Category: Regulation

Council and Parliament reach political agreement to criminalise violation of EU sanctions

Regulation, Sanctions
The Spanish presidency of the Council and the European Parliament concluded their negotiations for an EU law which introduces criminal offences and penalties for the violation of EU sanctions. This directive ensures that those who violate or circumvent EU sanctions will be prosecuted. This gains particular importance in the context of the Russian war of aggression against Ukraine. The law lays down that member states will need to define certain actions as criminal offences. These include: helping persons subject to EU restrictive measures to bypass a travel bantrading sanctioned goods and running transactions with states or entities which are hit…

Bipartisan Anti-Crypto Terror Financing Bill Heads to U.S. Senate

Counter Terrorist Financing, Regulation
A bipartisan group of U.S. senators including Mitt Romney (R-UT) introduced legislation that expands sanctions to foreign entities supporting all U.S.-designated terrorist groups, including through crypto transactions, giving law enforcement an additional toolkit to tackle terror financing.“The Terrorist Financing Prevention Act of 2023, introduced by the Senators, aims to prevent Foreign Terrorist Organizations and their financial enablers, including those using digital assets, from accessing U.S. financial institutions, imposing sanctions and strict regulations to counteract these activities,” the bill reads.The proposed act broadens current sanctions, initially focused on Hezbollah, to include all U.S.-designated foreign terrorist organizations and their supporting foreign entities.…

Landmark Agreement: EU Nears Establishment of Robust Anti-Money Laundering Authority

Regulation
In a historic move, the European Union’s Council and Parliament have provisionally agreed to forge ahead with the creation of a groundbreaking European authority focused on combating money laundering and the financing of terrorism – the Anti-Money Laundering Authority (AMLA). This breakthrough represents a cornerstone in the broader anti-money laundering package, designed to fortify the EU’s financial system and protect the interests of its citizens. Under the terms of the provisional agreement, AMLA is set to wield both direct and indirect supervisory powers over high-risk entities within the financial sector. Notably, the agreement leaves the question of the authority’s seat…

US Regulators Agree to Ramp Up Oversight of Systemically Risky Non-Banks

Regulation
In a significant policy shift, U.S. regulators have cleared the path for an increased oversight of asset managers, hedge funds, and other non-bank financial institutions that are perceived to pose potential risks to the country’s financial system. This move marks the revival of a robust regulatory framework that had been sidelined during the previous administration of President Donald Trump. The Financial Stability Oversight Council (FSOC), led by the Treasury Department and composed of other major federal agencies, has also introduced a new framework aimed at identifying impending risks within the financial system. This decision is an integral part of the…

ADGM introduces the worlds first DLT Foundations Regime

Digital Currencies, Regulation
The Registration Authority (RA) of Abu Dhabi Global Market (ADGM) officially released the Distributed Ledger Technology (DLT) Foundations Regulations 2023, marking a significant milestone in the evolution of digital assets regulatory frameworks across the region and at an international level. This newly implemented legislative structure is designed to provide a comprehensive framework for DLT Foundations and Decentralised Autonomous Organisations (DAOs), enabling them to operate and issue tokens recognising the unique needs of the Blockchain industry. This new regime comes in line with ADGM’s strategy to foster initiatives in the broader blockchain and digital asset realm. By setting a global benchmark…

Cyprus to Tighten Crypto Regulations in Accordance with FATF

Digital Currencies, Regulation
One of the friendliest European jurisdictions to crypto, Cyprus, might bring its industry regulation to tighter standards. According to an Oct. 10 report by the Cyprus Mail, the Cypriot Ministry of Finance intends to amend the existing Prevention and Suppression of Money Laundering and Terrorist Financing Law. The ministry has presented its amendments package to the House of Representatives Standing Committee on Legal Affairs, Justice and Public Order. It seeks to align Cyprus with international standards for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) set by the Financial Action Task Force (FATF), as well as the recommendations of…

FinCEN Proposes New Regulation to Combat Money Laundering and Terrorist Financing

