Join the 7/21 live chat & demo: How to turn KYB & KYC into your competitive advantage

Industry

Global AML compliance: Is your business doing enough?

Discover some of the regulations and protocols you’ll need to know and remember when conducting business internationally

Table of contents
Share this post
Copied
⚡ Key takeaways
  • The FATF is an inter-governmental body whose mission is to lay out protocols every country and business can use to protect themselves against money laundering.
  • Following FATF's guidelines is not enough to achieve international compliance — you need to understand and follow the local regulations in every area in which you do business.
  • Failure to follow AML regulations can result in heavy fines, reputational damage, and even criminal penalties, such as time in prison.

Most countries have implemented laws and regulations to combat the ever-increasing crimes of money laundering and terrorist financing.

To protect your organization and comply with global anti-money laundering (AML) laws, you must understand and follow the local regulations in every area in which you do business.

Why is global AML important?

Being unaware of AML guidelines isn’t a valid reason for noncompliance. Failure to follow regulations can result in heavy fines, reputational damage, and even criminal penalties, such as time in prison. In 2021 alone, financial institutions were fined a whopping $2.7 billion for failure to comply with AML laws.

For this reason, it’s essential to be aware of and comply with all applicable global AML regulations. Each law may have a different name and different rules — meaning global AML can be a complex and confusing process without the right systems in place.

While there is an international standard-making body, following its guidelines is not enough to achieve international compliance. Keep reading to discover just some of the regulations and protocols you’ll need to know and remember when conducting business internationally.

Global AML guidance from an international body

One of the key players in the global AML space is the Financial Action Task Force, or FATF. The FATF is a global advisory and watchdog service created to prevent money laundering and the harm it does to society.

The FATF is an inter-governmental body with 39 members including the US, the UK, and the European Commission. Its mission is to lay out protocols every country and business can use to protect themselves against money laundering. These recommendations include implementing KYC and due diligence measures to verify customer identities, using a risk-based approach to monitor clients, and reporting suspicious activity.

Through its members, associate members, observers, and observer organizations across multiple countries and jurisdictions, almost all major financial centers observe and follow FATF regulations.

AML regulations in North America

Any financial company that operates or does business in the United States must comply with the Bank Secrecy Act (BSA), originally created in 1970 to require better recordkeeping and reporting from financial institutions.

The BSA is administered by FinCEN, the US government’s Financial Crimes Enforcement Network. FinCEN states that financial institutions must develop compliance programs, report large-scale and other suspicious transactions, and regularly report on their AML procedures.

Since its creation, the BSA has continued to adapt and expand to meet the ever-changing threats of money laundering. For example, while it originally applied to legacy financial institutions like banks and credit unions, it has since expanded to cover other industries, such as online casinos and cryptocurrency exchanges.

Money laundering remains a significant challenge in Mexico. There, the Financial Intelligence Unit (FIU) and the Attorney’s General Office are in charge of implementing stronger AML laws in the region and prosecuting financial crimes.

The Canadian government has also implemented laws, such as the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), to counter financial terrorism. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) provides guidance to business and industries, particularly around risk management and the identification of beneficial owners (UBOs).

AML rules in Europe

There are a number of anti-money laundering directives across EU member states that encourage a risk-based approach to identify bad actors. The EU regularly amends these directives to address the rapid changes in money laundering.

For example, the 5th Anti-Laundering Directive (5AMLD) introduced new regulations around cryptocurrency and PEP lists. Most recently, the 6th Directive (6AMLD) increased the definition of offenses and the severity of punishments. It also heightened criminal liability; for example, aiding and abetting in money laundering is now a crime. Many individual European countries also have their own AML laws.

Other European AML regulations you might be subject to include the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) in the Netherlands and the Irish Criminal Justice (Money Laundering and Terrorist Financing) Act.

AML rules in the United Kingdom

While the UK is no longer a member of the EU, they’ve committed to following 5AMLD and 6AMLD regulations. The Financial Conduct Authority (FCA), a non-governmental body that works with Her Majesty’s Revenue & Customs, regulates and supervises AML activities.

The UK’s primary AML legislation is the Proceeds and Crime Act (POCA), which defines the offenses that constitute money laundering and requires financial institutions to implement proper AML controls.

