. Provisions in the Policing and Crime Bill, currently going through Parliament, outline new administrative penalties, civil monetary penalties and an increase in the maximum custodial sentence for breaching financial sanctions to seven years on conviction on indictment (or six months' imprisonment on summary conviction) for breach of financial sanctions. OFSI is seeking feedback on its proposed Guidance on the circumstances in which it may consider that a monetary penalty is suitable and how it will set the penalty amount as well as the process for imposing a penalty and the circumstances in which details of any penalty may be published. The consultation closes on January 26, 2017. OFSI has stated that either interim or final Guidance will be published before the power to impose penalties comes into effect in April 2017. The proposed Guidance is based on the current version of the Bill and may need to be amended as appropriate once the final legislation is published.
View the consultation paper.Topic : Financial Crime and Sanctions -
UK Financial Conduct Authority Consults on Changes to Rules on Delaying Disclosure of Inside Information
11/28/2016
The Financial Conduct Authority published a consultation paper on proposed changes to its Disclosure Guidance and Transparency Rules sourcebook in the Handbook on delaying the disclosure of inside information. The Market Abuse Regulation requires issuers to inform the public as soon as possible of inside information which directly concerns them. MAR mandates the European Securities and Markets Authority to prepare Guidelines which further specify when an issuer might delay disclosure of inside information. ESMA's Guidelines, published on November 20, 2016, outline the legitimate interests of issuers to delay disclosure of inside information and provide a non-exhaustive indicative list on the legitimate interests of the issuer that are likely to be prejudiced by the immediate disclosure of inside information and the situations in which delay of disclosure is likely to mislead the public. ESMA's Guidelines will apply directly across the EU from January 10, 2017. The FCA has confirmed that it intends to comply with ESMA's Guidelines and is consulting on the consequential changes to its rules. The consultation closes on January 6, 2017.
Read more.Topic : Financial Crime and Sanctions -
Basel Committee on Banking Supervision Consults on Revisions to Correspondent Banking Guidance for Money Laundering and Financing of Terrorism Risks
11/23/2016
The Basel Committee on Banking Supervision launched a consultation on proposed revisions to the correspondent banking and account opening annexes of its Committee Guidelines on sound management of risks related to money laundering and financing of terrorism. The Guidelines describe how banks should include money laundering and financing of terrorism risks within their overall risk management. The Basel Committee is seeking to confirm regulatory expectations on the assessment of money laundering and financing of terrorism risks in correspondent banking and its proposals follow the publication by the Financial Action Task Force of its Guidance on correspondent banking on October 21, 2016. The proposed revisions to the Guidelines develop the application of the risk-based approach for correspondent banking relationships, including recognizing that not all correspondent banking relationships carry the same level of risk. The proposed revisions also clarify expectations regarding the quality of payment messages and the conditions for using “know your customer” (KYC) services. Responses to the consultation are requested by February 22, 2017.
View the consultation paper.
View the Sound Management of Risks Related to Money Laundering and Financing of Terrorism.
View the FATF's Guidance.
Topic : Financial Crime and Sanctions -
European Supervisory Authorities Publish Joint Guidelines on a Risk-Based Approach to Anti-Money Laundering and Terrorist Financing Supervision
11/16/2016
The Joint Committee of the European Supervisory Authorities published joint Guidelines on the characteristics of a risk-based approach to anti-money laundering and terrorist financing supervision. The ESAs consist of the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority. The Guidelines build on the ESA’s previous “Preliminary report on anti-money laundering and counter financing of terrorism Risk Based Supervision” that was published in October 2013. The Guidelines outline steps to be taken by regulators when conducting AML/CTF supervision on a risk-sensitive basis. The Fourth Anti-Money Laundering Directive, amongst other things, aims to bring European legislation in line with the Financial Action Task Force’s International Standards on Combating Money Laundering and the Financing of Terrorism. The ESAs emphasize that AML-and CFT-related risk-based supervision is ongoing and cyclical and the Guidelines outline four requisite steps that national regulators should apply. Step 1 involves the regulator identifying the money laundering or terrorist financing risk factors by obtaining information of both domestic, foreign and sector-wide threats. Step 2 requires the information to be used by the regulator to conduct a risk assessment and obtain a holistic view of the risks associated with each firm. Step 3 requires the allocation of supervisory resources factoring in issues such as the required focus, depth, duration and frequency of the on-site and off-site activities and supervisory staffing needs. Step 4 requires regulators to ensure that the risk assessment and level of allocated supervisory resources remains commensurate to AML/CFT risks through ongoing monitoring and reviewing processes. The Guidelines will apply one year after the Guidelines have been issued.
View the joint Guidelines.
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US Financial Crimes Enforcement Network Publishes Technical Amendments to Anti-Money Laundering Regulations
11/04/2016
The US Financial Crimes Enforcement Network published technical amendments to anti-money laundering (AML) regulations implemented pursuant to the Bank Secrecy Act (BSA). The final FinCEN rule, which became effective November 4, 2016, removes and replaces outdated references to obsolete BSA forms, removes references to outdated forms of recordkeeping storage media and replaces other outdated terms and references.
View text of the final rule.Topic : Financial Crime and Sanctions -
UK Government Consults on Beneficial Ownership Register for Money Laundering Purposes
11/03/2016
The UK Government Department for Business, Energy & Industrial Strategy launched a consultation on the requirement to maintain a central register of beneficial ownership information of corporate and other legal entities under the Fourth Money Laundering Directive. The Fourth Money Laundering Directive requires member states to hold information on beneficial ownership of corporate and other legal entities incorporated in their territory in a central register and that the information should be available to specific EU authorities and organizations. Since April 6, 2016, the UK has required UK companies, limited liability partnerships and societates europaeae to establish and maintain a register of persons with significant control over them and since June 30, 2016, those entities have been required to file such information with Companies House where it is publicly available. The BEIS is consulting on amendments and additions to the UK's current PSC regime that are needed to properly implement the 4MLD requirements, including, requiring entities to update information in the PSC register every six months of a change (instead of every 12 months) and making the proportion of suppressed PSC information which is not publicly available through Companies House available to banks and investment firms. BEIS also propose that the determination of whether an entity is in scope of the Directive is that is must be UK-incorporated and constitutionally capable of having a beneficial owner. The consultation closes on December 16, 2016. Member states are required to transpose 4MLD by June 26, 2017.
View the Discussion Paper.
You may like to view our client now on the current UK PSC Regime.Topic : Financial Crime and Sanctions -
EU Reporting Instructions Released
10/26/2016
The European Securities and Markets Authority issued detailed reporting instructions and XML schema under its Financial Instruments Reference Data System. FIRDS covers the requirements under both the Markets in Financial Instruments Regulation and the Market Abuse Regulation for reference data collection, transparency reporting obligations, submission of the Double Volume Cap data and the transaction exchange reporting mechanism.
View ESMA's announcement. -
US Financial Crimes Enforcement Network Issues Advisory and Frequently Asked Questions on Reporting Cyber-Events in Suspicious Activity Reports
10/25/2016
On October 25, 2016, FinCEN issued an Advisory and related Frequently Asked Questions (FAQs) regarding the reporting of cyber-events, cyber-enabled crime and cyber-related information through Suspicious Activity Reports (SARs).
