FATF 2019 Regimes – Tightening the Reins on Money Launderers

To combat money laundering, the Financial Action Task Force (FATF) came into effect in 1989. An inter-governmental authority highlights the regulations to eliminate money launderers and terrorist financing from legitimate framework of businesses. FATF enforces regulations in its member countries and does research on the latest trends of terrorist financing and money laundering. On the based of which it gives suggestions and amendments in the regimes.

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The money laundering cases of Swedbank and Danske bank shows that any big businesses can be equally prone to money laundering attacks. With the advent of virtual currency flow, cryptocurrency we say has increased the opportunities for money launderers to convert the embezzle funds into legal ones. Legal sectors are also in the threat of money laundering and taking measures to eliminate the risks of dirty money flow.

FATF and Virtual Currency: In a couple of years, the universality of cryptocurrency such as Bitcoin has got global acceptance. This innovative payment method is flexible, efficient, and secure. Although these methods models possess challenges for regulators who are unsure about dealing with this method. Now, this technology is embraced in different sections of the world and accordingly, regulations are imposed. Others are limiting its legitimate use in the region. FATF has conducted research regarding the underlined payment methods of virtual currency, its usage and how it works. The report establishes key points that act as the base for policy development.

FATF has given recommendations based on the global conditions of cryptocurrency. Some of the cryptocurrency providers take in place in-house AML screening and KYC/AML methods to deter the risks of online fraud, payment scams and fraudulent transactions. Still, these practices are unable to fill up the loopholes that are haunting especially for financial institutions. Currency exchanges are in dire need of taking stringent actions to remove dirty money from out of the premises of legitimate businesses. They are also asked to report transactions that are above the specified threshold.

Industries and local regulators are thriving to reduce the money launderers and to undergo individual screening against a bunch of criminal records and lists.

FATF and Legal Sectors: Legal professional work with a broad business spectrum. It varies from country to country and also within a country. From individual practitioners to multinational companies, legal sectors opt to provide endless services. The business scalability is attractive for bad actors to perform money laundering and terrorist financing by understanding the premises. FATF guidance provides legal professionals with to fight with the ruinous circumstances that can affect their legitimate business adversely. FATF highlights the importance of verification of beneficial ownership requirements. Also, to perform Customer Due Diligence (CDD) measures for verification of business partners.

In June 2019, the legal sector has been in the spotlight due to which regimes are declared stating legal professionals to take steps against lingering laundered money within the industry. The recommendation concern parties to take into action vigilant Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) to mitigate the risks of facilitating criminal activities within the industry.

For legal professionals, it is important to undergo AML screening and monitoring processes by KYC services to combat the declining trust of financial institutions and service providers. FATF enforces institutions to oblige with the regimes and contribute to the mission of eliminating bad money across the globe.

What measures can be taken to comply with the New AML Regime?

Virtual currency and legal sectors need to amend with the latest protocols of AML and KYC. In-depth identity verification should be done before allowing bad traffic to bombard your system causing never-ending reputational damage.

After the new recommendations of FATF virtual currency and the legal sector will need to amend their KYC and AML protocols. The businesses in both sectors will have to do in-depth identity verification and AML screening of their clients. Global compliance with mandatory protocols is required to implement underneath standards of the industry. There would be more chances of growth in these industries they tend to avail the identity screening and verification solutions. Digital id verification processes can curb frauds that are rusting in several sectors.

For seamless business dealings and collaborations, the primary step is to undergo effective programs and filter out bad actors. Once fraudsters manage to enter the system by exploiting the vulnerabilities, malicious activities would be on the go. They not only include bad money transfers but also cyberattacks that collectively or separately can cost the business heavily. It is a dire need for businesses to come up with innovative solutions and stay one step ahead of fraudsters. For this, it is time for businesses to take hand in hand with local regulators and meet the regulatory as well as business requirements simultaneously.