FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) was established to assist in the detection and prevention of money laundering, but the past couple of years have been challenging for it to achieve its mandate.
A few weeks ago, I had the opportunity to attend another annual ACAMS AML & Financial Crime Conference in Las Vegas, Nevada. We all know conferences are a convenient way to spend time with customers and prospects, meet with partners, hear about the ever-evolving market challenges, and watch fellow AML professionals share case studies and lessons learned. But sometimes these conferences can be a whole lot of re-hashed stuff masked as “the new challenges you’ve yet to face, or best practices that you must adopt.”
Unfortunately, identity fraud as a crime continues to grow rapidly and is gaining in popularity as a tactic of criminals, with both new and existing financial services accounts susceptible to identity-focused activities.
Beneficial Ownership continues to be a hot topic of discussion across the globe. After the wave of new and clarified regulatory requirements in 2018, the fact that heated debate on this topic continues should come as no surprise. Whether it is the Fifth EU Directive (AMLD5), FinCEN’s Beneficial Ownership Final Rule, or FINTRAC’s Beneficial Ownership Amendments, all these guidelines seek to provide more clarity behind the reality and nature of the persons behind legal entities or shell companies.
The FCA recently published its first thematic review on AML in the capital markets industry. It does not make for comforting reading for practitioners. The Money Laundering Regulations first came into force in the UK in 1994, and applied to capital markets firms from the outset, and yet 25 years later the FCA states in this review, “We found that participants were generally at the early stages of their thinking in relation to money-laundering risk.” Obviously, there are cases where capital markets firms take AML seriously and have proper controls in place, but it is clear from the FCA thematic review that this is far from the case in many firms, possibly even the majority.
NICE Actimize recently released a new white paper on this topic, titled “The Moment for Implementing Real-Time Inbound Payment Profiling is Now: Are you ready to manage the AML issues?” by Robert Tharle and Adam McLaughlin, available to download here.
On May 9, 2019, FinCEN issued guidance on the “Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies”. While the guidance does not set forth any new regulatory requirements, it does combine all FinCEN regulations, rulings, and guidance around convertible virtual currencies (CVCs) since they were issued going back to 2011.
Over the last few years, vendors and financial institutions started to leverage Machine Learning and Artificial Intelligence to improve every possible analytical and operational aspect of software products across many types of industries, but particularly in financial crime and compliance categories. In many areas leveraging AI is a straight forward process, while in others it has proven to be more challenging.