According to FinCEN, while suspicious transactions may not always involve a cyber-event, relevant cyber-related information should still be included in SARs when available (e.g., Internet Protocol (IP) addresses and accompanying timestamps associated with fraudulent wire transfers being reported). Similarly, the FinCEN guidance provides that when suspicious transactions do involve cyber-events, a financial institution should include in SARs all relevant and available information regarding the suspicious transactions and the cyber-event - including the type, magnitude and methodology of the cyber-event as well as signatures and facts on a network or system that indicate a cyber-event. The advisory also encourages collaboration between in-house BSA/AML and cybersecurity units and sharing information with other financial institutions to the extent permitted under Section 314(b) of the USA PATRIOT Act.
Read more
Topic : Financial Crime and Sanctions -
Financial Action Task Force Publishes Guidance on Correspondent Banking Services
10/21/2016
The Financial Action Task Force published Guidance on correspondent banking services, which it has developed in collaboration with the Financial Stability Board. The Guidance is in response to increased concerns about so-called "de-risking", whereby financial institutions avoid, rather than manage, the risks associated with money laundering or terrorist financing by terminating business relations with entire regions or classes of customers. The FATF considers that de-risking is inconsistent with FATF Recommendations, that it has negatively impacted correspondent banking and that it may result in financial transactions being directed into less regulated areas which would reduce transparency and increase exposure to money laundering and terrorist financing risks.
Read more.Topic : Financial Crime and Sanctions -
Financial Action Task Force Publishes Approach to Criminalizing Terrorist Financing
10/21/2016
The Financial Action Task Force published Guidance to assist countries on the content required to comply with the obligation to criminalize terrorist financing. The Guidance builds on FATF Recommendation 5, which provides measures to assist countries in fulfilling their legal requirements under the International Convention for the Suppression of the Financing of Terrorism 1999 and relevant United National Security Council Resolutions. The Guidance outlines various aspects that offenses relating to terrorist financing must cover when implemented by national legal systems. For example, a terrorist financing offense must cover all types of willful terrorist financing activity. The Guidance specifies that the requirement of willful conduct is largely based on the Terrorist Financing Convention and requires a mental element or mens rea, such that the conduct is deliberately committed with an unlawful intention. The Guidance also sets out the bases and rationale of the Convention and Resolutions to assist countries in the implementation of such requirements. The Guidance focuses on the specific elements of the Recommendation that have most commonly been identified as creating particular implementation challenges and provides examples of how such requirements have been implemented by differing legal systems.
View the Guidance.
View the FATF Recommendations.Topic : Financial Crime and Sanctions -
Final EU Guidelines on Market Soundings and Delaying Disclosure of Inside Information
10/20/2016
The European Securities and Markets Authority published updated translations of its final Guidelines on the implementation of the Market Abuse Regulation for persons receiving market soundings and on delayed disclosure of inside information. ESMA had published the translations on October 20, 2016 but due to a linguistic issue with the Polish version had to re-publish all of the translations. The substantive content of the Guidelines is unchanged. The publication of the translations triggers the application of the Guidelines and so the Guidelines will now apply from January 10, 2017 instead of December 20, 2016. ESMA consulted on the draft Guidelines in January 2016 and published final versions of the Guidelines in July 2016.
Read more.Topic : Financial Crime and Sanctions -
Report to G20 on Beneficial Ownership
10/07/2016
The Financial Action Task Force published a report to the G20 Finance Ministers and Central Bank Governors updating them on the steps being taken by the FATF on implementation of international standards on transparency and beneficial ownership. In April 2016, the G20 Finance Ministers and Central Bank Governors requested the FATF and the Global Forum on Transparency and Exchange of Information for Tax Purposes to make initial recommendations by October 19, 2016 on ways to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information, and its international exchange. The report states that many countries still do not implement the beneficial ownership requirements effectively. Therefore, the FATF has committed to focus on beneficial ownership in the FATF peer review follow-up process, to deliver recommendations on how countries can improve their implementation of beneficial ownership requirements and to improve cooperation between the FATF and the Global Forum to improve transparency on beneficial ownership. The FATF will be considering the initial recommendations further at its meeting on October 19, 2016. The FATF is also calling on the G20 members to issue a public commitment to meet the FATF standards on beneficial ownership because, in the FATF's view, prevention of the abuse of corporate vehicles can only be remedied by individual countries.
View the report on beneficial ownership.Topic : Financial Crime and Sanctions -
Final EU Guidelines on Information regarding Commodity Derivatives and Spot Markets
09/30/2016
The European Securities and Markets Authority published a Final Report and final Guidelines on information expected or required to be disclosed on commodity derivatives markets or related spot markets under the Market Abuse Regulation. This follows the consultation that ESMA undertook in March 2016. MAR replaced the current Market Abuse Directive and its implementing legislation from July 3, 2016. One of the changes that MAR will introduce is the expansion of the definition of inside information relating to commodity derivatives to cover price sensitive information relevant to the related spot commodity contracts as well as the derivative. This means that transactions in commodity derivatives based on inside information relating to underlying spot transactions will be expressly prohibited. In addition, the market manipulation prohibitions will include transactions in derivatives markets that manipulate the related spot commodity transaction and transactions in spot commodity markets that manipulate the related derivative.
Read more. -
US Comptroller of the Currency Discusses Bank Secrecy Act and Anti-Money Laundering Compliance
09/28/2016
The US Comptroller of the Currency, Thomas J. Curry, spoke at a conference of the Association of Certified Anti-Money Laundering Specialists about the OCC’s role in the BSA/AML regulatory regime and the risks the regime is meant to curtail. Curry noted that risks in the BSA and AML space are increasing and that banks must have effective systems for BSA and AML management and timely reporting. He cautioned against overly reactionary “de-risking,” where institutions shrink their exposure to high risk geographies and customers, warning that it can lead to entire regions being excluded from the global financial system.
Curry noted that regulators can work with banks they supervise to help them maintain and enhance risk-management systems by communicating expectations clearly. He highlighted specific actions regulators have recently taken, including the joint fact sheet published by the US Treasury on the BSA and AML examination process regarding foreign correspondent banking. He also highlighted upcoming OCC guidance that will clearly lay out the risk management expectations for banks regarding their foreign correspondent portfolios, including best practices for banks on governance, communications and risk mitigation regarding correspondent accounts. Curry closed by reiterating the key points from the joint fact sheet, namely that the OCC, like its fellow federal regulators does not follow a “zero-tolerance” approach to enforcement, and that a decision to terminate a banking relationship or exit a line of business lies solely with a bank.
