Anti-Money Laundering/Combating the Financing of Terror/Corruption
On 19 April 2018, the European Parliament announced that it voted to adopt the proposed Fifth Money Laundering Directive (5AMLD). On 25 April 2018, the Council of the EU published an information note (including the draft text) concerning the outcome of the European Parliament's first reading of 5AMLD. The key highlights are summarised above.
A draft Directive on the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences has been introduced as part of the AML/ CTF reform package.
FATF private sector consultative forum: financial services aspects
On 24 April 2018, the Financial Action Task Force (FATF) issued a press release with a summary of issues discussed at its April private sector consultative forum. The forum is designed to give private sector representatives the opportunity to engage directly with the FATF and its members on AML/ CTF issues. Issues discussed that may be of interest to financial services practitioners include the following:
- Combatting de-risking. This is a key priority for the FATF. Participants considered the latest market developments and ongoing initiatives to address de-risking. They discussed remaining challenges and the potential next steps, including through co-ordinated action at the international level, and by national policy makers, supervisors, financial institutions and industry bodies.
- FinTech and RegTech Participants discussed the private sector's experience of using digital identities to identify and verify their customers for the purposes of customer due diligence (CDD), as part of the on-boarding process. They also discussed the regulatory landscape for crypto-assets, and the extent to which the current FATF standards and guidance adequately address recent developments in this area. A more detailed summary of the discussions in this area has been published alongside the press release. To support financial innovation that is resiliant to money laundering and terrorist financing, the FATF launched a new platform
- Risk-based approach for securities sector Participants discussed ongoing work to develop risk-based approach guidance for the securities sector. In particular, they discussed the ML/ TF risks that are unique to this sector, as well as the role of intermediation and reliance. Participants also discussed the type of relationships covered by FATF recommendation 13 (on correspondent banking) in this sector, and the potential risk factors, indicators and measures to mitigate those risks.
- Risk-based approach for life insurance sector Participants exchanged views on ongoing FATF work to develop risk-based approach guidance for the life insurance sector (updating 2009 guidance). In particular, they discussed the scope and focus of the guidance, the nature and level of money laundering and terrorist financing risks associated with different types of life insurance products and their risk mitigating factors. They also discussed situations where simplified due diligence (SDD) and enhanced due diligence (EDD) could be applied.