AML Roundup - Q3 2022
We’re bringing together all the latest AML and CFT regulatory developments that impact the private markets in our quarterly AML Roundup. Our Q3 edition includes: the EU’s 8th package of sanctions against Russia, FinCen’s proposed changes to beneficial ownership rules in the US and the recent information paper issued by the Monetary Authority of Singapore (MAS) providing asset managers with the supervisor’s expectations for meeting AML/CFT obligations.
- Eighth package of Russia related sanctions: Sanctions adopted following Russia’s military aggression against Ukraine (europa.eu)
“The EU has introduced a new listing criterion, which will allow it to sanction persons who facilitate the infringements of the prohibition against circumvention of sanctions.”
- Taxation: Anguilla, The Bahamas and Turks and Caicos Islands added to EU list of non-cooperative jurisdictions for tax purposes – Consilium (europa.eu)
The Council added Anguilla, The Bahamas and Turks and Caicos Islands to the EU list of non-cooperative jurisdictions for tax purposes. The list now consists of:
|Trinidad and Tobago||Turks and Caicos Islands|
|US Virgin Islands||Vanuatu|
- Euro area member states recommend that Croatia become the 20th member of the euro area – Consilium (europa.eu)
Croatia to introduce the Euro on 1 January 2023.
- Consultation – Joint Money Laundering Steering Group (JMLSG) proposed amendments to Part 1 of its Guidance in the following areas:
- Paragraph 5.5.11 and Annex 5-IV – as relating to high-risk third countries (HRTC) EDD
Firms must undertake enhanced due diligence on business relationships connected to the UK high risk third country list. The consultation further provides: “All of these additional EDD measures must be applied to new and existing customers”
- Paragraph 5.3.129A and paragraphs 5.3.258-5.3.282 – as relating to trusts
“Firms must obtain proof of registration… in the case of in-scope trusts proof of registration with the Trust Registration Service may be obtained from the agent or trustee of the trust”
The consultation includes the positive duty on UK firms to report discrepancies: “For further information on discrepancy reporting for in-scope trusts (including what HMRC considers a material discrepancy) see: https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual”
- Chapters 4 and 7 – as relating to proliferation financing
This adds proliferation financing as a distinct area of risk that sits alongside AML/CFT
- Proposed updates to the sourcebook of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS)
The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) oversees the effectiveness of AML/CFT at professional body supervisors (PBSs) that cover the legal and accountancy sectors. The UK Financial Conduct Authority notes: “Among the findings of our third report were that 80% of PBSs had not implemented an effective risk‑based approach and that only 26% were using enforcement tools effectively.”
- HM Treasury Advisory Notice: High Risk Third Countries
HM Treasury updated the list of high risk third countries which requires regulated businesses to apply enhanced customer due diligence measures and enhanced ongoing monitoring in any business relationships.
The countries listed are as follows: Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, DPRK*, Gibraltar, Haiti, Iran*, Jamaica, Jordan, Mali*, Morocco, Myanmar*, Nicaragua*, Pakistan, Panama, Philippines, Senegal, South Sudan*, Syria*, Türkiye, Uganda, United Arab Emirates, Yemen*
*These jurisdictions are subject to financial sanctions measures
- AML/CFT Handbook Update and Gibraltar Instruction — GFSC
Gibraltar was removed from the AML/CFT Handbook together with an instruction for firms to take steps before the end of December 2022 in respect of business relationships connected to Gibraltar.
- Publication of National Statement on Financial Services and Financial Crime: Activities, Risk Appetite and Mitigation
“… by its nature, the activity of providing private structures for high value overseas persons and companies to protect and invest assets raises the risk that a proportion of these funds will be the proceeds of crime.”
- The AML/CFT assessment body of the Council of Europe (MONEYVAL) is due to evaluate the Island in 2023.
United States of America
- FinCEN Issues Final Rule for Beneficial Ownership Reporting to Support Law Enforcement Efforts, Counter Illicit Finance, and Increase Transparency
The rule will require most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners—the persons who ultimately own or control the company, to FinCEN.
- General Licence Under Russian Sanctions Issued
Russia sanctions update: General Licence GL/2022/0001 allows a Relevant Investment Fund or Fund Manager to redeem, withdraw or otherwise deal with an investment interest and make payments for basic needs, routine holding and maintenance and legal fees from frozen accounts.
Persons intending to use General Licence GL/2022/0001 must consult a copy of the licence for full details of the relevant permissions and usage requirements.As outlined in General Licence GL/2022/0001, a Relevant Investment Fund or Fund Manager that is regulated by the Cayman Islands Monetary Authority (the “Authority”) must notify the Authority of its use of this licence within three (3) business days. Such notifications should be sent to [email protected]
- MAS Information Paper for Asset Managers
The information paper issued by the Monetary Authority of Singapore (MAS) provides asset managers the supervisor’s expectations for meeting AML/CFT obligations. Any gaps in the asset manager’s process and controls should be remedied in a timely manner.