View Comptroller Curry's speech.Topic : Financial Crime and Sanctions -
G20 Anti-Corruption Action Plan 2017-2018 Published
09/27/2016
The G20 published its Anti-Corruption Action Plan for 2017-2018 and called on countries to implement the United Nations Convention against Corruption. The G20 established the Anti-Corruption Working Group in 2010, a body which is guided by rolling two-year action plans. The new Action Plan outlines areas of priority for the G20 and the Working Group, which amongst other things, include seeking to promote concrete and practical action to achieve enforcement of anti-corruption laws by taking steps to improve co-operation between law enforcement and other relevant authorities within and between member countries, implementing the Financial Action Task Force Recommendations on Transparency and Beneficial Ownership of Legal Persons and continuing to focus on combatting bribery and exploring the possible adherence of all G20 countries to the OECD Anti-Bribery Convention. The Working Group has been tasked with preparing a more detailed implementation plan, so that progress with the priorities can be tracked. It will report in 2017, on progress in implementing the commitments.
View the Action Plan.
Topic : Financial Crime and Sanctions -
EU Legislation Listing High-Risk Third Countries under the Fourth Money Laundering Directive
09/20/2016
A Commission Delegated Regulation identifying high-risk third countries with strategic deficiencies under the Fourth Money Laundering Directive was published in the Official Journal of the European Union, based on deficiencies identified by Financial Action Task Force.
The Regulation lists high-risk third countries which have provided a written high-level political commitment to address identified deficiencies and have developed an action plan with the FATF; countries listed: Afghanistan, Bosnia and Herzegovina, Guyana, Iraq, Lao PDR, Syria, Uganda, Vanuatu and Yemen. The Regulation identifies Iran as a high-risk third country that has provided a written high-level political commitment to address identified deficiencies and has decided to seek technical assistance in the implementation of the FATF action plan. The Regulation also identifies the Democratic People's Republic of Korea (DPRK) as high-risk third country which presents ongoing and substantial money-laundering and terrorist-financing risks, having repeatedly failed to address identified deficiencies.
View the Regulation.
Topic : Financial Crime and Sanctions -
US Federal Banking Agencies and US Treasury Department Release Joint Fact Sheet on Foreign Correspondent Banking
08/30/2016
The US Department of Treasury, the US Federal Reserve Board, the US FDIC, the US OCC and the National Credit Union Administration released a joint fact sheet on foreign correspondent banking that sets forth supervisory and enforcement processes with respect to anti-money laundering and sanctions in the area of correspondent banking. Among other things, the fact sheet notes that while US depository institutions that maintain correspondent accounts for foreign financial institutions (FFIs) are not required to conduct due diligence on an FFI’s customers, US depository institutions must establish appropriate, specific and risk-based due diligence policies, procedures and processes that are reasonably designed to assess and manage the risks inherent with these relationships. The release further provides that while the regulators are not adopting a zero tolerance philosophy that mandates the strict imposition of formal enforcement action regardless of the facts and circumstances of the situation, the regulators are taking the threats posed by criminals, money-launderers and terrorist financers very seriously and continue to use their authorities to safeguard the US financial system against abuse.
View fact sheet.Topic : Financial Crime and Sanctions -
US Financial Crimes Enforcement Network Proposes a Rule Imposing Anti-Money Laundering Programs on Banks Without a Federal Regulator
08/25/2016
The US Financial Crimes Enforcement Network issued a notice of proposed rulemaking pursuant to Section 326 of the USA PATRIOT Act that would lay out minimum standards for anti-money laundering programs and remove the AML program exemption for banks that lack a Federal functional regulator. The proposed rule would amend 31 CFR Chapter X to broaden the application of the AML requirements, customer identification programs and beneficial ownership requirements to cover all banks, not just those subject to regulation by a Federal functional regulator, including, but not limited to, private banks, non-federally insured credit unions and certain trust companies. Comments must be submitted to FinCEN by October 24, 2016.
View FinCEN’s release.Topic : Financial Crime and Sanctions -
European Banking Authority Opines on Virtual Currencies and the Fourth Anti-Money Laundering Directive
08/11/2016
The European Banking Authority published an Opinion on the Commission’s proposed amendments to the Fourth Anti-Money Laundering Directive and its application to virtual currencies. The Commission is proposing to bring custodian wallet providers (CWPs) and virtual currency exchange platforms (VCEPs) within the scope of the 4MLD so that they would, among other things, have to apply customer due diligence controls when exchanging virtual currencies for real currencies, and put in place policies and procedures to detect, prevent and report money laundering and terrorist financing.
Read more.Topic : Financial Crime and Sanctions -
US Office of the Comptroller of the Currency Released a Second Notice Soliciting Comments on the Bank Secrecy Act/Anti-Money Laundering Risk Assessment System
08/08/2016
The OCC released a second notice soliciting comments on the expansion of the Bank Secrecy Act/Anti-Money Laundering Risk Assessment System to all OCC-supervised institutions. As noted in the original OCC proposal, published on January 4, 2016, the current information collection system applies only to community banks. Pursuant to the notice, the OCC continues to seek comments on, among other items, the accuracy of the OCC’s estimate of the burden of the collection of information, and ways to enhance the quality and utility of the information to be collected, and ways to minimize the burden of the collection on respondents, including through the use of automated collection technologies. Comments on the MLR System were due by September 7, 2016.
View text of the OCC notice.Topic : Financial Crime and Sanctions -
UK Regulator Introduces Financial Crime Reporting Obligations
07/29/2016
The Financial Conduct Authority published final rules on financial crime reporting, which will introduce obligations for banks, large investment firms, building societies, mortgage lenders, large electronic money institutions, certain large consumer credit firms, life insurers and retail investment and mortgage intermediaries. Relevant firms will be required to provide details annually on, among other things, the jurisdictions and types of customers as well as the number of suspicious activity reports to the FCA. The reporting obligation will only apply to a firm's business that is subject to the Money Laundering Regulations 2007. The FCA is introducing the new requirement so that it can adopt a more risk-sensitive supervisory approach. Due to the feedback it received to its consultation on the implementation timeline, the FCA has extended the remittance deadline by 60 days so that firms with an accounting year end of December 31 will need to submit the data by late March the following year. The FCA is also allowing firms to complete the first Financial Crime Report on a best endeavors basis.
View the FCA's Policy Statement and final Rules.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Publishes Draft Technical Standards on Reporting Sanctions and Measures Imposed
07/26/2016
The European Securities and Markets Association published a final report on draft implementing technical standards concerning the procedures and forms for submitting information regarding administrative and criminal investigations, sanctions and other administrative measures under the Market Abuse Regulation. The technical standards relate to requirements under MAR for national member state regulators to submit two types of information to ESMA: (i) aggregated information on all administrative and criminal sanctions and other administrative measures imposed, and criminal investigations undertaken, under relevant provisions of MAR; and (ii) administrative and criminal sanctions and other administrative procedures that are disclosed to the public by regulators, which must be simultaneously reported to ESMA.
ESMA submitted the draft technical standards to the European Commission for endorsement on July 26, 2016.
View the final report.Topic : Financial Crime and Sanctions -
US Federal Agencies Issue Proposal to Extend the Country Exposure Report
07/20/2016
The OCC, Department of the Treasury, Federal Reserve Board and FDIC jointly published a notice proposing to extend, with revision, the Country Exposure Report (FFIEC 009) and the Country Exposure Information Report (FFIEC 009a). The revisions would (i) require that institutions provide their Legal Entity Identifier on both reporting forms, if applicable and (ii) add Intermediate Holding Companies to the Federal Reserve Board’s respondent panel. The agencies had previously requested comments on these changes. The proposed revisions have now been submitted to the Office of Management and Budget for approval. The changes would take effect September 30, 2016.
