Welcome to our AML round-up for Q4 2024 covering the latest AML/CFT regulatory developments impacting the private markets.
Included in this edition are the EU’s latest Russian sanctions package, updates to ELTIF regulations in Luxembourg, and the FCA’s consultation on the proposed regulatory framework for the Private Intermittent Securities and Capital Exchange System (PISCES).
In the U.S. we highlight FinCEN’s Final Rule, which targets illicit finance and national security threats within the investment adviser sector. With less than a year now remaining until the 1 January 2026 compliance deadline, investment advisers impacted by this pivotal legislation should assess their policies and procedures to ensure they meet the Rule’s requirements. To discuss how we can assist, or for any questions regarding these updates, reach out to Louis Dodd or Askender Ouazzani.
Europe
EU adopts 15th sanctions package against Russia for its continued war against Ukraine. This latest package of sanctions, adopted on 16 December 2024, contains key elements including:
- Anti-Circumvention Measures – to help prevent the evasion of the Oil Price Cap;
- 84 Additional Listings – including 54 individuals and 30 entities;
- Trade – the package adds 32 new companies to the list of those supporting Russia’s military and industrial complex in its war against Ukraine;
- Protection for the interests of EU Operators – the latest measures prohibit the recognition or enforcement in the EU of some specific rulings by Russian Courts; and
- Financial sector measures including a loss recovery derogation and a no liability clause for EU central securities depositaries (CSDs).
The European Banking Authority (EBA) published its Fourth Report on the functioning of anti-money laundering and countering the financing of terrorism (AML/CFT) colleges. The Report found that competent authorities continued to improve the functioning of AML/CFT colleges in 2023. It also identified scope for further progress, especially in two key areas, namely: adjusting the functioning of AML/CFT colleges to the money laundering and terrorist financing (ML/TF) risks to which the underlying firm is exposed and discussing the need for a common approach or joint action. AML/CFT colleges are permanent structures that serve to enhance cooperation between different supervisors involved in the supervision of cross-border institutions.
Switzerland
In December, the Federal Council adopted the updated Digital Switzerland Strategy for 2025 and selected new focus themes, covering:
- Artificial intelligence: Legal situation and the use of AI in the Federal Administration;
- Strengthening information security and cybersecurity for the whole of Switzerland; and
- Promoting the use of Open Source Software in the Federal Administration.
Luxembourg
The CSSF will launch its annual AML/CFT questionnaire for the year 2024 on 24 February 2025. The final submission of responses must be completed through the CSSF eDesk platform by 4 April 2025.
The Commission Delegated Regulation (EU) 2024/2759 (“Delegated Regulation”) relating to European long-term investment funds (“ELTIF”) was published on 25 October 2024, in the Official Journal of the European Union and is now in force. New ELTIF applications must now fully comply not only with the provisions of Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds (as amended), but also with those of the Delegated Regulation. Existing Luxembourg-based ELTIFs that do not benefit from the grandfathering clause must make the necessary adaptations to comply with the provisions of the Delegated Regulation as soon as possible. Any significant changes must be notified to the CSSF.
The CSSF has also updated the ELTIF application questionnaire to reflect the provisions of the Delegated Regulation. This must be used for all new applications.
United Kingdom
The FCA is consulting on its proposed framework for the Private Intermittent Securities and Capital Exchange System (PISCES). PISCES will be a new type of trading platform that will enable intermittent trading of private company shares using market infrastructure. The proposed regulatory framework for PISCES will be established under a Financial Market Infrastructure (FMI) sandbox created by the Treasury. Comments on the consultation paper can be submitted via online form or email by 17 February 2025.
Jersey
The Jersey Financial Services Commission has updated appendices D1 and D2 of the AML/CFT/CPF Handbook in response to the latest Financial Action Task Force Statements of 25 October 2024. Algeria, Angola, Cote d’Ivoire and Lebanon have been added. Senegal and Barundi have been removed. Countries and territories listed under Sources 1 and 2 of Appendix D2 should be treated as not compliant with FATF Recommendations for the purpose of Article 17A of the Money Laundering Order.