Counter Terrorist Financing, Money Laundering, Regulation
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has taken a significant step in the fight against money laundering and terrorist financing by announcing a Notice of Proposed Rule Making (NPRM). This NPRM identifies international Convertible Virtual Currency Mixing (CVC mixing) as a class of transactions of primary money laundering concern. The move comes in response to growing concerns regarding the extensive use of CVC mixing services by various illicit actors worldwide, including state-affiliated cyber actors, cybercriminals, and terrorist groups such as Hamas, Palestinian Islamic Jihad, and the Democratic People’s Republic of Korea (DPRK). The proposed rule…

UK’s Economic Crime and Corporate Transparency Act receives Royal Assent

Money Laundering, Regulation
Robust laws to fight fraud, counter corruption and bolster legitimate business received Royal Assent today. The Economic Crime and Corporate Transparency Act introduces world-leading powers which will allow UK authorities to proactively target organised criminals and others seeking to abuse the UK’s open economy. Companies House will receive enhanced abilities to verify the identities of company directors, remove fraudulent organisations from the company register and share information with criminal investigation agencies Law enforcement agencies will benefit from greater powers to seize, freeze and recover cryptoassets, while groundbreaking legal reforms will allow the courts to dismiss spurious lawsuits which seek to…

Off the shelf AML policies put firms and clients at risk

Regulation, Regulatory Risk
The Solicitors Regulation Authority’s (SRA) 2022/23 anti-money laundering (AML) report warns of the risks posed by common AML issues. Find out what steps you and your firm can take to comply with your obligations. The SRA carried out 177 law firm inspections and 73 desk-based reviews between April 2022 and April 2023. One in three (30%) of firms inspected were fully compliant with their AML obligations, with just over half (51%) partially compliant. But the SRA found 19% of firms to be non-compliant, resulting in corrective or enforcement action. Alongside the Solicitors Disciplinary Tribunal (SDT), the SRA has: submitted 24…

Switzerland Proposes to Strengthen Anti-Money Laundering Laws

Money Laundering, Regulation
The Swiss government stated its intentions Wednesday to strengthen its anti-money laundering laws, in a bill that, if passed, would bring its financial due diligence measures closer in line with international standards. Switzerland, which has shielded the wealth of the world’s criminals and corrupt, has now proposed to strengthen its anti-money laundering laws. (Photo: Wally Gobetz, Flickr, License)Switzerland’s seven-member Federal Council, among them Finance Minister Karin Keller-Sutter, proposed a series of reforms meant to restore the country’s integrity as a global banking hub, which has suffered several black eyes over the years for keeping the ill-gotten gains of the world’s…

Upcoming UK Reforms: Tackling AML Will Require Consolidation, Not Further Fragmentation

Money Laundering, Regulation
With a series of proposed reforms on the table to improve the effectiveness of the UK’s anti-money laundering and counter-terrorism financing regulatory structure, First AML’s Simon Luke argues it’s essential to find the right fit for the regime going forward. A 2022 review of the UK’s AML/CTF framework determined that while the overall regulatory approach was sound, the regime in place has weaknesses that need to be addressed through structural reform. Four options have been offered for consultation (which closes Sept. 30): an enhanced version of the current model, Office for Professional Body Anti-Money Laundering Supervision (OBPAS), called OPBAS+; a…

Dubai’s Financial Services Authority (DFSA) signs MoU with the UAE’s FIU.

Regulation
DUBAI’s Financial Services Authority (DFSA) has signed a Memorandum of Understanding (MoU) with the UAE’s Financial Intelligence Unit (FIU) to advance AML/CFT coordination and cooperation. The MoU was signed by the DFSA’s ceo Ian Johnston and the FIU’s chief Ali Faisal Ba’Alawi last week (August 3). The agreement aims to enhance co-operation, co-ordination, and information sharing between the DFSA and FIU to fulfill their respective obligations related to AML/CFT compliance. This includes ensuring that applicable laws are followed by relevant entities. “It is crucial to work closely with authorities at a local, regional and global level in our interconnected environment,…

U.S. Department of the Treasury, IRS Release Proposed Regulations on Sales and Exchanges of Digital Assets by Brokers

Digital Currencies, Regulation
WASHINGTON – As part of the Biden-Harris Administration’s implementation of the bipartisan Infrastructure Investment and Jobs Act (IIJA), the U.S. Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) today released proposed regulations on the sale and exchange of digital assets by brokers, in an effort to crack down on tax cheats while helping law-abiding taxpayers know how much they owe on the sale or exchange of digital assets. This is part of a broader effort at Treasury to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays…