View notice.Topic : Financial Crime and Sanctions -
FinCEN FAQs on Customer Due Diligence Requirements
07/19/2016
The US Department of the Treasury’s Financial Crimes Enforcement Network issued guidance in respect of its May 2016 final rule governing Customer Due Diligence requirements for financial institutions in the form of responses to frequently asked questions. In particular, FAQ #5 highlights amendments to AML program requirements by clarifying that the CDD rule creates a specific obligation for covered financial institutions to implement and maintain risk-based procedures for conducting ongoing customer due diligence, which procedures should include (i) understanding the nature and purpose of the customer relationship; and (ii) conducting ongoing monitoring to identify and report suspicious transactions, as well as to maintain and update customer information on a risk basis.
View FinCEN FAQs.Topic : Financial Crime and Sanctions -
Decision of European Central Bank on Disclosure of Confidential Information
07/16/2016
A Decision by the European Central Bank on the disclosure of confidential information in the context of a criminal investigation was published in the Official Journal of the European Union. Pursuant to the Single Supervisory Mechanism, the ECB and/or national regulators can receive requests from national criminal investigation authorities for the disclosure of confidential information created or received in the course of their supervisory tasks and responsibilities. EU law has implications for the conditions under which confidential information held by regulators within the SSM, including the ECB, may be disclosed to national criminal investigation authorities. “Confidential information” includes information covered by data protection rules, by the obligation of professional secrecy, including those in the Capital Requirements Directive. The Decision sets out the processes and conditions under which confidential information will be provided to criminal investigation authorities.
The decision entered into force on August 5, 2016.
View the decision.Topic : Financial Crime and Sanctions -
European Commission Proposes Further Changes to the EU's Anti-Money Laundering and Counter Terrorism Regime
07/05/2016
The European Commission published proposed revisions to the EU Fourth Money Laundering Directive. The Commission is proposing to bring virtual currency exchange platforms and custodian wallet providers within the scope of 4MLD so that they would, among other things, be required to apply customer due diligence and establish place policies and procedures to detect, prevent and report money laundering and terrorist financing. The Commission is also proposing to lower, from EUR 250 to EUR 150, the thresholds for non-reloadable pre-paid payment instruments to qualify for the exemption from customer due diligence requirements. It further proposes to require all EU member states to set up automated centralised mechanisms to enable swift identification of holders of bank and payment accounts and to harmonize the regime on enhanced customer due diligence for countries that have weak AML & CFT regimes. Public access to information on beneficial ownership of companies and trusts engaged in commercial activities is also proposed and Financial Intelligence Units are to be given greater powers to request information from entities that are subject to 4MLD.
Topic : Financial Crime and Sanctions -
Final EU Technical Standards on Disclosure of Inside Information and Delaying Disclosure of Inside Information
06/30/2016
A Commission Delegated Regulation in the form of Implementing Technical Standards on the means for appropriate public disclosure of inside information and for delaying the public disclosure of inside information was published in the Official Journal of the European Union. The Market Abuse Regulation requires an issuer to inform the public as soon as possible of information which directly concerns the issuer. An issuer may delay disclosing the information in certain circumstances, for example, if immediate disclosure is likely to prejudice the legitimate interests of the issuer. The ITS set out the technical means for issuers to publicly disclose inside information and the means for delaying the public disclosure of inside information. The ITS also requires an issuer bank or investment firm that wishes to delay disclosure of inside information to notify its regulator in writing to obtain the regulator's consent to the delay. The ITS applied from July 3, 2016.
View the RTS on Disclosing or Delaying Disclosure of Inside Information.
Topic : Financial Crime and Sanctions -
Final EU Technical Standards on Conditions for Buy-Back Programmes and Stabilization to be Exempt from the Market Abuse Ban
06/30/2016
A Commission Delegated Regulation in the form of Implementing Technical Standards on the means for appropriate public disclosure of inside information and for delaying the public disclosure of inside information was published in the Official Journal of the European Union. The Market Abuse Regulation requires an issuer to inform the public as soon as possible of information which directly concerns the issuer. An issuer may delay disclosing the information in certain circumstances, for example, if immediate disclosure is likely to prejudice the legitimate interests of the issuer. The ITS set out the technical means for issuers to publicly disclose inside information and the means for delaying the public disclosure of inside information. The ITS also requires an issuer bank or investment firm that wishes to delay disclosure of inside information to notify its regulator in writing to obtain the regulator's consent to the delay. The ITS applied from July 3, 2016.
View the RTS on Disclosing or Delaying Disclosure of Inside Information.
Topic : Financial Crime and Sanctions -
New York State Department of Financial Services Issues Final Anti-Terrorism Transaction Monitoring and Filtering Program Regulation
06/30/2016
The New York State Department of Financial Services issued its Transaction Monitoring and Filtering Program Requirements and Certifications final rule, which includes several notable departures from the proposal issued by DFS on December 1, 2015. The issuance of the final rule is another example of DFS enforcing anti-money laundering and sanctions requirements applicable to banks under US federal law. Like the proposed rule, the final rule requires covered institutions to maintain a transaction monitoring program for potential Bank Secrecy Act/anti-money laundering violations and suspicious activity reporting, maintain a filtering program to prevent transactions prohibited by the Office of Foreign Assets Control and submit to the DFS annually a confirmation regarding compliance with the DFS’ transaction monitoring and filtering program requirements.
Perhaps most significantly, and apparently in recognition of serious concerns raised by the industry during the comment period, the final rule does not include the proposed “annual certification” by an institution’s chief compliance officer attesting to a covered institution’s compliance with the rule, nor does it include a reference to criminal penalties for filing an incorrect or false certification. Instead, the final rule requires an annual board resolution or senior officer compliance finding confirming that the covered institution is in compliance with the regulation “to the best of the [individual’s] knowledge.” The final rule also introduced “reasonably designed” standard into the transaction monitoring and filtering programs that institutions must establish.
View DFS final rule.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Opines on Regime for Disclosure of Inside Information by Emission Allowance Market Participants
06/17/2016
The European Securities and Markets Authority published its Opinion on the proposed requirements for Emission Allowance Market Participants to disclose inside information under the Market Abuse Regulation. ESMA's Opinion is in response to the European Commission's notification that it intended to endorse, subject to certain amendments, ESMA's Implementing Technical Standards on the public disclosure of inside information by issuers and EAMPs and on the means for delaying public disclosure of inside information. The European Commission is concerned that the ITS will lead to EAMPs being subject to duplicative disclosure requirements under the EU Regulation on wholesale energy market integrity and transparency, known as REMIT. The Commission's view is that the ITS should deem the REMIT disclosure requirements sufficient for the purposes of disclosure requirements under MAR, so as to avoid imposing duplicative requirements on EAMPs.
