Chrissy Hill

High Net Worth Compliance - What’s Next? The EU Council recently agreed a batch of AML changes https://lnkd.in/gGVNhmPT it’s always interesting to follow EU developments as it usually sets the tone for what their counterparts at the FATF in Paris will likely suggest at a global level. The EU has changed their approach to AML compliance, switching from predominantly “directive” driven legislation, which leaves to member states practical implementation, to “regulations” which have direct effect in each member state: and so there is a specific AML regulation and the establishment of a centralised AML Authority. This is to drive greater consistency and cooperation across members states. The EU have taken the opportunity to expand the scope of “obliged entities” i.e., persons requried to comply with AML obligations in their business relationships, this will now include intermediaries dealing or investing in or with: Crypto assets; Crowdfunding; High value motor vehicles, water craft (yachts) and aircraft; Professional football clubs; and Migration agents (involved in sale of RBI schemes). The above is supplemented by a suggested expansion to include high value “garments and clothing accessories” so if you thought the queue outside Chanel was a marketing ploy, then in future it’ll likely be all that in-shop compliance activity going on! HNW individuals with a net worth of €50 million are automatically high risk, as is any client contracting residence by investment services, all of which will be subject to enhanced due diligence, specifically including an exhaustive source of wealth investigation. Beneficial ownership registers are dealt with by directive, including central registers for beneficial owners of companies and trusts, permitting access to parties that can show a “legitimate interest” which include NGOs, academics and investigative journalists (note: such person needn’t show any previous experience). There are limited beneficial owner notification requirements, where a search is made of a register. The concept of legitimate interest is also extended, predictably to governmental organizations, including foreign governments and AML obliged entities. Changes are scheduled to come into force in 2027, with the AML Authority due to commence operations in 2025. The impact of the changes on migration agents in the EU will be explored later today (11th June) via a webinar hosted by the Investment Migration Council, where I have been kindly asked to speak, see below registration link. IMC Webinar: https://lnkd.in/gzWGRv6k #aml #investmentmigration #rbi #cbi #FATF #EU #beneficialownership #trusts #singapore #hongkong #uae #familyoffice #privatebank

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The FATF Targets Soft Power - my latest article for the IFC Review discusses the shift from ownership to pure control in the FATF's regulatory methodology. Goodbye to the 25% threshold with its 24.99% immunity perhaps? https://lnkd.in/eqi7HUUk

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It's not all bad about regulation. On the contrary, as Patrick Hansen rightly points out, regulation such as PSD, EMI and MiCa has led to more competition.  And with PSD3/PSR, non-bank PSPs may even get direct access to the ECB. Knowing how difficult it is for a licensed PSP to open and operate bank accounts, I think this is a very important improvement. Credits to Patrick Hansen for this excellent article.

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📢 FCA Update: Ensuring Compliance with Cryptoasset Financial Promotions Rules 📢 The Financial Conduct Authority (FCA) has recently released an update on firms' adherence to the new 'back end' financial promotions rules for cryptoassets. This follows the introduction of regulations aimed at enhancing consumer protection in the rapidly evolving world of cryptocurrency. 🔍🚀 In Short: 💡 New Requirements: In June 2023, new requirements were set for firms promoting qualifying cryptoassets to retail clients, including a 24-hour cooling-off period, personalised risk warnings, client categorisation, and appropriateness assessments. This regulatory shift marks a significant step in ensuring that consumers fully understand and are prepared for the risks associated with crypto investments. 💡 Industry Response: The FCA has reviewed the compliance of a range of firms and identified both strengths and weaknesses in their approaches. While some firms have effectively implemented these new requirements, others have struggled to meet the expected standards. The FCA has highlighted the importance of good practice and provided detailed feedback to help firms improve. 💡 Due Diligence: A crucial aspect of the new rules is due diligence on cryptoassets. The FCA's findings reveal a varied approach among firms, with the most effective ones demonstrating thorough, ongoing due diligence processes. In contrast, some firms fell short, either by focusing too narrowly on certain aspects or failing to monitor the stability of cryptoassets adequately. 💡 Consumer Protection: The aim of these rules is to prevent harm to consumers by ensuring they receive clear, high-quality information about the risks of cryptoassets and have the time to make informed decisions. The FCA is committed to working collaboratively with the sector to raise standards and enhance consumer confidence in the UK crypto market. It is instrumental for regulators to utilise operational practices and share their findings openly. This approach not only helps firms understand regulatory expectations but also drives continuous improvement across the sector. For a detailed look at the FCA’s findings and to understand how to comply with these regulations, read the full publication here: https://lnkd.in/dmD5_aKu Let’s discuss how these updates might impact the crypto sector and what steps firms can take to ensure compliance. Your thoughts and experiences are valuable—share them in the comments below! 👇💬 #Crypto #Regulations #FCA #FinancialPromotions #ConsumerProtection #DueDiligence #CryptoAssets #Compliance #Finance #UKCryptoMarket

