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5 AML Regulations Set to Shape Financial Crime in 2024

Key Regulatory Changes in AML Compliance and Their Impact on Financial Institutions

As financial crimes become more sophisticated, global regulatory bodies are continually updating their frameworks to combat money laundering (AML) and terrorist financing. In 2024, several new and updated AML regulations will significantly influence the compliance landscape. Here are five key AML regulations set to shape financial crime in the coming year.

1. The US Corporate Transparency Act

The US Corporate Transparency Act (CTA) requires companies to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Effective from January 2024, this act aims to enhance transparency and prevent shell companies from being used to hide illicit activities. Financial institutions will need to update their Customer Due Diligence (CDD) processes to comply with these new requirements, ensuring that they accurately capture and report ownership information.

2. The EU’s Sixth Anti-Money Laundering Directive (6AMLD)

The EU’s 6AMLD introduces stricter penalties and expands the scope of AML regulations. It holds companies and individuals criminally liable for money laundering offenses, including aiding and abetting such crimes. Additionally, the directive emphasizes the need for stronger cooperation and information sharing between EU member states. Financial institutions operating in the EU must enhance their AML frameworks to comply with these stringent requirements.

3. The UK’s Economic Crime and Corporate Transparency Bill

In the UK, the Economic Crime and Corporate Transparency Bill, passed in 2023, sets the stage for improved financial crime data sharing among institutions. Articles 188 and 189 of the bill facilitate direct and indirect information exchange to tackle financial crime. This legislation mandates that institutions develop standards for sharing AML and KYC data, enabling quicker identification of bad actors and emerging fraud trends.

4. Australia’s Tranche 2 Reforms

Australia’s Tranche 2 reforms aim to extend AML obligations to designated non-financial businesses and professions (DNFBPs) such as lawyers, accountants, and real estate agents. These reforms, expected to be enforced in 2024, will require DNFBPs to implement robust AML measures, including customer identification and reporting suspicious activities. This expansion seeks to close existing regulatory gaps and reduce the risk of money laundering in non-financial sectors.

5. AI Regulations in the G7

The G7 countries are increasingly focusing on regulating the use of artificial intelligence (AI) in financial services. In 2024, new guidelines are expected to address the ethical use of AI, ensuring it is used responsibly in AML processes. These regulations will likely cover aspects such as data privacy, algorithmic transparency, and accountability. Financial institutions using AI for AML purposes will need to ensure their systems comply with these emerging standards to avoid regulatory scrutiny.

Conclusion

The regulatory landscape for AML is becoming more rigorous, with significant updates and new regulations set to take effect in 2024. Financial institutions worldwide must stay informed and adapt their compliance strategies to meet these evolving requirements. By doing so, they can better protect themselves against financial crime and contribute to a more transparent and secure financial system.

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