FINMA publishes guidance on money laundering risk analysis

Money Laundering, Regulation
The Swiss Financial Market Supervisory Authority today published guidance on the money laundering risk analysis. It repeatedly identified shortcomings in this area during on-site supervisory reviews. It sets out its observations in the guidance.FINMA is publishing guidance on the money laundering risk analysis. By doing so, it is creating transparency about its observations and experiences gained from supervisory practice in this area. FINMA has repeatedly identified shortcomings in the area of the money laundering risk analysis during on-site supervisory reviews. This prompted it to conduct an in-depth review of the money laundering risk analyses of more than thirty banks in…

Reform of the UK’s AML and CTF supervision regime

Regulation
HM Treasury is consulting on reforms to the UK’s anti-money laundering (AML) and counter-terrorist financing (CTF) supervision regime. Find out what changes are being proposed. The proposalsA 2022 review by HM Treasury found structural inconsistencies and weaknesses with the UK’s AML and CTF supervision regime. The UK government aims to reform the regime to increase its effectiveness and improve coordination across the system. Under the current regime, there are: three statutory supervisors:HM Revenue and Customs (HMRC)the Financial Conduct Authority (FCA)the Gambling Commission (GC)22 professional body supervisors that supervise the legal and accountancy sectorsHM Treasury proposes the following four models: OPBAS+The…

UK Government Proposes New Rule Requiring Bank Account Closure Transparency

Regulation
The UK government has proposed new rules for banks requiring more transparency with account closures. Under the proposal, banks would be required to delay account closures by 90 days and provide a notice to customers explaining why their account is being closed. Currently, banks are only required to provide a 30-day notice period for account closures. This is the latest in a recent string of actions focused on consumer rights and protection in the UK, following The Financial Conduct Authority (FCA) ‘Dear CEO’ letter for payment companies and the UK Payment Systems Regulator (PSR) APP fraud reimbursement requirements. Still, some…

UK Crypto, Stablecoin Laws Approved by Parliament’s Upper House

Digital Currencies, Regulation
The Financial Services and Markets Bill stands to recognize crypto as a regulated activity and stablecoins as a means of payment under existing laws. U.K. parliamentarians have voted through a new bill that could recognize crypto as a regulated activity in the country.The approval of the Financial Services and Markets Bill (FSMB) on Monday by Parliament’s upper chamber, the House of Lords, means the bill is going to enter the final stages before it is put into law. The wide-ranging bill, spanning over 340 pages, was introduced in July to take advantage of Brexit freedoms and give regulators more power…

Access to Public Information is too Restrictive in some European States

Regulation
The Group of States against Corruption of the Council of Europe (GRECO) today expressed concern about the restrictive access to public information in European states. In its annual report for 2022, GRECO recalls the role that access to information plays in ensuring public transparency and in facilitating the pursuit of corrupt behaviour. It regrets that in some countries, governments are still accorded a broad margin of discretion for determining what is in the public domain and whether to exclude certain documents from free access. “Government entities are often reluctant to disclose information and prefer to apply exceptions enabling them to…

Watchdog Proposes First Set of Global Rules for Crypto Sector

Digital Currencies, Regulation
INTERNATIONAL securities watchdog IOSCO unveiled on Tuesday the first global approach to regulating cryptoasset and digital markets, drawing on lessons from last year’s collapse of the FTX exchange that fuelled concerns over consumer protection. The industry, which typically only has to comply with anti-money laundering checks, has been calling for a global approach to regulation as different jurisdictions follow their own rules. The moves come after crypto exchange FTX began U.S. bankruptcy proceedings last November following a liquidity crisis that prompted intervention from regulators worldwide. Tuesday’s recommendations are a “turning point in addressing the very clear and proximate risks to…

Property register fines worth £1bn not yet imposed

Law, Regulation & Guidance, Regulation
The UK has so far failed to impose fines worth as much as £1bn on foreign companies breaking a landmark transparency law, BBC analysis reveals.Since January, overseas firms that own UK property can be fined up to £2,500 a day unless they declare their owners.Thousands are still to do so, including firms which have been linked to oligarchs such as Roman Abramovich, but no fines have yet been issued.The government said it was “building cases” against unregistered companies.The register was introduced as part of the Economic Crime Act in February 2022, following Russia’s invasion of Ukraine. Ministers said it would…

