HKMA Issues Guide for Regtech Adoption in Customer Monitoring

The second guide published by the HKMA will allow banks to test their internal measures and infrastructure capabilities for the adoption of Regtech solutions. 

As part of a two-year roadmap, the Hong Kong Monetary Authority (HKMA) has published its second issue, the Regtech Adoption Practice Guide, to promote the adoption of regtech solutions in the banking sector. The new issue follows the first guide, which focused on the adoption of cloud-based regtech solutions. 

In January, the HKMA published case studies that highlighted the benefits of adopting regtech solutions, particularly for meeting Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) compliance targets. 

The new guide adds to the previous publication and focuses more on the benefits of adopting regtech solutions in the area of customer monitoring – a task that is necessary for banks to perform to stay AML/CFT compliant. 

The guide states that these solutions are of the essence, as manual processes are becoming a thing of the past. Additionally, regtech solutions can enable banks to stay up-to-date and collect necessary information related to customers and their transactions. 

“This information is essential to understanding whether the purpose and intended nature of the customer’s activities are commensurate with its risk profile and the nature of the business relationship”, the guide states. 

The HKMA adds that while the adoption of advanced technologies such as machine learning and cognitive solutions is still in its emergent stage, they are the prime areas of growth.

The Guide also highlights the major bottlenecks and pain points that banks face during customer monitoring, which regtech solutions can easily address. Key developments in the industry and possible regtech applications are also outlined. 

The Guide consists of practical guidelines that banks can follow to automate ongoing monitoring of customers. 

The Regtech Adoption Practice Guide can be viewed here.

Suggested Read: RegTech facilitates effortless AML Compliance


Tether Executives to Face DOJ Bank Fraud Probe

Since its inception in 2014, Tether has become the third-largest cryptocurrency platform in the world. 

Tether Ltd., the world’s third-largest cryptocurrency platform, could be at the receiving end of a criminal probe soon due to allegations that its executives engaged in bank fraud by failing to reveal its transactions were related to the crypto market. 

According to Bloomberg, the Department of Justice could be enforcing formal charges in the upcoming weeks against the executives of Tether – the stable coin that underpins liquidity in Bitcoin. 

Tether made a statement following the allegation that said: 

“Tether routinely has an open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability. We are proud of our role as industry leaders in promoting cooperation between industry and government authorities in the U.S. and around the world.”

The company added that it is committed to staying transparent with its customers and is using industry-leading technology for its growth. 

The DOJ is focused on initiating an investigation into an event that occurred years ago when Tether was in its initial stages. According to three sources, federal prosecutors are interested in finding out if the executives at Tether concealed from banks that transactions were linked to crypto. 

Being one of the most popular stable coins, such criminal charges would negatively impact the currency and will mark one of the most significant developments in the U.S. government’s crackdown on virtual currencies.

Suggested Read: Crypto Regulations 2021 – What Digital Currency Providers Need to do


Danske Bank Facing the Long-term Cost of Money Laundering

Danske Bank is still facing the consequences of its involvement in the €200 billion worth of money laundering scandal that occurred three years ago. 

Danske bank, which was once regarded as the Nordic region’s most esteemed companies, has yet to fully bounce back from its money laundering scandal, which has made it a prime target for investigations in the US and EU. While corporations and business entities have moved past the scandal, the Danske bank is still suffering from the customers end due to reputational damage. 

The CEO of Danske bank, Carsten Egeriis stated:

“In the Danish retail business, we do continue to see customer outflows and falling market shares. That is clearly one of my, and our, top priority points, to turn that around.” According to Bloomberg, the bank doesn’t publish a quarterly breakdown of customer flows. 

This case is a clear example of the consequences that can be faced by companies for having inadequate Anti-Money Laundering (AML) controls and measures in place. Ever since the bank revealed that it failed to screen $235 billion in non-resident cash that flowed through its Estonian branch, it has become the worst performing bank stock in the entire Nordic region. 