Read more.Topic : Financial Crime and Sanctions -
EU Secondary Legislation Under the Market Abuse Regulation on Investment Recommendations Published
06/17/2016
An EU Delegated Regulation containing Regulatory Technical Standards on investment recommendations under the Market Abuse Regulation was published in the Official Journal of the European Union. MAR will apply from July 3, 2016 except for those concepts that will be introduced by the revised Market in Financial Instruments Directive and the Market in Financial Instruments Regulation, which will apply from 3 January 2018.
The RTS set out the technical arrangements for objective presentation of investment recommendations and for disclosure of particular interests or conflicts of interest. The RTS require that a firm producing a recommendation must disclose its identity, as well as the names and identities of the individuals involved in preparing a recommendation. Firms that disseminate recommendations will be subject to similar disclosure obligations and must also indicate on a recommendation the date on which it was first disseminated. Firms producing recommendations must also disclose relevant interests or conflicts of interest.
View the RTS on investment recommendations.Topic : Financial Crime and Sanctions -
EU Technical Standards on Preventing Market Abuse and Reporting Suspicious Transactions Published
06/17/2016
An EU Delegated Regulation containing Regulatory Technical Standards on preventing market abuse and reporting suspicious transactions under the Market Abuse Regulation was published in the Official Journal of the European Union. MAR will apply from July 3, 2016 except for those concepts that will be introduced by the revised Market in Financial Instruments Directive and the Market in Financial Instruments Regulation, which will apply from 3 January 2018.
The RTS impose requirements on operators of trading venues and persons professionally arranging or executing transactions to monitor for and report insider dealing or market manipulation. A template suspicious transaction and order report (known as a STOR) will need to be used for reporting suspicious transactions. The RTS also impose a requirement on operators of trading venues and persons professionally arranging or executing transactions to provide adequate training for their staff involved in monitoring detection and identification of orders and transactions that might be insider dealing or market manipulation, including for staff involved in processing orders and transactions.
View the RTS on preventing market abuse and reporting suspicious transactions.Topic : Financial Crime and Sanctions -
EU Level 2 Legislation on Market Soundings Published
06/17/2016
Two EU Delegated Regulations containing technical standards on the requirements relating to market soundings under the Market Abuse Regulation were published in the Official Journal of the European Union. MAR will apply from July 3, 2016 except for those concepts that depend on the entry into effect of the revised Market in Financial Instruments Directive and the Market in Financial Instruments Regulation, which will apply from January 3, 2018.
Read more.Topic : Financial Crime and Sanctions -
EU Regulation on Notifications under the Market Abuse Regulation
06/10/2016
A Commission Delegated Regulation supplementing the Market Abuse Regulation was published in the Official Journal of the European Union. The Regulation lays down Regulatory Technical Standards for the content of notifications to be submitted to regulators and the compilation, publication and maintenance of the list of notifications.
The Markets in Financial Instruments Regulation requires on-going submissions of reference data for financial instruments admitted to trading. By contrast, the MAR requires trading venues to notify regulators only once of details of financial instruments which are the subject of a request for admission to trading, admitted to trading or traded and where a financial instrument ceases to be traded or admitted to trading. The Regulatory Technical Standards require that notifications of financial instruments pursuant to the reporting obligations in MAR include all of the data set out in table 2 annexed to the Regulatory Technical Standards, such as the instrument identification code, instrument full name and trading venue.
Read more.Topic : Financial Crime and Sanctions -
EU Regulatory Technical Standards on Accepted Market Practices under the Market Abuse Regulation
06/10/2016
A Commission Delegated Regulation supplementing the Market Abuse Regulation was published in the Official Journal of the European Union. The Regulation lays down Regulatory Technical Standards on the criteria, procedures and requirements for regulators when establishing an accepted market practice and the requirements for maintaining it, terminating it or modifying the conditions for its acceptance. The RTS are made pursuant to MAR, which exempted the application of the prohibition of market manipulation to certain activities, provided that, amongst other things, the person's behavior confirms with an accepted market practice established by a regulator, in compliance with RTS.
Read more.Topic : Financial Crime and Sanctions -
US Financial Crimes Enforcement Network Identifies the Democratic People’s Republic of Korea as a Jurisdiction of Primary Money Laundering Concern
05/27/2016
The US Financial Crimes Enforcement Network, pursuant to authority contained in the USA PATRIOT ACT, found “reasonable grounds” to conclude that the Democratic People’s Republic of Korea is a jurisdiction of primary money laundering concern. In its notice, FinCEN cited several factors that contributed to this conclusion, including evidence that organized criminal groups, international terrorists or entities involved in the proliferation of weapons of mass destruction have transacted business in North Korea, evidence that North Korea has been found to have repeatedly failed to address the deficiencies in its AML regime and the extent to which North Korea has demonstrated high levels of institutional and official corruption.
Read more.Topic : Financial Crime and Sanctions -
Technical Standards on Market Soundings under the Market Abuse Regulation
05/17/2016
The European Commission adopted Regulatory Technical Standards on the arrangements, systems and procedures for market participants disclosing inside information while conducting market soundings. The Market Abuse Regulation, which will apply from July 3, 2016 across the EU, provides that when a disclosing market participant discloses inside information during a market sounding, that disclosure will be deemed to be made in the normal course of the exercise of the person's employment, profession or duty provided that certain conditions are met. Such disclosure would not therefore constitute market abuse. The adopted RTS require disclosing market participants to establish procedures which describe the way in which market soundings are conducted, to provide certain information to the person receiving the market sounding, including, where possible, an estimate as to when the information will cease to be inside information, and to keep records of the persons who have received market soundings.Topic : Financial Crime and Sanctions -
US Financial Crimes Enforcement Network Deputy Director El-Hindi Addresses New Customer Due Diligence Rule and Beneficial Ownership Proposal
05/16/2016
As part of his remarks at the Institute of International Bankers Annual Anti-Money Laundering Seminar, US Financial Crimes Enforcement Network Deputy Director Jamal El-Hindi discussed certain US Department of Treasury efforts that have been rolled out in the last several months, including: (i) the final customer due diligence (CDD) rule; (ii) draft legislation requiring legal entities to provide beneficial ownership information at the company formation stage; and (iii) the use of FinCEN’s geographic targeting orders. The CDD final rule amends existing Bank Secrecy Act regulations to clarify and strengthen obligations of covered financial institutions, specifically banks, brokers or dealers in securities, mutual funds, futures commission merchants and introducing brokers in commodities. The final rule also adds a new requirement that these financial institutions know and verify the identities of the natural persons who own, control and profit from the legal entities the financial institutions service. Finally, the rule harmonizes BSA program rules and makes explicit several components of customer due diligence that have long been expected under existing regulations. El-Hindi noted how FinCEN relied on significant engagement with industry in finalizing this rule.
Read more.Topic : Financial Crime and Sanctions -
US Treasury Announces Measures to Enhance Anti-Money Laundering, Bank Secrecy Act Compliance and Tax Evasion Rule Compliance
05/06/2016
The US Treasury Department put forth several measures to combat money laundering, corruption and tax evasion, in the wake of the so-called “Panama Papers” document leak. First, the US Treasury issued a final Customer Due Diligence Rule that for the first time requires all financial institutions to collect and verify the personal information of the individuals who own, control, and profit from companies (i.e., the beneficial owners)when those companies open accounts.