SEC’s Gensler seeks $2.4B in funding to chase down crypto ‘misconduct’

Digital Currencies, Regulation
United States Securities and Exchange Commission Chair Gary Gensler says the regulator is spread thin and needs additional funding to keep up with the “increased complexity in the capital markets.” United States Securities and Exchange Commission Chair Gary Gensler has thrown his support behind U.S. President Joe Biden’s request to allocate a record $2.4 billion in funding for the regulator, highlighting the ongoing need to crack down on “misconduct” in the cryptocurrency industry. In prepared testimony for the March 29 budget hearing with the House Appropriations Committee, Gensler said the additional funding was needed to keep up the pace of…

Europe passes landmark crypto regulation

Digital Currencies, Regulation
The European Parliament passed landmark crypto regulation, the Markets in Crypto-Assets (MiCA), on 20th April, 2023 becoming one of the world’s leading jurisdictions for crypto asset regulation. MiCA is a regulatory framework for crypto assets not already covered under existing financial services legislation. The regulation includes provision for consumer and investor protection, addresses financial stability and monetary policy risks as well as measures against market manipulation, money laundering, terrorist financing and criminal activity. The European Commission first proposed MiCA in 2020, ahead of many other global economies including the US and the UK. The global crypto asset market has existed…

Financial watchdog puts banks on alert in fight against money laundering via the Post Office

Money Laundering, Regulation
A series of measures designed to reduce the risk of money laundering via the Post Office have today been set out by the FCA. The regulator brought together partners including the National Economic Crime Centre (NECC), industry and government to strengthen controls while seeking to ensure that legitimate customers can continue to use the Post Office for Everyday Banking. The measures set out for banks today include: Post Offices are an important part of protecting access to cash for people and small businesses. FCA research found 6% of adults in the UK used cash to pay for everything over the…

Factsheet: failure to prevent fraud offence

Fraud, Regulation
What is the government doing and why?The government is creating a new failure to prevent fraud offence to hold organisations to account if they profit from fraud committed by their employees. This will improve fraud prevention and protect victims. Whilst there are some existing powers to fine and prosecute organisations and their employees for fraud, the new offence will strengthen these, closing loopholes that have allowed organisations to avoid prosecution in the past. Under the new offence, an organisation will be liable where a specified fraud offence is committed by an employee or agent, for the organisation’s benefit, and the…

Britain Reviews Plans for ‘Edinburgh’ Light Touch Regulation Following SVB Collapse

Regulation
BRITAIN’S plans to re-introduce light touch regulation was being reviewed this week in light of the SVB collapse. UK prime minister Rishi Sunak and chancellor Jeremy Hunt have seeking regulation of the country’s financial services to make it more attractive post-Brexit. Known as the Edinburgh Reforms, these are now being re-considered. Vicky Saporta, executive director for prudential regulation at the BoE, said last month that the legislation was “a big deal” and would “make a big difference” to the way it regulated banks. However, the government was now being urged to be far more cautious. “The Treasury must be careful…

FATF Publishes its ‘Tougher’ New Beneficial Ownership Standards

KYC, Regulation
FATF today published its “tougher” global beneficial ownership standards to assist countries and financial institutions to prevent shell companies being safe havens for illicit proceeds. The task force’s Recommendation 24 requires countries to ensure that competent authorities have access to adequate, accurate and up-to-date information on the true owners of companies. The Paris-based body has also updated the guidance that will help countries implement the revised Recommendation 24. The guidance explains types and sources of relevant information, and mechanism and sources to obtain such information. This includes the multi-pronged approach, which consists of combining information from, among others, companies themselves,…

What does new anti-fraud regulation mean for UK plc?