Apart from the diminishing market value and reputational damage, Danske bank is also facing other probes. It was caught overcharging low-income borrowers and also failed to properly advise retail investors that they faced losses. This, in return, has led to police charges and massive fines

The bank’s CEO, as well as ex CEOs, are also facing lawsuits. Philip Richards, a senior bank analyst at Bloomberg Intelligence in London, said that “regulators are now all over Danske’s operations, checking everything, challenging everything.” 

This means that the bank has “been forced to pull back from overseas operations, but also retrench in certain trading activities et cetera, where the regulator may deem Danske is taking too much risk,” he said. 

Suggested Read: AML Solutions: Eliminating the Risks of Money Laundering


Taiwan FSC Fines Taishin Int’l Bank For Inadequate Internal Controls

Taishin Commercial Bank of Taiwan penalised for defrauding NT $347 million from customers and failing to maintain KYC/AML compliance

In a statement last week, the Financial Supervisory Commission (FSC) of Taiwan declared that Taishin Bank personnel were involved in a fraudulent scheme through which they bagged NT $30 million from customers. 

A hefty administrative fine of NT $30 million was imposed on the bank by Taiwan’s financial regulatory authority, FSC, for violating Article 45-1 of the Banking Act and failing to maintain proper investment-linked insurance policies. 

The details shared by the watchdog stated that two partner entities, E.Sun Commercial Bank and Cathay United Bank stole NT $140 million from 41 customers and NT $17.32 million from four clients respectively. An FSC executive stated that,

“In the 2016 employee performance assessment, the weighting of sales was 40%. After that, the weighting was reduced, but it was still relatively higher than other banks”

Given that customers were defrauded for NT $347 million, the fine compared to the NT $20 million on E.Sun in November 2020 and NT 12 million on Cathay Bank in December last year was much greater in magnitude. 

According to Taishin Bank, the money was stolen by an ex-employee from nine clients, which is the highest among bank thefts. Not only that, this event was in progress for more than a decade starting from 2008 to last year. FSC quoted that schemes like these are possible because of inadequate internal controls and AML compliance procedures developed by banking entities. 

A former employee named Chou, a customer relations manager at the Zhonghe District branch in New Taipei City created a fake remittance form signed by a customer to send money to his sister’s bank account. This news was shared in a video conference by Huang Kuang, the Deputy Director of the Banking Bureau at Zhonghe. 

Huang further elaborated that despite Chou’s clients agreeing to reconcile, Taishin Bank did not save records for inspection of account activity. 

FSC terminated Claire Lin, Deputy Head of retail banking for almost three months, accounting for the mismanagement and deficiency in employee performance and evaluations. 

Suggested Read: 5 Ways Banks Can Minimize Risks In Light of KYC/AML


SFC Issues Warning on Unregulated Virtual Asset Platforms

Binance has announced that stock tokens will no longer be available on its website for purchase after SFCs statement. 

Following the ban on Binance in Italy, Japan, Germany, UK, and US, Hong Kong has also banned the crypto exchange. The Securities and Futures Commission (SFC) said, 

“No entity in the Binance group is licensed or registered to conduct ‘regulated activity’ in Hong Kong.”

Soon after this statement, Binance announced that stocks will not be available on its website for purchase and support will end on October 14 for the previously issued tokens. SFC has shown suspicion that Binance might be offering investors in Hong Kong some trading services. The regulator stated,

“The SFC wishes to make it clear that no entity in the Binance group is licensed or registered to conduct “regulated activity” in Hong Kong.”

As per the Securities and Futures Ordinance (SFO), stock tokens are considered as securities and they are subject to SFC’s regulatory remit. 

The SFC has warned that where the stock tokens are securities, marketing and/or distributing them in Hong Kong or targeting the region’s investors require a license from the SFC unless there is an exemption applicable. 

According to SFC, 

“It may also be an offence for any person to offer such tokens to the Hong Kong public without the SFC’s authorisation or registration. Any person who contravenes a relevant provision may be prosecuted and, if convicted, subject to criminal sanctions.”

The Securities and Finance Commission has warned investors to be extremely careful while investing in stock tokens offered on any unregulated exchange as legal remedies may not be available later on. 