AML guidelines in Asia

When doing business in Asia, you may have to deal with one of several different bodies that regulate the financial industry through AML laws.

For example, the Hong Kong Monetary Authority (HKMA) recommends a number of controls, such as appointing a compliance officer and conducting a risk assessment of all customers.

The Payment Services Act (PSA) in Singapore, enforced by the Monetary Authority of Singapore (MAS), similarly requires due diligence, KYC protocols, reporting, and monitoring.

AML laws in Australia & New Zealand

While regulations in Australia and New Zealand vary by jurisdiction and area, they’re closely modeled after the guidelines laid out by the FATF.

The Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) in Australia and the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act) in New Zealand align with international standards and give individuals and businesses confidence in the countries’ financial systems.

AML in South America

South America is a complex and challenging area for AML compliance. There are high levels of corruption and financial crime in this region, and regulations in individual countries differ greatly.

Despite this, the Financial Action Task Force of Latin America (GAFILAT) was founded to develop and implement a comprehensive strategy to combat money laundering and financial terrorism. Their work is strongly based upon global FATF guidelines.

Persona: Your global AML solution

If you’re operating in or expanding to other countries, you need a flexible compliance system that can adjust to your requirements.

The right system can make it quicker and easier to comply with local laws and regulations.

Persona's identity verification system covers more than 200 countries and territories. It’s also available in 20 different languages to support all of your international business needs.

The global AML guidance you need

Staying on top of changing AML laws can be challenging. But it’s also imperative for any business or institution that operates in multiple countries and wishes to avoid public backlash and financial or criminal penalties.

Help protect your business against severe consequences without the difficulties. Make global AML compliance easier with Persona’s flexible, intuitive system on your side. Get in touch or start for free today.


Disclaimer: Persona only provides checks against available AML lists. It is your responsibility to make a final determination regarding AML risk and specific country requirements. This post is provided for informational purposes only and is not intended as legal advice. We recommend you consult with an attorney regarding your AML obligations in your particular jurisdiction.

Frequently asked questions

No items found.

Table of contents

Most countries have implemented laws and regulations to combat the ever-increasing crimes of money laundering and terrorist financing.

To protect your organization and comply with global anti-money laundering (AML) laws, you must understand and follow the local regulations in every area in which you do business.

Why is global AML important?

Being unaware of AML guidelines isn’t a valid reason for noncompliance. Failure to follow regulations can result in heavy fines, reputational damage, and even criminal penalties, such as time in prison. In 2021 alone, financial institutions were fined a whopping $2.7 billion for failure to comply with AML laws.

For this reason, it’s essential to be aware of and comply with all applicable global AML regulations. Each law may have a different name and different rules — meaning global AML can be a complex and confusing process without the right systems in place.

While there is an international standard-making body, following its guidelines is not enough to achieve international compliance. Keep reading to discover just some of the regulations and protocols you’ll need to know and remember when conducting business internationally.

Global AML guidance from an international body

One of the key players in the global AML space is the Financial Action Task Force, or FATF. The FATF is a global advisory and watchdog service created to prevent money laundering and the harm it does to society.

The FATF is an inter-governmental body with 39 members including the US, the UK, and the European Commission. Its mission is to lay out protocols every country and business can use to protect themselves against money laundering. These recommendations include implementing KYC and due diligence measures to verify customer identities, using a risk-based approach to monitor clients, and reporting suspicious activity.

Through its members, associate members, observers, and observer organizations across multiple countries and jurisdictions, almost all major financial centers observe and follow FATF regulations.

AML regulations in North America

Any financial company that operates or does business in the United States must comply with the Bank Secrecy Act (BSA), originally created in 1970 to require better recordkeeping and reporting from financial institutions.

The BSA is administered by FinCEN, the US government’s Financial Crimes Enforcement Network. FinCEN states that financial institutions must develop compliance programs, report large-scale and other suspicious transactions, and regularly report on their AML procedures.

Since its creation, the BSA has continued to adapt and expand to meet the ever-changing threats of money laundering. For example, while it originally applied to legacy financial institutions like banks and credit unions, it has since expanded to cover other industries, such as online casinos and cryptocurrency exchanges.