Fraud, Regulation
Legal experts are expecting the enactment of a series of new anti-fraud measures this year, particularly via the economic crime and corporate transparency bill. What effect will this have on British businesses?Jonathan Weinberg14 Mar 2023Gettyimages 1366039494This year is set to be a significant one for the legislative side of the fight against financial crime in the UK. That means there’s plenty of debate about it – in the Houses of Parliament, around boardroom tables and within legal chambers. Matt Horne worked for the National Crime Agency for nearly a decade, latterly as deputy director of investigations, before becoming head of…

New EU Measures against Money Laundering and Terrorist Financing

Regulation
MEPs approved stricter rules to close existing gaps in combating money laundering, terrorist financing and evasion of sanctions in the EU.On Tuesday, MEPs from the Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs committees adopted their position on three pieces of draft legislation on the financing provisions of EU Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) policy. The package consists of: the EU “single rulebook” – regulation – with provisions on conducting due diligence on customers, transparency of beneficial owners and the use of anonymous instruments, such as crypto-assets, and new entities, such as crowdfunding…

The Financial Conduct Authority Is Investigating Suspected Money Laundering Failings At Barclays

Money Laundering, Regulation
Barclays Bank is being investigated by the Financial Conduct Authority (FCA) for suspected failings in its compliance and anti-money laundering (AML) systems. The UK regulator requested an independent review of Barclays’ internal systems under Section 166 of the Financial Services and Market Act 2000. This involves asking an independent firm of experts to review and report on Barclays’ systems and provide recommendations to improve practices in line with AML regulations. The Financial Times reported that there had been a number of incidents where the bank had failed to conduct thorough know your customer (KYC) and AML checks. Although the incidents…

Swiss regulator investigates 12 banks in Lebanese central banker corruption case

Bribery, Corruption, Regulation
ZURICH (Reuters) -Switzerland’s financial regulator has investigated 12 banks and launched enforcement proceedings against two of them in relation to corruption charges against longtime central banker Riad Salameh, it said on Monday. Lebanese authorities charged Salameh, his brother Raja and one of his assistants on Thursday with money laundering, embezzlement and illicit enrichment after months of delay in the high-profile case. The Salameh brothers have denied wrongdoing throughout the process. The governor insisted on his innocence to Reuters last Thursday, saying the charges were “not an indictment” and pledged to abide by judicial procedures. The charges are the product of…

Experts warn UK businesses of imminent changes to anti-money laundering regulations

Money Laundering, Regulation
Legal experts have urged UK businesses to pay close attention to upcoming changes to the 2017 Money Laundering Regulations (MLRs) that will impose further compliance requirements on in-scope firms. In line with the 2022 Money Laundering and Terrorist Financing (Amendment) (No.2) Regulations, from 1 April 2023, businesses subject to the MLRs will have to comply with checks of the register of overseas entities (ROE) at Companies House for dealings with corporate entities. For dealings with trust entities, businesses subject to the MLRs will have to comply with checks of the trust registration service (TRS) that is maintained by HM Revenue…

Britain Sets Out Plans to Regulate Crypto Industry in Wake of FTX Collapse

Digital Currencies, Regulation
The U.K. formally laid out plans to regulate the cryptocurrency industry, with the government looking to rein in some of the reckless business practices that emerged over the past year and contributed to the demise of FTX. In a widely-anticipated industry consultation launched Tuesday, the government proposed a number of measures aimed at bringing regulation of crypto asset businesses in line with that of traditional financial firms. Among the proposals unveiled Tuesday was a move that would strengthen rules targeting financial intermediaries and custodians that store crypto on behalf of clients. A big theme that emerged in 2022 was the…

Thailand’s SEC issues rules on management of digital wallets for custody of digital assets and keys

Digital Currencies, Regulation
The Securities and Exchange Commission (SEC) has issued regulations requiring digital asset business operators that provide custody of clients’ digital assets to establish a digital wallet management system to accommodate efficient custody of digital assets and keys* and ensure safety of clients’ assets. The regulations cover the following requirements: (1) Policy and guidelines for overseeing risk management and management of digital wallets and keys as well as communication to clarify such policy, action plans and procedures, work supervision and internal control to ensure compliance with the policy; (2) Policy and procedures for designing, developing and managing digital wallets as well…