The Italian Companies and Exchange Commision, the Malta Financial Services Authority and the Bank of Lithuania issued warnings last week that Binance is not licensed to operate in their jurisdiction to provide any investment services. 

Over the last few weeks, FCA, Japan’s FSA, MAS, BaFin, and Thailand’s SEC have also issued the same warnings. 


New Zealand’s FMA Issues New ID Verification Guideline

A new explanatory note has been issued by New Zealand identifying the sources of information that reporting entities can use for identity verification. 

The Financial Markets Authority (FMA), New Zealand has issued guidelines for identity verification protocols in the country. The previous explanatory note published by the ​​Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) supervisors in December 2017 has been replaced by the new guidelines. 

According to the new guidelines, the Confirmation service operated by the Department of Internal Affairs (DIA) and the Transport Agency (NZTA) driving licence records can be used to verify the name and date of birth of an individual during the process of identity verification.

Other electronic sources used in New Zealand for identifying individuals have also been pointed out, including Credit Bureaus, the Companies Office, the Land Registry (LINZ), and vehicle registrations (NZTA).

Additionally, the guideline sets out AML/CFT regulatory expectations that come into account during the review of reporting entity’s identity verification policies, procedures, and practices. 

For the compliance of AML/CFT regulations, reporting entities are required to perform identity verification on each individual prior to onboarding them. This step is deemed necessary to avoid fraudsters infiltrating the system. 

Examples of acceptable electronic identity verification (EIV) practices have also been included at the end of the guideline. 

The Explanatory Note can be viewed here.  

Suggested Read: Why Digital Identity Verification is Booming – A Detailed Insight


Italian Regulators Block Consumers from Investing in Binance

Italy has joined the list of warnings against Binance, directing citizens to avoid investing in the cryptocurrency. 

In an announcement from the national securities regulator on Thursday, citizens of Italy have been blocked from accessing the world’s largest cryptocurrency exchange, Binance, on all its platforms. 

The announcement made by CONSOB (Commissione Nazionale per le Società e la Borsa) made it clear that consumers are not even allowed to use Adding to this, CONSOB revealed that Binance is not authorized to provide its services and operate in Italy, even though parts of the website were written in Italian. 

“It is important that savers are informed that transactions in instruments related to crypto-assets may present risks that are not immediately perceptible, due to their complexity, the high volatility of the prices of these instruments as well as for malfunctions and cyberattacks to which the IT infrastructures used for such operations may be subjected,” stated the regulator. 

The new regulatory ban from Italy adds to the list of warnings that have been announced against Binance. UK’s Financial Conduct Authority (FCA) recently banned cryptocurrency trading through Binance in the country over concerns of money laundering and terrorist financing. Other countries also hold a firm stance against the volatile cryptocurrency exchange due to the high risks associated with it. 

Binance also received a negative response from Thailand and Japan, while Canadian regulators in Ontario have forced the exchange to restrict its operations.

Statista survey revealed that by 2020, 48% of Italians were using cryptocurrency to make online purchases, pointing out increased adoption of digital assets in the country. 

A source from Binance told Insider that the notice from CONSOB does not have a direct impact on the services provided by Binance. 

The spokesperson also stated that the crypto exchange is working in collaboration with regulators to maintain compliance. “We are actively keeping abreast of changing policies, rules and laws in this new space”. 

Suggested Read: Crypto Regulations 2021 – The Updated Compliance Regime in France


Interpol Calls for Global Action to Prevent “Ransomware Pandemic”

Interpol has called for united global action to be implemented against ransomware attacks, following a 311% rise in one year. 

Interpol has announced a strict action plan to be made against ransomware attacks, as criminals made USD 350 million in 2020 from such payments. Secretary-General of Interpol, Jürgen Stock, has directed police authorities worldwide to collaborate with industry partners for the timely prevention of a ransomware pandemic. 

At the Interpol High-level Forum on Ransomware, Stock said that an international coalition is required to tackle terrorism, human trafficking and mafia groups. Although some prevention measures exist, stricter policies have become necessary.  