Money laundering remains a significant challenge in Mexico. There, the Financial Intelligence Unit (FIU) and the Attorney’s General Office are in charge of implementing stronger AML laws in the region and prosecuting financial crimes.

The Canadian government has also implemented laws, such as the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), to counter financial terrorism. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) provides guidance to business and industries, particularly around risk management and the identification of beneficial owners (UBOs).

AML rules in Europe

There are a number of anti-money laundering directives across EU member states that encourage a risk-based approach to identify bad actors. The EU regularly amends these directives to address the rapid changes in money laundering.

For example, the 5th Anti-Laundering Directive (5AMLD) introduced new regulations around cryptocurrency and PEP lists. Most recently, the 6th Directive (6AMLD) increased the definition of offenses and the severity of punishments. It also heightened criminal liability; for example, aiding and abetting in money laundering is now a crime. Many individual European countries also have their own AML laws.

Other European AML regulations you might be subject to include the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) in the Netherlands and the Irish Criminal Justice (Money Laundering and Terrorist Financing) Act.

AML rules in the United Kingdom

While the UK is no longer a member of the EU, they’ve committed to following 5AMLD and 6AMLD regulations. The Financial Conduct Authority (FCA), a non-governmental body that works with Her Majesty’s Revenue & Customs, regulates and supervises AML activities.

The UK’s primary AML legislation is the Proceeds and Crime Act (POCA), which defines the offenses that constitute money laundering and requires financial institutions to implement proper AML controls.

AML guidelines in Asia

When doing business in Asia, you may have to deal with one of several different bodies that regulate the financial industry through AML laws.

For example, the Hong Kong Monetary Authority (HKMA) recommends a number of controls, such as appointing a compliance officer and conducting a risk assessment of all customers.

The Payment Services Act (PSA) in Singapore, enforced by the Monetary Authority of Singapore (MAS), similarly requires due diligence, KYC protocols, reporting, and monitoring.

AML laws in Australia & New Zealand

While regulations in Australia and New Zealand vary by jurisdiction and area, they’re closely modeled after the guidelines laid out by the FATF.

The Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) in Australia and the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act) in New Zealand align with international standards and give individuals and businesses confidence in the countries’ financial systems.

AML in South America

South America is a complex and challenging area for AML compliance. There are high levels of corruption and financial crime in this region, and regulations in individual countries differ greatly.

Despite this, the Financial Action Task Force of Latin America (GAFILAT) was founded to develop and implement a comprehensive strategy to combat money laundering and financial terrorism. Their work is strongly based upon global FATF guidelines.

Persona: Your global AML solution

If you’re operating in or expanding to other countries, you need a flexible compliance system that can adjust to your requirements.

The right system can make it quicker and easier to comply with local laws and regulations.

Persona's identity verification system covers more than 200 countries and territories. It’s also available in 20 different languages to support all of your international business needs.

The global AML guidance you need

Staying on top of changing AML laws can be challenging. But it’s also imperative for any business or institution that operates in multiple countries and wishes to avoid public backlash and financial or criminal penalties.

Help protect your business against severe consequences without the difficulties. Make global AML compliance easier with Persona’s flexible, intuitive system on your side. Get in touch or start for free today.


Disclaimer: Persona only provides checks against available AML lists. It is your responsibility to make a final determination regarding AML risk and specific country requirements. This post is provided for informational purposes only and is not intended as legal advice. We recommend you consult with an attorney regarding your AML obligations in your particular jurisdiction.

Continue reading

Continue reading

How do AML regulations apply to crypto exchanges?
Industry

How do AML regulations apply to crypto exchanges?

If your business operates in the crypto space, it’s critical that you understand the tenets of AML so you can take the requisite steps to meet regulatory requirements.

Why does KYC matter for fintech companies?
Industry

Why does KYC matter for fintech companies?

Whether you offer a lending product or investing service, if you're a fintech company, you need to comply with KYC regulations.

Why automated adverse media screening is essential for AML
Industry

Why automated adverse media screening is essential for AML

Negative news checks are an essential but complex process. Protect your business from reputational risk with an automated screening solution.

Ready to get started?

Get in touch or start exploring Persona today.