Read more.Topic : Financial Crime and Sanctions -
UK Regulator Publishes Final Rules Implementing the Market Abuse Regulation
04/28/2016
The Financial Conduct Authority published a Policy Statement, including final rules on changes to the FCA Handbook required to implement the Market Abuse Regulation. MAR will apply directly across the EU from July 3, 2016, replacing the current Market Abuse Directive. Some of the changes to the FCA rules reflect MAR’s direct application in the UK. In contrast, the Market Abuse Directive will need to be transposed into national law, including the FCA Handbook. The FCA rules need to be amended to either refer directly to MAR (e.g. for definitions) or to reflect the position under MAR. For example, MAR requires, amongst other things, issuers to provide an explanation for a delay in the disclosure of inside information under certain circumstances. The FCA's rules will require such notification to be made in writing when requested.
The new FCA rules will apply from July 3, 2016. However, the FCA does note that some changes may be required depending on the final version of the EU technical standards due under MAR.
View the Policy Statement.Topic : Financial Crime and Sanctions -
UK Financial Conduct Authority Consults on Changes to Implement the Market Abuse Regulation
04/22/2016
The Financial Conduct Authority published its proposed changes to the Decision Procedure and Penalties Manual and the Enforcement Guide for implementation of the Market Abuse Regulation. The MAR will apply directly across the EU from July 3, 2016. The FCA must amend and update its rules and guidance to bring them in line with MAR. The FCA's proposals are based on draft secondary legislation which HM Treasury is expected to lay before Parliament in the coming weeks. The draft secondary legislation will, amongst other things, amend the scope of the FCA's powers to impose financial penalties and public censure as well as giving the FCA additional powers to impose sanctions for breaches of MAR or any of its underlying legislation. The new powers include the power to prohibit an individual from carrying out a management function or dealing in financial instruments on their account. The FCA has already consulted on amendments to its Handbook, including the Market Conduct handbook and the disclosure and transparency rules. Policy statements on those proposals are expected soon. The current consultation closes on May 22, 2016. The FCA intends to publish the policy statement in June 2016.
View the consultation paper.Topic : Financial Crime and Sanctions -
UK Government Action Plan for Anti-Money Laundering and Counter-Terrorist Finance
04/21/2016
The UK Government published an Action Plan for anti-money laundering and counter terrorism financing. The Government is aiming to overhaul the UK approach to AML and CTF by giving new capabilities and legal powers to law enforcement agencies, improving the effectiveness of the supervisory regime and addressing inconsistencies in the regime, improving information sharing between the public and private sectors and increasing the international reach of the UK law enforcement agencies and enhancing international information sharing. The Government published a Call for Information on the system of appointing supervisors for AML and CTF and the powers of supervisors to incentivize compliance and adoption of the risk-based approach. An annex to the Action Plan includes proposed legislative changes. The Action Plan includes a list of deliverables which includes the involvement of the Home Office, the National Crime Agency, HM Treasury and the British Bankers' Association. The shorter term deliverables include running the pilot Joint Money Laundering Intelligence Taskforce, which provides for information sharing between banks and the NCA, on a permanent basis, creating a register of banks' specialisms, exploring new powers to tackle money laundering and completing the review of the supervisory regime. Responses to the Call for Information and the consultation on legislative proposals should be submitted by June 2, 2016.
View the Action Plan.
View the Call for Information on the AML Supervisory Regime.
View the Consultation Paper on Legislative Proposals.Topic : Financial Crime and Sanctions -
European Banking Authority Opinion on Customer Due Diligence for Asylum Seekers
04/12/2016
The European Banking Authority published an Opinion on the application of customer due diligence measures to customers who are asylum seekers from higher-risk third countries or territories. The Opinion, addressed to national EU regulators, outlines the EBA’s view on the application of customer due diligence measures by credit and financing institutions when entering into a business relationship with customers who are asylum seekers from higher-risk third countries. Firms are required under the EU's anti money laundering legislation (to be transposed into national law by June 27, 2017) to prevent financial systems being exploited for the purpose of money laundering or terrorist financing.
Topic : Financial Crime and Sanctions -
US Treasury Deputy Assistant Secretary Discusses Strengthening of US Anti-Money Laundering and Combating the Financing of Terrorism
04/06/2016
At the SIFMA Anti-Money Laundering and Financial Crimes Conference, Jennifer Fowler, Deputy Assistant Secretary of the US Treasury, spoke regarding progress that the US has made in strengthening its framework for anti-money laundering and combatting the financing of terrorism. Fowler noted that the Financial Action Task Force is currently undergoing a mandatory assessment of its AML/CFT framework, focusing not only on technical compliance with the FATF standards, but more importantly, how effectively those standards are implemented. Fowler also addressed ways the US can improve in combating illicit finance, specifically, among other things, by: (i) seeking to clarify and strengthen customer due diligence requirements for financial institutions; and (ii) ensuring that companies know and disclose their ultimate, or beneficial, owners to the government at the time of company formation.
View Fowler’s speech.Topic : Financial Crime and Sanctions -
EU Regulation and Template on Public Disclosure of Managers Transactions
04/05/2016
A Commission Delegated Regulation and Commission Implementing Regulation supplementing the Market Abuse Regulation were published in the Official Journal of the European Union. The Delegated Regulation extends the exemption to certain public bodies and central banks of third countries from the obligations set out in MAR, including amongst others, the Reserve Bank of Australia, Central Bank of Brazil, Bank of Canada and the People's Bank of China.
Topic : Financial Crime and Sanctions -
US Secretary of the Treasury Lew Provides Remarks on the Evolution of Sanctions Regulation
03/30/2016
US Treasury Secretary Jack Lew addressed the Carnegie Endowment for International Peace, commenting on the evolution of economic sanctions programs as a tool for US foreign policy. He emphasized the importance of using sanctions, but also cautioned against overusing sanctions and using sanctions where they may have a negligible impact. Critically, Lew noted that economic sanctions are meant to be forward-looking and to change future behavior, rather than to be punitive for past bad actions. Focusing on three key lessons that apply to the appropriate use of sanctions, Lew noted the importance of: (i) working with US allies to have broad, international support for economic sanctions; (ii) recognizing the appropriate time to provide relief from sanctions in order to preserve US credibility and the ability to use sanctions programs to motivate behavior changes; and (iii) investing in infrastructure to help implement and support targeted sanctions programs. Secretary Lew remarked on the high costs of sanctions programs, and the potential for overuse to result in negative externalities, including driving business and financial transactions outside of the US.