The call has come as a response to the exponential growth in cybercrimes, with criminals using new businesses models to provide rRansomware-as-a-service. 

“Despite the severity of their crimes, ransomware criminals are continuously adapting their tactics, operating free of borders and with near impunity,” said Secretary General Stock. 

Stock believes that ransomware has become too big a threat to be managed by single entities alone. To handle the magnitude in a more effective way, urgent global action is needed, which Interpol can facilitate. 

Interpol has also laid down four recommendations to create a global leadership framework to mitigate ransomware attacks. These include:

  • Raise awareness, partnerships and information sharing
  • Target pre-exploit disruption of ransomware and its ecosystem through reactive and proactive global law enforcement actions
  • Provide in-event emergency support against ransomware attacks using INTERPOL’s global network and capabilities
  • Ensure post-event support following ransomware attacks to increase resilience, agility and responsiveness

With the use of technologies powered by AI models, ransomware attacks and their disruptive consequences can be minimized if not completely eradicated. 

Suggested Read: Kaseya Ransomware Attack – How to Protect Your Organization from Cyber Risks

japan fsa

Japan FSA, Central Bank to Assess FI’s AML, Anti-fraud Measures

Reports have revealed that Japan’s FSA and BOJ are seeking to better understand whether the current AML, anti-fraud, and cybersecurity measures at FIs are sufficient. 

The Financial Services Agency (FSA) and the Bank of Japan (BOJ) are planning to dig deeper into how well AML and anti-fraud measures are working at regional banks and other financial institutions, according to Nikkei.

The investigation is expected to commence as soon as this summer due to the surge in fraudulent money transfers in the country. A report by Japan’s National Police Agency revealed that 1,734 fraudulent online money transfers took place last year. This depicts a 16% rise compared to last year. 

The aim behind the regulator’s investigation is to check whether FIs are taking necessary precautions to counter fraudulent money transfers. In case of any deficiencies, further assessments and actions will be implemented. 

The regulators will also be investigating the status of Anti-Money Laundering procedures at banks and other financial institutions. This follows a revision of the FSA’s AML guidelines issued this February, which aimed to enhance customer management at banks. 

The BOJ has been made part of the investigation at the request of the FSA, as numerous financial institutions may be involved. Although the bank does not have supervisory authority, it can assist FSA by collecting and sharing information through on-site examinations of FIs.  

Depending on the results compiled, each FI that lacks necessary measures will be issued improvement orders or requested to submit reports regarding their finances and operations. 

Nikkei also reveals that the FATF (Financial Action Task Force) is set to publish an assessment of Japan’s AML framework in August, pointing out insufficient internal control measures at Japanese FIs. 

In the previous assessment by the FATF conducted in 2008, numerous FIs in Japan were pointed out for having lax identity verification controls in place. The latest assessment is expected to follow in the same footsteps, highlighting shortcomings and potential results in Japan being placed into enhanced follow-up.

New legislation is also expected to be introduced to parliament next year to strengthen the existing penalty regime for AML violations.

Suggested Read: Japanese FSA to Beef Up AML Systems from Fiscal 2021


Global Drug, Money Laundering Hub Busted in Las Vegas

Federal law enforcement officials in Las Vegas have dismantled an international money laundering and cocaine hub during an ongoing investigation that started six years ago. 

An investigation commenced six years ago has dismantled a money laundering and drug hub in Las Vegas, as reported by the officials on Wednesday. This involves more than 30 other states. 

The Las Vegas FBI chief and federal prosecutor told the reporters that the probe publicized after the arrest of six people in California, Arizona, Washington, and Nevada over drug and money laundering charges. 

Christopher Chiou, the US Attorney and special agent in charge of the Las Vegas, Aaron Rouse were bound by law enforcement agencies in Colombia, Romania, United Kingdom, Canada, Israel, and Australia. According to Chiou, millions of dollars were involved nin the case.  

The chief has characterized the conspiracy as a “cog” in a money laundering operation supporting transnational criminal entities. Aaron denied to provide exact numbers or any other details of the six arrests. 

