FinCEN Seeks to Extend AML Requirements to All Banks

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The U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, proposed a rule that would require banks lacking a federal regulator to establish an anti-money laundering compliance program.

The proposal would eliminate what FinCEN called a “gap” in anti-money laundering coverage between banks with and without a regulator. The rule would require unregulated banks to have essentially the same compliance programs as regulated financial institutions, and unregulated banks could use their existing policies and procedures to fulfill the new obligations, FinCEN said in a brief statement.

“Banks without a federal functional regulator may be as vulnerable to the risks of money laundering and terrorist financing as banks with one,” the proposal said.

FinCEN said Thursday it estimated the proposal would affect a total of 740 banks across the country, most of which are private banks, as well as certain trusts and credit unions. Although these banks haven’t historically haven’t been required to establish anti-money laundering programs, they are required to comply with many other aspects of the Bank Secrecy Act, including the filing to FinCEN of suspicious activity reports and currency transaction reports.

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Where next for anti-money laundering regulation?

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The UK’s actions surrounding the EU’s Fourth Anti Money Laundering Directive will be a key indicator of its planned approach in the period following the referendum

When it comes to anti-corruption legislation, the United Kingdom is considered a world leader. Its tough UK Bribery Act is viewed as one of the ultimate global standards for tackling bribery. Indeed, in relation to anti-money laundering (‘AML’) regulation, the UK has a reputation of going above and beyond the recommended standards. For example, it has adopted an ‘all crimes approach’ to current European AML governance meaning there is no minimum level of predicate offence below which acts need not be reported.

Yet in a post- Brexit world, it is fundamental that the ability and will of the UK to maintain such tough standards doesn’t waiver, with the country eager to attract new foreign investment and sustain current levels of growth. As the European Commission urges member states to bring forward the implementation of the Fourth Money Laundering Directive (‘4MLD’) to the end of 2016, this could prove a significant test for exactly which direction the UK will head once it exits the EU. Will the UK introduce the Directive given that Prime Minister, Teresa May, has indicated that she’s unlikely to trigger Article 50 until 2017, or will it press pause and take a completely new stance?

Tackling terrorist financing

As part of a series of Anti-Money Laundering Directives, the EU 4MLD aims to tackle tax evasion, terrorist financing and money laundering. This fourth directive introduces several key changes to the 2007 UK Money Laundering Regulations and includes provisions to introduce a Beneficial Ownership Register for legal entities, trusts and companies. The 4MLD also implements harsher requirements for both Simplified and Enhanced Due Diligence and advocates bigger responsibilities for senior managers as well as extending the definition of politically exposed persons (‘PEPs’). While until recently EU member states were given until June 2017 to introduce the 4MLD into national legislation, the European Commission in its action plan against terrorist financing, urged member states to bring forward the date of implementation to the end of 2016 and improve the exchange of information between countries.

Of course, post referendum it remains unclear whether the UK will continue to implement new EU regulation, particularly once Article 50 has been triggered and latterly the European Communities Act repealed. While it may eventually still choose to maintain equal standards, any reluctance to implement similarly strict principles in the next two to three years could prove problematic. Hesitancy from the UK to continue to be part of any enhanced practices implemented by EU member states could have a knock on effect on the success of the 4MLD and significantly hinder the ability to investigate international money laundering.

Whether the 4MLD is adopted or not, it will be vital that the UK maintains its tough stance and does not feel commercial pressure to relax its financial controls in order to encourage investment in the UK. Continuing its membership of organisations formed to combat financial crime, such as the FATF (Financial Action Task Force), will play a fundamental role in ensuring this is the case, as will continuing to follow guidance and standards set by such organisations.

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US claims anti-money laundering policy is ‘not zero tolerance’

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The US Treasury has sought to soften the perception of its enforcement of an anti-money laundering (AML) regime against international banks, by emphasising that its policy is not one of “zero tolerance”.
US claims anti-money laundering policy is ‘not zero tolerance’

The regime it operated was “fair and effective”, the US department said in a statement and factsheet, with about 95% of anti-money laundering (AML), countering the finance of terrorism (CFT) and sanctions compliance problems getting corrected through cautionary letters or other guidance without the need for an enforcement action or penalty.

The statement is aimed at countering moves by international banks to withdraw correspondent banking services from jurisdictions or certain regions for de-risking reasons.

“The rare but highly visible cases of large monetary penalties or settlements for AML/CFT and sanctions violations have generally involved a sustained pattern of reckless or willful violations over a period of multiple years and a failure by the institutions’ senior management to respond to warning signs that their actions were illegal.  These large cases did not represent small or unintentional mistakes,” it said.

The fact sheet also dispelled “certain myths” about US supervisory expectations, “notably that there is no general expectation for banks to conduct due diligence on the individual customers of foreign financial institutions”.