View Treasury Secretary Lew’s speech.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Consults on Proposed Guidelines on Information Regarding Commodity Derivatives and Spot Markets
03/30/2016
The European Securities and Markets Authority launched a consultation on proposed guidelines on information expected or required to be disclosed on commodity derivatives markets or related spot markets under the Market Abuse Regulation. MAR will replace the current Market Abuse Directive and its implementing legislation from July 3, 2016. One of the changes that MAR will introduce is the expansion of the definition of inside information relating to commodity derivatives to cover price sensitive information relevant to the related spot commodity contracts as well as the derivative. This means that transactions in commodity derivatives based on inside information relating to underlying spot transactions will be expressly prohibited. In addition, the market manipulation prohibitions will include transactions in derivatives markets that manipulate the related spot commodity transaction and transactions in spot commodity markets that manipulate the related derivative. The definition of inside information for commodity derivatives includes information which is "reasonably expected to be disclosed or is required to be disclosed in accordance with legal or regulatory provisions at the Union or national level, market rules, contract, practice or custom, on the relevant commodity derivatives markets or spot markets". ESMA's proposed guidelines aim to set out the types of information that would be considered inside information for commodity derivatives or spot transactions by establishing a non-exhaustive indicative list of information that would be reasonably expected or required to be so disclosed. The consultation closes on May 20, 2016 and ESMA aims to publish its final report by late Q3 2016.
View the consultation paper.Topic : Financial Crime and Sanctions -
US Federal Financial Institution Regulatory Agencies Release Guidance to Issuing Banks on Applying Customer Identification Program Requirements to Holders of Prepaid Cards
03/21/2016
The Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, National Credit Union Administration, Office of the Comptroller of the Currency and Financial Crimes Enforcement Network issued guidance for certain banks, savings associations, credit unions and US branches and agencies of foreign banks (collectively, “banks”) clarifying the applicability of the customer identification program (CIP) regulations implementing Section 326 of the USA PATRIOT Act to prepaid cards.According to the guidance, a bank’s CIP should apply to the holders of certain prepaid cards issued by the institution as well as to holders of such cards purchased from third-party program managers that design, manage and operate prepaid card programs on the bank’s behalf. The guidance clarifies when, under the CIP rule, the bank should obtain information in order to verify the identity of the cardholder, including obtaining the name, date of birth, address and identification number (e.g., the Taxpayer Identification Number) of the cardholder.
Since prepaid cards have become mainstream financial products, US regulators have emphasized the implementation of strong and effective controls to mitigate money laundering and other financial crime risks associated with the issuance of prepaid cards and the processing of prepaid card transactions. Some controls have already been put in place, including limits on card value and the frequency and number of transfers permitted, as well as due diligence on third parties and cardholders.
View the interagency guidance.Topic : Financial Crime and Sanctions -
EU Technical Standards on Reporting of Trade Activity by Trading Venues to Regulators Published
03/17/2016
Commission Implementing Regulation on implementing technical standards on the timing, format and template of notifications to regulators by trading venues of financial instruments was published in the Official Journal of the European Union. In accordance with Market Abuse Regulations trading venues are required to notify regulators daily with information relating to the trade of financial instruments. The ITS required trading venues to report to their national regulators on the financial instruments which were subject to a request for admission to trading or admitted to trading or traded on the trading venue and set out, in accordance with the MAR, the required format and details of trading activity that must be provided. The information required for example, for the trade of Derivatives, includes the expiry date, price multiplier and underlying issuer. The full list of requirements are contained in the Annex to the ITS. It is intended that the related reporting obligations under the Markets in Financial Instruments Regulation will align with the obligations under these ITS. The ITS will apply from July 3, 2016.
View the ITS. -
EU Technical Standards on Reporting of Trade Activity by Trading Venues to Regulators Published
03/17/2016
Commission Implementing Regulation on the implementation of technical standards regarding the timing, format and template of notifications to regulators by trading venues of financial instruments was published in the Official Journal of the European Union. In accordance with the Market Abuse Regulation, trading venues are required to notify national regulators daily with certain transaction information. The ITS sets out the required format and details of trading activity that must be provided. With regards to derivatives trading, for example, information relating to the expiry date, price multiplier, and underlying issuer must be disclosed. The full list of requirements is contained in the Annex to the ITS. It is intended that the related reporting obligations under the Markets in Financial Instruments Regulation will align with the obligations under these ITS. The ITS will apply from July 3, 2016.
View the ITS.
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UK's Serious Fraud Office Closes Foreign Exchange Investigation
03/15/2016
The Serious Fraud Office announced that it had closed its investigation relating to allegations of fraudulent conduct in the foreign exchange market. The SFO has concluded there was insufficient evidence for a realistic prospect of conviction, based on the information and material from the Financial Conduct Authority. The SFO stated that there were reasonable grounds to suspect fraud had been committed. However, the available evidence was considered not to satisfy the evidential tests for prosecution under English law. The SFO considers that the evidential deficiency could not be remedied by extending the investigation.
View the SFO press release.Topic : Financial Crime and Sanctions -
Final EU Legislation on New Requirements for Insider Lists
03/11/2016
Commission Implementing Regulation on implementing technical standards on the precise format of insider lists under the EU Market Abuse Regulation was published in the Official Journal of the European Union. The ITS set out the requirements for issuers, emission allowance market participants, auction platforms, auctioneers and auction monitors, or any person acting on their behalf, to create and maintain insider lists. MAR extends the scope of the requirements on insider lists to impose the obligation on a wider range of persons as well as in relation to a wider scope of financial instruments. The ITS include template insider lists which aim to ensure the harmonization of information being collated in insider lists across the EU and require a greater amount of detail on insiders so that regulators may easily identify them if they need to. The ITS will apply from July 3, 2016, the same date that MAR will come into effect.
View the ITS.Topic : Financial Crime and Sanctions -
European Commission Adopts Secondary Legislation under the EU Market Abuse Regulation
03/09/2016
The European Commission has adopted regulatory technical standards under the Market Abuse Regulation on: (i) arrangements, systems and procedures for preventing, detecting and reporting abusive practices or suspicious orders or transactions; (ii) conditions for buy-back programs and stabilization measures; and (iii) investment recommendations. The RTS on preventing market abuse and reporting suspicious transactions impose requirements on operators of trading venues and persons professionally arranging or executing transactions for monitoring for and reporting on insider dealing or market manipulation and include a requirement to provide adequate training for their staff involved in such activities. The RTS on buy-backs and stabilization set out the criteria which must be met for trades to become exempt from the market abuse ban, including requiring certain disclosure and reporting, conditions for trading and trading restrictions. The RTS on investment recommendations set out disclosure and distribution requirements for investment recommendations. All of the adopted RTS are subject to approval by the European Parliament and Council of the European Union, following which they will be published and come into force. The adopted version shows that it is intended that they will apply from July 3, 2016 when MAR comes into effect.
View the RTS on preventing market abuse.
View the RTS on buy-backs and stabilization.Topic : Financial Crime and Sanctions -
Financial Action Task Force Risk-Based Approach on Money or Value Transfer Services
02/24/2016
The Financial Action Task Force published final Guidance on a Risk-Based Approach for Money or Value Transfer Services. This non-binding guidance is applicable to the entire MVTS sector but is primarily aimed at non-banking MVTS providers. The purpose of the guidance is to assist MVTS providers and associated banks, financial institutions and competent authorities in the development of a common understanding of a risk-based approach to anti money laundering and combating the financing of terrorism. The risk-based approach assists in the implementation of the revised FATF International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation published in 2012. The Guidance outlines key elements in the application of a risk-based approach to AML and counter-terrorist financing in the context of MVTS.