“Take the cog out, the spokes fall,” he said. “Their hub is gone.”

The FBI chief further stated that two of the six people are residents of Las Vegas named in separate indictments. Others are citizens of Seattle, San Jose, Los Angeles, California, and Phoenix. 

The woman and five men are aged between 31 and 51. Chiou further communicated that all the six individuals will be prosecuted in Las Vegas and face a conspiracy charge. Four of the six are accused of money laundering, while three will face additional drug distribution charges. There is a high probability that each could face decades in prison. 

Suggested: Next PostNext A Comprehensive Guide to AML Compliance [2020] 

ecb news

ECB Will Be Launching Digital Euro Project

An electronic equivalent of banknotes and coins, the digital euro will likely be a digital wallet that eurozone citizens can keep at the ECB. 

The European Central Bank (ECB) will be going forth with a multi-year project to create a digital version of the euro. The digital euro is likely to be a type of digital wallet that Europe-based consumers can keep at the ECB. 

The decision has been given the green light to meet the growing demand for e-payment, and to tackle a boom in private sector digital currencies, such as Binance’ Bitcoin and Facebook’s proposed Diem.

The digital euro will serve as an online bank account at ECB itself, rather than a commercial institution. This is a key difference as ECB cannot run out of funds, making the digital currency more secure than its private counterparts. 

The ECB will be directly managing the digital euro instead of relying on the private sector, due to high risks of physical currency diminishing in comparison, as observed in Sweden. 

Another driving force behind the digital euro is that the biggest providers of payment services, Mastercard and Visa, originate from outside the bloc. 

The ECB has given itself two years to finalize the digital euro’s design. After that, it will need to be validated by its Governing Council. If approved, the ECB will work on implementation for another three years before launch. Thus, the plan is set to launch after a five-year planning period. 

Additionally, the digital euro was not previously discussed in the EU treaty. Therefore, legislative changes are also expected. 

Following the decision to launch the digital euro, critics have raised the concern that the ECB might use the electronic currency to enforce monetary policy measures, including negative interest rates on household deposits or direct cash transfers.

Suggested Read: Digital euro successfully tested at the Bank of France


New Zealand to Update AML/CFT Regulation ​​from 9 July 2021

Among other changes, reporting entities have been directed to conduct customer due diligence on nominee directors and nominee general partners of companies.

To enhance the current money laundering laws of the country, New Zealand’s government is planning to introduce updates in the AML/CFT (Anti-Money Laundering and Counter Financing of Terrorism) system starting from July 9, 2021. 

The decision has surfaced as two key regulations of the AML/CFT system were set to expire. Namely, the AML/CFT Exemptions were scheduled for expiry on June 30, 2020, while AML/CFT Definitions Regulation 2011 partially expired on July 27, 2021. 

The cabinet has agreed to make amendments to the Exemption Regulations, the Requirements and Compliance Regulations, and the Definitions Regulations. 

The changes mentioned in the document published on the Ministry of Justice’ website are summarised below.

  1. Ensure that limited partnerships can more easily be included in designated business groups.
  2. AML/CFT audits will be required every three years. However, the Financial Markets Authority (FMA) can request a more frequent audit or a less frequent audit.
  3. Companies will be exempt, for 30 days unless otherwise notified by the Police, from having to conduct enhanced due diligence as may be required under the Commissioner’s Order. 
  4. Businesses are required to ask customers to provide information regarding nominee director relationships. If the relationship is found, enhanced due diligence must be implemented by the business (a transitional compliance period will apply until 29 April 2022).
  5. A change is being introduced to clarify that AML/CFT obligations apply to ordering and beneficiary institutions of wire transfers over NZD 1,000, even if no existing business relationship has been established with the sender or receiver. 

In-depth detail regarding Anti-Money Laundering and Countering Financing of

Terrorism regulations update can be viewed here

Suggested Read: FATF Highlights the Gaps in New Zealand’s AML Measures

singapor news

Singapore Proposes Additional AML/CFT Requirements for FIs

Monetary Authority Singapore has issued a consultation paper proposing the scope of AML/CFT to be extended to financial institutions dealing with precious stones, precious metals and precious products.