Guernsey
The Guernsey Financial Services Commission has issued a consultation paper on the Prospectus Rules. It is seeking views on a proposed revised set of rules and guidance, which would be made under the Protection of Investors (Bailiwick of Guernsey) Law, 2020 (“the POI Law”) which are intended to update and improve upon the current Prospectus Rules and Guidance, 2021. Responses to the consultation paper are sought by 3 March 2025 via the following link, where a copy of the consultation paper can also be found: Guernsey Financial Services Commission – Citizen Space.
The Commission has issued updates to two Appendices within the Handbook on Countering Financial Crime which add Gibraltar to the Appendix C list of equivalent jurisdictions and update the Appendix I list of higher risk jurisdictions. Senegal, Barbados and Chile have been removed from Appendix I, whilst Belize has been added.
USA
FinCEN Investment Adviser AML Rule – Countdown to Compliance: On 28 August 2024, the Financial Crimes Enforcement Network (FinCEN) issued a Final Rule aimed at combating money laundering, terrorist financing, and other illicit financial activities within the investment adviser industry. This rule, which takes effect on 1 January 2026, marks a significant shift in regulatory expectations for investment advisers.
Key Highlights of the Rule: The Final Rule expands the definition of “financial institution” to include investment advisers. Specifically, it applies to:
- SEC-registered investment advisers (RIAs)
- Exempt reporting advisers (ERAs)
Investment advisers covered by the rule will be required to:
- Implement a risk-based and reasonably designed AML/CFT program;
- Apply a Suspicious Activity Report (SARs) policy and make disclosures with FinCEN where appropriate;
- Keep certain records, such as those relating to the transmittal of funds (i.e., comply with the Recordkeeping and Travel Rules); and
- Fulfil certain other obligations applicable to financial institutions subject to the BSA and FinCEN’s implementing regulations, such as special information sharing procedures.
Next Steps for covered investment advisers:
- Evaluate Existing Policies and Procedures – Assess whether current AML/CFT programs align with the Rule’s requirements;
- Enhance Internal Controls – Strengthen internal policies, procedures, and controls to address any gaps;
- Educate Staff – Ensure employees are equipped to comply with SAR filing, recordkeeping, and other requirements;
- Engage Compliance Experts – Seek guidance from legal or compliance professionals to navigate the new obligations effectively.
With less than one year remaining before the compliance deadline, investment advisers should act now to ensure readiness for the Rule’s enforcement on 1 January 2026.
FinCEN has issued an Alert on Deepfake Fraud Schemes Targeting Financial Institutions: In light of the growing challenges faced by financial institutions in detecting and mitigating against fraud schemes that use deepfake media to circumvent KYC processes, FinCEN issued the alert to help identify such schemes, including associated typologies and red flag indicators.
The SEC published a Risk Alert for Registered Investment Companies (RICs or funds) in November to assist funds and their advisers in preparing themselves for examination and support their ongoing compliance efforts. The Risk Alert offers valuable insights on the examination process and shares staff observations with respect to a number of “core” review areas. These observations are based a review of deficiency letters sent to funds over the last four years and highlight frequent areas of weakness in relation to fund compliance programs, fund governance practices, filings and disclosures.
Cayman Islands
The Cayman Islands Monetary Authority (CIMA) has published its AML/CFT Activity Report for 2023 setting out its AML / CFT activity and outcomes during the period including the results of its onsite inspection and the key themes and deficiencies arising from these. The highest number of deficiencies recorded were around the use of the Risk-Based Approach, followed by Customer Due Diligence and Sanctions Programmes.
Singapore
In October Singapore published its National AML Strategy. The National AML Strategy expands on the 2016 National Policy Statement and takes into account key ML risks observed by agencies over the years, including the updated Money Laundering National Risk Assessment. It provides the blueprint of Singapore’s approach to addressing ML threats and risks and sets out the actions which Singapore has taken and will be taking to further enhance its AML framework.
The Inter-Ministerial Committee (IMC) on Anti-Money Laundering released a report in October to share its findings and recommendations following a review of Singapore’s Anti-Money Laundering (AML) framework. Recommendations focus on proactive prevention, timely detection and effective enforcement.
International
Jurisdictions under Increased Monitoring – 25 October 2024: The FATF has reviewed the list of countries subject to increased monitoring, often referred to as the ‘grey list’. Following review, the FATF now also identifies Algeria, Angola, Côte d’Ivoire and Lebanon. Senegal has been removed from the list.