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📢 Strengthening AML/CFT Programs: Key Updates from FinCEN 📢 On the 28th of June, the Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) to enhance and modernize anti-money laundering and countering the financing of terrorism (AML/CFT) programs for financial institutions. This proposed rule aims to ensure that AML/CFT programs are effective, risk-based, and reasonably designed, allowing financial institutions to allocate resources according to their risk profiles. Key Highlights: 🔍 Effective AML/CFT Programs: Programs must be effective, risk-based, and reasonably designed to protect national security and the integrity of the US financial system. 🛡️ Compliance Requirements: AML/CFT programs must include internal policies, a designated compliance officer, ongoing employee training, and independent audits. 🔄 Risk Assessment Process: Requires financial institutions to implement a risk assessment process to identify and manage risks related to money laundering, terrorist financing, and other illicit activities. 📈 Incorporation of AML/CFT Priorities: Proposes incorporating government-wide AML/CFT priorities into program rules, reflecting changes from the AML Act of 2020. 🌐 Encouraging Innovation: Emphasizes technological innovation and modernizes AML/CFT programs, allowing for innovative approaches to meet compliance obligations. At Provenance, we specialize in providing comprehensive AML compliance services within the digital asset space. Our expert team helps businesses navigate the complexities of AML regulations, ensuring your programs are effective, risk-based, and fully compliant. Let us help you safeguard your operations and stay ahead of regulatory changes. Contact us today to learn more about our AML solutions. https://lnkd.in/eGBKu6FS #FinCEN #AML #CFT #Compliance #Innovation #DigitalAssets #ProvenanceCompliance

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FCA publishes assessment of firms’ compliance with ‘back end’ cryptoasset financial promotions rules ➡ Published today (7 August), the FCA's findings are based on its assessment of a sample of UK-registered cryptoasset firms, as well as authorised firms able to approve promotions of unregistered firms. The 'back end' rules in question include those relating to the 24-hour cooling-off period, personalised risk warnings, client categorisation, appropriateness assessments, record keeping and due diligence. These are, as the FCA recognises, the most challenging of the new rules for firms to comply with, requiring extensive changes to back-end systems and significantly impacting the customer journey and user experience. Although the cryptoasset financial promotions rules went live in October last year, having discussed with industry the extent of work needed to comply with the 'back-end' rules and firms’ preparedness, the FCA implemented a modification by consent which gave firms who requested it until 8 January this year to comply with these rules. Following its subsequent assessment of firms' compliance with the rules, the FCA has identified multiple instances where firms did not meet the required standards and warns that "If firms do not improve, we will act". They also note that they will consider firms’ compliance with regulatory requirements, including the financial promotions regime, as part of any application to be authorised under the future financial services regulatory regime for cryptoassets. It is therefore crucial that cryptoasset businesses providing or intending to provide services to UK customers, including from overseas, read the FCA's feedback on the good and poor practices identified during its assessment. Taking a step back though, many industry participants will be questioning the justification for such onerous requirements for cryptoasset firms when compared with other areas of financial services, as well as rules in other jurisdictions. They will also question whether the FCA is striking the right balance between consumer protection and user experience, with the latter undoubtedly suffering significant detriment when compared to users in other leading cryptoasset markets. The risk remains that this approach, combined with the ongoing difficulty of obtaining cryptoasset firm registration in the UK, will continue to push firms and customers towards offshore business models.