Monetary Authority Singapore (MAS) has proposed further AML/CFT obligations for financial institutions (FIs) that deal with precious stones, precious metals and precious products (abbreviated to PSM). In particular, the consultation paper adds requirements for PSM dealings involving digital payment tokens, and customers that may be considered higher risk shell companies.

According to the PSM proposal, all FIs that directly deal with PSMs or act as an intermediary will be liable to comply with the AML/CFT requirements. This involves activities conducted by the FIs such as the manufacture, import, sale, purchase for resale of PSM, in addition to the selling or redeeming of any related asset-backed tokens.

The PSM proposal highlights the following conditions, where customer due diligence must be implemented by financial institutions: 

  1. The FI establishes an account relationship with any customer for the purpose of dealing in PSM
  2. The FI undertakes any PSM transaction involving more than SGD 20,000, regardless of the payment mode
  3. The FI suspects money laundering or terrorism financing or has doubts about the veracity or adequacy of any information previously obtained

To further enhance Singapore’s financial sector and prevent criminal activities such as money laundering and terrorism financing, the consultation paper also proposes to update the current MAS notices regarding AML/CFT compliance for FIs and VCCs (Variable Capital Companies). 

The proposal will expand the scope of AML/CFT requirements to Digital Payment Tokens (DPTs) and Digital Tokens that are Capital Markets Products (DCMPTs). Similar to the requirements introduced in the Payment Services Act, FIs would be required to conduct Customer Due Diligence from the first dollar for occasional transactions involving DPTs or DCMPTs.

Additionally, the PSM Notice will also require financial institutions to collect and record information regarding beneficial owners when they transmit or arrange for the exchange of DPTs on behalf of customers. FIs will also have to immediately and securely submit this information to beneficiary DPT service provider, and screen the value transfer originators and beneficiaries against relevant information sources for AML/CFT risks. 

FIs and VCCs have also been directed to implement adequate risk assessment for the timely detection of shell companies that pose higher ML/TF risks. MAS will also be laying down guidance regarding the red flags of money laundering, including examples of unusual transactions and behavioural caution points. 

Additional guidance regarding the alignment of AML/CFT obligations for credit card or charge card licensees will also be introduced in the Notice, as introduced by the Payment Services Act.

The consultation paper is open for comment until 10 August 2021.

Suggested Read: Why Financial Industry Needs KYC/AML Compliance?

nab news

NAB and CBA Exposed Over PNG Money Laundering Case

NAB and CBA have been given a “formal warning” instead of criminal charges, as the PNG regulator claimed this was the “least punitive” response.

BSP Financial Group, the largest lender in the Pacific, has put CBA (Commonwealth Bank of Australia) and NAB (National Australia Bank) under scrutiny once again for their part in the money laundering case in Papua New Guinea. Following the breaches of anti-money laundering (AML) laws, the lender has been ordered to remove members from its senior management. 

PNG regulators found BSP to have committed several violations of the anti-money laundering laws, closing up to thousands of individual breaches.  

The bank is being asked by the regulators to remove and replace certain members of the higher management, including the chief executive, Robin Fleming. BSP has also been mandated to hire an external auditor to ensure it stays compliant with AML laws in the future. 

While BSP could have faced criminal and civil charges given the seriousness of its AML breach, the Financial Analysis and Supervision Unit (FASU) which sits within the PNG central bank, issued the lender with a “formal warning”, saying this was the “least punitive” response.

“These regulatory measures seek to address the systemic culture of non-compliance within BSP … and are deemed necessary to protecting the integrity of PNG’s financial system,” the FASU stated in a statement authorized by its director, Benny Popoitai.

CBA and NAB are known to provide a gateway for BSP’s clients to transfer money in and out of Australia, as they provide so-called “correspondent” banking services to BSP in Australia. 

Additionally, according to Australian law, NAB and CBA have been directed to implement “due diligence assessments” on their “correspondent banks” (BSP in this case) to ensure they are not facilitating money laundering. 