New York’s Financial Regulator Takes Aim at Firms Co-Mingling Crypto Funds

Digital Currencies, Regulation
New York’s chief financial regulator is set to release new guidance on Monday dictating that companies separate customers’ crypto assets from their own, after alleged co-mingling of funds at collapsed crypto exchange FTX and its affiliated trading firm Alameda Research led to hefty losses for clients. The New York State Department of Financial Services (NYDFS), which leads one of the few state agencies with a regulatory system in place for cryptocurrency companies, will also stipulate that state-regulated companies disclose to customers how they account for clients’ digital currency. The guidance is the latest in a series of crypto-related directives NYDFS…

Elizabeth Warren’s Tough-On-Crypto Bill is Taking Shape

Digital Currencies, Regulation
Sen. Elizabeth Warren, D-Mass. is working on a sweeping cryptocurrency bill that would hand the Securities and Exchange Commission most regulatory authority over the market, according to two people familiar with her efforts. While discussions are still early and details could change, Warren’s office is looking at a range of crypto-related issues, including regulations, taxation, climate, and national security. The senator has recently stepped up her criticism for the industry and demanded “comprehensive” new rules to govern it following the massive collapse of the crypto exchange FTX. (FTX founder Sam-Bankman Fried is an investor in Semafor.) Ideas on the table…

UK Anti Money Laundering and Countering the financing of Terrorism – Supervision Report 2020-22

Regulation
This report provides information about the performance of AML/CTF supervisors between 6 April 2020 – 5 April 2022 and fulfils the Treasury’s obligation, under Section 51 of the MLRs, to publish an annual report on supervisory activity. The report includes supervisory and enforcement data on both the Statutory and Professional Body Supervisors, highlighting any notable changes in supervisory activity and any fines that supervisors have issued. This report provides supervisory and enforcement data for both the 2020-2021 period (6th April 2020 – 5th April 2021) and the 2021-2022 period (6th April 2021 – 5th April 2022). The two years have…

Hochul Signs Partial Cryptocurrency Mining Nan into New York Law

Digital Currencies, Regulation
New York’s nation-leading Climate Leadership and Community Protection Act, the most aggressive climate and clean energy law in the nation, while also continuing our steadfast efforts to support economic development and job creation in upstate New York.” The new law will also trigger a study by state Department of Environmental Conservation to study the impacts of the cryptocurrency mining industry on the environment. The measure was hotly debated in the halls of the state Capitol this year, with environmental groups pushing lawmakers and Hochul to support the bill and the industry urging Hochul to reject it. “Thank you, Governor Hochul,…

EU Court of Justice Rolls Back Anti-Money Laundering Rules

Money Laundering, Regulation
In a stunning reversal, the Court of Justice of the European Union weakened an existing anti-money laundering rule on Tuesday, limiting use of one of the most potent tools against financial secrecy – access to beneficial ownership information. “Beneficial ownership” is the term for who, in reality, benefits from (or owns) a given company or corporate structure. Wealthy individuals, criminals and tax cheats are among those who routinely disguise ownership of such entities, often to hide their wealth from authorities. Organizations fighting for tax equity and reform immediately denounced the ruling. “By requiring corporations and offshore entities to publicly disclose…

New Crackdown on Fraud and Money Laundering to Protect U.K. Economy

Financial Crime, Fraud, Regulation
The Economic Crime and Corporate Transparency Bill will strengthen the UK’s reputation as a place where legitimate businesses can thrive while driving dirty money out of the UK. Through the reforms, anyone who registers a company in the UK will need to verify their identity, tackling the use of companies as a front for crime or foreign kleptocrats. The reforms to Companies House – its biggest upgrade in 170 years – will also see the organisation armed with new powers to check, challenge and decline incorrect or fraudulent information, making it a more active gatekeeper over company creation. The investigation…

E.U. to Discuss Crypto Legislation With U.S. Officials

Digital Currencies, Regulation
EU representatives will reportedly broach the need for a more coordinated global crypto regulatory framework with US officials at next week’s IMF-World Bank annual meetings. The bloc’s Commissioner for Financial Services, Mairead McGuinness revealed there was a “crowded agenda” for the US next week. Speaking at a media roundtable hosted by Bloomberg, Commissioner McGuinness added: “One of the items that won’t be bottom of the list, it will be in there right around the top is crypto.” “I am sure they want to hear what we’ve done, how it went, what the problems were. I would be very happy to…