View the FATF Guidance.
View the FATF Recommendations.Topic : Financial Crime and Sanctions -
US Government Accountability Office Releases Report on Potential Illicit Uses of Remittance Transfers
02/16/2016
The US Government Accountability Office released a report that examines the potential illicit uses of remittances and analyzes the benefits of requiring remittance senders to provide certain types of identification at a threshold below the current $3,000 level for US anti-money laundering efforts. Among other things, the report examines: (i) BSA remittance requirements for remittance providers and related challenges that remittance providers face in complying with these requirements; (ii) money laundering risks that remittances pose; and (iii) views of relevant stakeholders’ (including the Financial Crimes Enforcement Network, regulators, remittance providers, law enforcement, and industry and other associations) on the extent to which requiring remittance providers to verify identification and collect information at a lower dollar transaction amount than is currently required, or adding a requirement to verify legal immigration status, would assist US federal agencies’ AML efforts.
View the report.Topic : Financial Crime and Sanctions -
Consultation on Proposed Guidelines under the EU Market Abuse Regulation Launched
01/28/2016
The European Securities and Markets Authority published proposed Guidelines under the Market Abuse Regulation. The consultation paper covers proposed Guidelines addressed to persons receiving a market sounding and Guidelines for issuers and emission allowance market participants on delaying disclosure of inside information. The MAR will apply directly across the EU from July 3, 2016.
Read more. -
EU Legislation Published on Protection of Whistle Blowers under the Market Abuse Directive
12/18/2015
A Commission Implementing Directive on the procedures and requirements for protection of individuals that report an actual or potential infringement of the Market Abuse Regulation to a national regulator was published in the Official Journal of the European Union. The Implementing Directive sets out the procedures for reporting, record-keeping requirements, measures for the protection of whistle blowers that are working under a contract of employment and arrangements for the protection of personal data of whistle blowers. Member States must transpose the requirements of the Implementing Directive into their national laws by July 3, 2016 and apply the new legislation from that date. The Market Abuse Regulation sets out the EU requirements on insider dealing, the unlawful disclosure of inside information and market manipulation and will apply directly across the EU from July 3, 2016.
View the Implementing Directive.Topic : Financial Crime and Sanctions -
European Commission to Extend Exemption from Market Abuse Regulation to Certain Third Country Central Banks
12/16/2015
The European Commission published a report on the appropriateness of an extension of the exemption from the Market Abuse Regulation to certain public bodies and central banks of third countries. MAR exempts Member States, members of the European System of Central Banks, ministries and other agencies and special purpose vehicles of one or more Member States or persons acting on their behalf from the application of MAR to transactions, orders or behaviour that are undertaken in pursuit of monetary, exchange rate or public debt management policies. The Commission may extend that exemption to certain public bodies and central banks of third countries after assessing and reporting to the European Parliament and European Council on the appropriateness of such an extension. The Commission intends to extend the exemption under MAR to central banks and debt management offices of Australia, Brazil, Canada, Hong Kong SAR, India, Japan, Mexico, Singapore, South Korea, Switzerland, Turkey and the United States and to the central bank of China.
View the report.Topic : Financial Crime and Sanctions -
Financial Action Task Force Report on Money Laundering through Physical Transportation of Cash
11/30/2015
The Financial Action Task Force published a report on money laundering through physical transportation of cash. The report, dated October 2015, analyzes input received from over 60 countries which identifies methods used by criminals to transport funds across borders. The report sets out real examples illustrating such methods and identifies the challenges that national law enforcement entities face to discover money laundering via the physical transportation of cash.
View the report.Topic : Financial Crime and Sanctions -
Financial Conduct Authority Proposes Amending its Guidance on Delaying Disclosure of Inside Information
11/20/2015
The Financial Conduct Authority published proposals to amend its guidance on when an issuer can delay disclosure of inside information under the FCA's Disclosure and Transparency Rules. Under the UK market abuse regime, which includes the transposition of the EU Market Abuse Directive, an issuer can delay disclosing inside information to protect its legitimate interest subject to certain conditions being met. FCA guidance on when an issuer might have a legitimate interest states that there are unlikely to be other circumstances where a delay would be justified except in relation to impending developments, the provision of liquidity by a central bank to the issuer or a member of its group and the non-exhaustive list of examples included in the DTR, which are taken from MAD. The FCA is proposing to delete that guidance. As a result of recent case law, stakeholders have highlighted to the FCA that issuers are concerned that more information should be considered inside information than was previously thought to be the case. However, the ability of the issuer to delay disclosure of that information is constrained by the FCA's guidance which goes further than the EU requirements. Under the Market Abuse Regulation, which comes into effect in the UK on July 1, 2016, the European Securities and Markets Authority must issue guidelines on an issuer's legitimate interest, including a non-exhaustive indicative list of examples. The FCA therefore does not intend to define a list of legitimate interests at this time. Responses to the FCA's consultation are due by February 20, 2016.
View the consultation paper. -
UK Regulator Consults on Handbook Changes to Implement Market Abuse Regulation
11/05/2015
The Financial Conduct Authority published a consultation paper on proposals for necessary changes to the FCA Handbook that are required to implement the new Market Abuse Regulation. The consultation paper seeks views, amongst other things, on the different options for implementing the new regime in two areas, namely: (i) the requirement for issuers to provide an explanation for a delay in the disclosure of inside information under certain circumstances; and (ii) the threshold for disclosure of managers' transactions, for persons discharging managerial responsibilities within issuers. MAR replaces the Market Abuse Directive and will apply from July 3, 2016. Comments on the consultation are due by February 4, 2016.
View the consultation.Topic : Financial Crime and Sanctions -
European Securities and Markets Authority Publishes Final Draft Technical Standards under the Market Abuse Regulation
09/28/2015
The European Securities and Markets Authority published a final report and final draft Regulatory and Implementing Technical Standards on the Market Abuse Regulation which replaces the Market Abuse Directive and applies from July 3, 2016. The report sets out the changes to the draft technical standards from those proposed in ESMA's initial consultation. The final draft technical standards cover: (i) detailed requirements for reporting of suspicious orders or transactions; (ii) the establishment, maintenance and termination of accepted market practices for certain behaviour not to be considered market manipulation; (iii) the arrangements, procedures and record keeping requirements that persons conducting market soundings must comply with for a market sounding not to be considered insider dealing, including the systems and notification templates and technical means for appropriate communication; (iv) the conditions that buy-back programmes and stabilisation of securities must meet not to be considered insider dealing or market abuse, including conditions for trading, restrictions on time and volume, price conditions and disclosure and reporting obligations; (v) notification requirements for trading venues of financial instruments for which a request for admission to trading is made, admitted to trading or traded for the first time; (vi) technical means and rules for public disclosure of insider information and rules on disclosure delays; (vii) arrangements for the objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflict of interest; (viii) the precise format of insider lists; and (ix) the format and template for notification of managers transactions. ESMA will submit the final report and final draft RTS and ITS to the European Commission for endorsement.
View the final report and technical standards.