BSP’s operations are spread across PNG, the Solomon Islands, Tonga, Samoa, Fiji, the Cook Islands and Cambodia. It also has correspondent banking relationships with Bank of America and Wells Fargo.

Suggested Read: Reports Reveal NAB Contract Workers Received Little to No AML Training


BNM Issues New Policy For Remote Corporate Customer Onboarding

BNM has issued a new policy document that permits MSBs to onboard customers remotely in the corporate sector. 

The Central Bank of Malaysia, also known as Bank Negara Malaysia (BNM), recently published a new policy document permitting Money Service Businesses to use non-face-to-face verification processes while onboarding new clients. 

E-KYC verification procedures were introduced for individual remittance customers in 2017, while the scope of e-KYC was expanded to money-changing businesses in 2019. 

E-KYC verification processes are implemented by money service businesses to ensure compliance with AML/CFT regulations and to safeguard the safety and integrity of money services. BNM’s policy document sets out the minimum requirements that licensed MSBs must fulfil during remote customer onboarding. 

The document states that Money Service Businesses must first obtain approval from their Board of Directors and Central Bank of Malaysia prior to the implementation of e-KYC verification in corporate customer onboarding.

It also states that corporations need to ensure proper identification and verification procedures of customer identities on a continuing basis in a remote setting in the same way as implemented during in-person verification. Money laundering risks and suspicious transaction reports must also be filed to prevent ML/CFT activities. 

MSBs must also implement at least one additional verification method on top of the mandatory verification procedure, BNM says. Video calls to the customers must be made to ensure they are actually who they claim to be, requiring them to show proof of their business. However, an unannounced introductory phone call must be made prior to the video call. 

During the video call, MSBs may request the person to show proof of business existence. This can include the use of consent notes or inventories.

“Reporting institutions must ensure the systems and technologies developed and used for the purpose of establishing business relationships using non-face-to-face channels (including verification of identification documents) have capabilities to support an effective AML/CFT compliance programme,” the document says.

BNM adds that the companies that fail to comply with the new rules will be facing appropriate enforcement action, including licence suspension or direct action against MSB directors, managerial staff, and other employees. 

Suggested Read: What is Biometric Consent Authentication?


EU Proposes New AML Agency For Addressing Money Laundering

The EU document has been proposed to introduce tough action against money laundering in the region post-Brexit. 

To tackle the ever-increasing incidents of money laundering in the bloc, the European Union has issued a document, proposing the launch of a new Anti-Money Laundering Agency (AMLA) for supervising financial institutions.

Europe came into the global spotlight following the 2018 money laundering case of Danske Bank, where 200 billion euros of suspicious transactions were passed through the Estonian branch of the bank between 2007 and 2015. 

The new AML agency makes up one part of a broader plan made for the region to tackle money laundering. The EU’s regulatory body, the European Commission, is set to propose the document later this month, sources revealed to the Wall Street Journal. 

The draft notes down “Money laundering, terrorist financing, and organized crime remain significant problems which should be addressed at Union level.” 

The AMLA will be given the authority to make operational decisions on high-risk companies. 

“By directly supervising and taking decisions towards some of the riskiest cross-border financial sectors obliged entities, the Authority will contribute directly to preventing incidents of money laundering/terrorist financing in the Union,” the Commission proposal said.

The draft highlights how the EU states would have to cooperate to build mutually acceptable money laundering laws for the project to work. 

The Commission also states that the need for new laws is necessary to regulate crypto assets that are currently exposed to money laundering and terrorist financing. Currently, the EU consists of several weak jurisdictions, including Austria, Malta, the Baltic States, and Luxembourg. 

The EBA (European Banking Authority), a Paris-based EU regulator, already has an anti-money laundering unit. The proposed AMLA will take over the functions of the EBA. 

The draft is set to be published on 20th July 2021 after final edits, while the AMLA is due to begin functioning by 2026, conditional on the agreement of the member states. 

Suggested Read: Anti-Money Laundering Compliance for Crypto Exchanges [2021 Update]

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