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SIFIU launches anti-money laundering program

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THE Solomon Islands Financial Intelligence Unit (SIFIU) finally launched and coordinated another major Anti-money laundering and combating financing of terrorism (AML/CFT) National Risk Assessment (NRA) program that commences Monday this week.

The Risk Assessment work may take up to six months to complete and requires the cooperation of both the private and the public sector.

A one full day workshop held at the IBS hotel Wednesday this week was part of the NRA work.

The Solomon Islands has had one NRA in 2009 and the exercise that is currently undertaken is the 2nd one the country is going through.

The full-day intensive workshop held on Wednesday was conducted by the Asian Development Bank (ADB) consultant and financial intelligence expert, Neil Jen Sen, with the support of SIFIU officials and the Central Bank of Solomon Islands (CBSI).

 

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At least 85 real estate firms not complying with anti-money laundering rules

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At least 85 real estate companies have not implemented a plan showing how they are trying to detect money laundering and other suspicious transactions, nearly 15 years after they were required to do so, according to data obtained by The Canadian Press.

In Ontario, 19 real estate firms said they hadn’t fully implemented a compliance regime for anti-money laundering rules.

The federal anti-money laundering agency received 337 compliance reports from roughly 1,000 companies in the real estate sector it surveyed — including brokers, sales representatives and developers — between Jan. 1, 2013, and Feb. 8, 2016.

The data, which was obtained through an access-to-information request, represents only a small sampling of the real estate industry. There are about 20,000 companies in the real estate sector that are required to report to Fintrac.

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MAS to Launch New Anti-Money Laundering Initiative

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The Monetary Authority of Singapore, the country’s central banking authority, has stepped up its plans to issue an overhaul to its internal infrastructure and systems in a bid to help curb money laundering, given the recent cropping of incidents worldwide, according to a recent Wall Street Journal report.

MAS to Launch New Anti-Money Laundering Initiative

A couple months ago, the central bank of Bangladesh learned a painful lesson as it was targeted by a $1.0 billion heist that succeeded in hacking SWIFT systems, resulting in the theft of $81.0 million. Since then, a panel of international banks have all instigated probes and overviews into their respective payments systems, given the vulnerabilities uncovered via the Bangladeshi incident.

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Nordea flags Danish anti-money-laundering probe

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STOCKHOLM– Nordea Bank AB said Friday the Danish Financial Supervisory Authority has criticized the bank’s Danish unit in its anti-money-laundering-probe and will hand over the matter to the police for further investigations and possible sanctions.

The regulator started its probe in June 2015 and its findings are related to the bank’s earlier reported deficiencies in the area, it said.

“The deficiencies within anti-money-laundering are known to us and we have in close dialogue with the authorities addressed these in the action plan that we launched last spring,” said Nordea Chief Executive Casper von Koskull.

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DOJ resets anti-money laundering probe vs Kim Wong

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This was after Wong sought more time to submit his counter-affidavit in response to the complaint over the controversial $81-million laundered money from the Bank of Bangladesh which slipped through the Philippine financial system through the Rizal Commercial Banking Corp. (RCBC).

Based on the nine-page complaint filed by the Anti-Money Laundering Council (AMLC), also facing a case for violation of Section 4 (a) and (b) of Republic Act (RA) No. 9160, otherwise known as the the Anti-Money Laundering Act of 2001 is Chinese national Weikang Xu.

Section 4 (a) holds accountable for money laundering any person who transacts or attempts to transact a monetary instrument or property which represents, involves, or relates to, the proceeds of any unlawful activity; while section 4 (b) covers any person who performs or fails to perform any act despite knowledge that any monetary instrument or property involves the proceeds of any unlawful activity and, therefore, facilitates the offense of money laundering.

Bank CEO defends Canada’s anti-money laundering practices

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The Bank of Montreal’s CEO is defending the Canadian banking sector’s anti-money laundering practices following reports linking a major Canadian financial institution to a Panamanian law firm at the centre of a data leak on the use of offshore tax havens.

Bill Downe says Canadian banks have “dramatically” beefed up their anti-money laundering controls over the last seven to 10 years at the request of various governments around the world.

“I would say that the current Bank Secrecy Act anti-money laundering provisions, particularly involving U.S. dollar accounts, are extremely robust,” Downe said in an interview following the bank’s annual shareholder meeting in Toronto on Tuesday.

 

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Tighter money laundering rules planned

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Wealthy people who fall under suspicion of criminal activity will have to explain before any charges how they came by their assets under a new anti-money laundering initiative announced by the British government on Thursday.

The plans will also increase the responsibility of businesses to report suspicious financial activity and introduce a criminal offense of illicit enrichment — targeting public officials who exploit their power.

Investigators will be able to designate a company as being “of concern in relation to money laundering”, a move that would force banks, law firms and accountants to use special measures when doing business with them.

The move is the latest in a series of steps the government has taken in the past year to beef up transparency and law enforcement powers in Britain’s financial system.

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