Banks and financial institutions have been issued anti-money laundering fines of over $1.9 billion this year alone. But is this just a hint towards a rising trend, and how quick will banks get a handle on things?
December 13th, 2021
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Over the course of 2021, research has shown that regulatory authorities have issued $1,972,797,500 in anti-money laundering fines to banks and financial institutions.
Although this statistic itself is eye watering, it’s symbolic of a wider trend. Over the course of the past few years, regulatory bodies have continually updated and toughened restrictions on money laundering. As a result, compliance departments are now repeatedly being punished for falling foul of the rules.
With even more new pieces of legislation continually coming into force, it’s expected that the amount paid in AML fines will continue to grow in the coming years. Here are three reasons why this is likely to be the case.
Earlier this year, the EU announced a package of proposals intended to strengthen the union’s AML/CFT rules. At the heart of this package was the creation of a decentralized EU regulatory agency known as AMLA. When operational, this new agency will be responsible for coordinating national supervisors and ensuring that the private sector consistently and correctly applies AML rules and regulations.
The new authority will be established in 2023 and will be fully staffed in 2026. It will be responsible for:
As a result, in the next couple of years, financial institutions in the EU should expect greater scrutiny into their practices. Is your company ready for that?
Many banks and financial operators still rely on legacy technology. As a result, in the coming years, these entities will find it increasingly difficult to detect and report suspicious transactions.
After all, the use of outdated systems can cause numerous issues, such as high rates of false positives and the inability to differentiate suspicious transactions from unusual ones. On top of this, relying on an outdated AML system may mean that many financial businesses are failing to report suspicious transactions and file suspicious activity reports (SARs) on time.
Upgrading to a better system requires financial institutions to be proactive. However, a proactive approach to KYC and AML provides several benefits. As well as helping keep the business away from the attention of regulators, improving an AML system can also improve operations and lead to much better customer service.
The failure to identify and verify the source of funds is exposing banks to heightened financial crime risks.
If banks continue to apply generic customer risk assessments to different types of risk, fail to acquire sufficient information on the intended nature of the customer relationship, and continue to misunderstand the inherent risks involved in the process of due diligence, then further scrutiny by regulators in how banks perform CDD and EDD is inevitable.
The regulatory landscape around AML legislation is shifting quickly, and new regulations are putting banks and obliged entities under increasing pressure to ensure regulatory compliance. Any entity that fails to comply with new regulations can expect to be fined heavily or face significant legal and regulatory action. As a result, it’s important that you ensure your business remains compliant.
Thankfully, at Veriff, we can help. Our AML and KYC compliance tool can help you fight financial crime. With the help of identity verification, you can ensure that your customers are who they say they are, and stop bad actors exploiting your financial services business. Plus, PEP and sanctions checks, adverse media screenings and ongoing monitoring can make sure you’re always updated in real time if something changes with an onboarded customer.
To learn more about how our AML and KYC compliance tool can help you, get a consultation today.
The ice-cream-themed NFTs involved in the scheme were known as ‘Frosties’. Early investors were promised future giveaways, access to future releases, and a metaverse game built around the brand. However, prosecutors allege that Ethan Nguyen and Andre Llacuna executed a ‘rug pull’ in January.
The thieves are struggling to exchange the dirty cryptocurrency for cleaner funds. After all, governments around the world have ramped up law-enforcement efforts to seize stolen funds and bolstered money-laundering regulations for crypto exchanges. Such efforts make transferring the funds to exchanges difficult.
The company analyzed NFT sales to self-financed addresses and found that several NFT sellers have conducted hundreds of ‘wash trades’. These trades involve the seller being on both sides of the transaction, and they’re used to paint a misleading picture of an NFT’s value and liquidity.