In the EU, customer due diligence and beneficial ownership are also at the forefront. The proposed EU-wide AML directive (AMLA) set for 2023 will see more streamlined beneficial ownership reporting across Europe. For institutions, this means that the AMLA will have the authority to carry out immediate inspections on AML issues, which includes the possibility of imposing sanctions. This is particularly pertinent with recent sanctions being imposed on certain Russian individuals and entities, with more (presumably) to come.
Similarly in the US, the Corporate Transparency Act (CTA) on beneficial ownership is currently being reviewed, with the comment period scheduled to end late February 2022 and finalised regulations anticipated in March. There are also incoming regulations related to AML on reporting transactions and payments of over $10,000, with increasing penalties for repeat AML violators. New initiatives for reporting cyber security breaches within a 36-hour timeframe will also be implemented by FinCen in May.
Likewise, in the UK, there will be a focus on fraud, cyber crime, and operational resilience. In March, a new Cyber National Crime Force will be piloted, with a full review report by HM Treasury of the UK’s AML and counter-terrorist financing regulatory and supervisory regime expected in June.
Globally, ESG continues to be a major point of discussion. The need for more regulation has long been highlighted. In 2022, we will see new initiatives aimed at greater ESG compliance.
Here are some of the key dates in compliance to keep in mind this year, divided by region:
What is the impact of these new regulations and initiatives for financial institutions?
Financial services can expect their due diligence workload to continue to expand. Adding to this pressure is the rise in fines for not meeting compliance requirements and deadlines.
The key is to plan ahead and to take an active approach to keeping-up-to-date with regulations.
However, as compliance teams well know, carrying out due diligence correctly and effectively is often a time-consuming, labour-intensive task. The onboarding process is often fraught with the following challenges:
- Multiple sources in multiple languages need to be searched
- Naming systems differ from culture to culture
- Name screening systems often generate large amounts of hits, many of which can be false positives
smartKYC’s sophisticated technology results in faster, better and more cost-effective background checks – of watchlists, adverse media, source of wealth and much more. Our KYC search technology automates manual processes, delivers greater decision confidence and systemises client onboarding, refresh and proactive monitoring.
For example, smartKYC’s robo onboarding solution can interrogate all relevant sources in minutes, including open web and media archives, allowing financial institutions to straight-through process online applications with confidence. Or, where potential risks may exist, have these few cases escalated for human review.
With smartKYC, you can:
- Reduce time to perform KYC
- Reduce false positives and general noise
- Have greater confidence in the work done
- Have more automation and batch processing
- Make foreign language KYC easier
- Demonstrate a consistent, auditable process
- Integrate results into existing workflow tools
- Realise continuous monitoring aspirations
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