Revised EU anti-money laundering rules ‘will help combat crime’

Most financial crime professionals in UK financial services believe that the European Union’s (EU) 4th EU Anti-Money Laundering (AML) Directive will make it easier for firms to prevent money laundering, a survey finds.

The survey, which canvassed opinion from 168 senior level AML compliance professionals working for investment banks, retail banks and asset managers in the UK, forms the basis of the Future Financial Crime Risk 2017 report, produced by LexisNexis Risk Solutions, global information solutions provider and part of RELX group.

The report highlights that asset managers are especially positive about the advantages, with over 80% agreeing it will aid the fight against financial crime.

This marks a shift in attitude from a similar survey conducted by LNRS in 2015, when the group asked financial crime professionals about the potential impact of the 4th EU AML Directive. Previously, only 17% of those surveyed believed that the regulation would significantly reduce money laundering while 32% thought it would make no difference – or even increase levels of money laundering.

As of today the Money Laundering Regulations 2017 – aka the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 – come into force which transpose the 4th EU AML Directive into UK law. To support this, the Joint Money Laundering Steering Group (JMLSG) has released revised guidance within which they advise firms to adopt a risk based approach to customer due diligence.

Regulated organisations have been advised to risk assess relationships in order to determine the appropriate level of customer due diligence to be performed. In particular, additional checks are required in relation to identifying and screening beneficial owners when dealing with corporate entities. Therefore, as the demands of AML compliance continue to rise, institutions are required to know more about their customer than ever before.

“In reality, Britain has always been at the forefront of fighting financial crime – but our research shows the compliance professionals in the financial services sector view the new regulations as further supporting the fight,” commented Mike Harris, director of financial crime compliance and reputational risk at LexisNexis Risk Solutions.

“That said, it’s important not to underestimate the sheer scale of the logistical challenge for organisations resulting from this regulatory change, especially for smaller to medium-sized firms.

“Many regulated entities may be less au fait with the risk based approach to due diligence than their financial counterparts and the changes that the 4th EU AML Directive brings. Therefore, it is critical that they review the JMLSG’s new guidance and revise their processes, controls and risk appetite for on-boarding customers to ensure they maintain compliance.”

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