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The FATF is proposing updates to its AML/CFT standards to support financial inclusion, inviting public feedback by December 6, 2024. Key revisions aim to encourage simplified risk-based measures and clarify language to help financial institutions apply proportional responses. This consultation reflects FATF's commitment to balancing anti-money laundering efforts with financial access. https://okt.to/9w17kZ #AML #CFT #FATF #RiskManagement #FinancialRegulation #AMLCompliance #PublicConsultation #RegulatoryUpdates #FinancialInstitutions

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A battle royale is raging over regulations which force UK banks to fight fincrime such as money-laundering, tax evasion and terrorist financing, writes Frances Coppola. Last year’s debanking scandal shone a spotlight on bank account closures. And a growing number of politicians and commentators say onerous regulation is harming the UK’s financial services industry in a post-Brexit world. Yet some 40 per cent of the world’s “dirty money” still flows through London and the Crown dependencies, according to a government minister. So are UK regulations too tight, too loose, or simply hitting the wrong targets? The debate is likely to step up a notch with an impending general election being held on July 4. The Institute of Economic Affairs - London, a free-market think-tank, says anti-money laundering regulations are unfair, costly and ineffective.   While the IEA’s point of view is hardly surprising, it provides hard-hitting statistics that gives the financial services sector some pause for thought. Read more of what they say here 👇 https://lnkd.in/e4mWw2sm #fincrime #AML #CFT #AMLCFT

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US OFAC designates five individuals and four entities associated with the TGR Group, "a sprawling international network of businesses and employees that have facilitated significant sanctions circumvention on behalf of Russian elites." "With touchpoints around the world, the TGR Group is an extensive sanctions evasion and money laundering network that works to obfuscate the illicit activities of its clients, including through the use digital assets, such as stablecoins like Tether (USDT). Controlled by Ukrainian national George Rossi, the network provides a range of services to place, layer, and integrate illicit financial schemes into the global financial system. These include: the laundering of funds associated with sanctioned entities; providing an unregistered service to exchange cash and cryptocurrency; the receipt of cash and making the value available to clients in the form of cryptocurrency; providing a pre-paid credit card service; and, obfuscating the source of funds to allow high-net worth Russian nationals to purchase property in the United Kingdom." #sanctions #Russia #evasion #cryptocurrency #OFAC #AML #circumvention

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Earlier today, the FCA published findings from its multi-firm review of the treatment of politically exposed persons (PEPs) in UK financial services. https://lnkd.in/gywAxMA5   In short, the FCA found: - most firms it reviewed had systems and controls designed to implement the UK's 2017 Money Laundering Regulations (MLRs), and existing FCA guidance around PEPs dating from 2017 (FG 17/6); - firms were 'not regularly applying excessive enhanced due diligence measures' on such customers; - there was however room for improvement in all the firms assessed; - a series of technical issues need attention in some firms, in particular the use of internal definitions of a PEP that are wider than the MLRs require, and controls over the review of individuals' PEP status after leaving public office.   Chapter 3 of the FCA's paper sets out a series of measures that firms need to take, including: - reviewing current policies, procedures and controls against its findings; - addressing any gaps in current arrangements; - improving the clarity and effectiveness of communications with PEP customers (overlaid with a reminder about compliance with the Consumer Duty); and - ensuring staff are appropriately trained.   At the same time, the FCA has proposed amendments to its 2017 guidance relating to PEPs and is consulting on them (via new GC24/4). https://lnkd.in/g8jUFqgK   We'll be picking up the FCA's work in more detail in a future edition of our 'In the Know' newsletter for financial crime. Change is, however, on the way. The FCA's consultation closes on 18 October 2024.   #financialcrime #financialregulation #addleshawgoddard

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The Financial Conduct Authority (FCA) is proposing significant updates to its Financial Crime Guide, targeting key areas like sanctions, proliferation financing, and transaction monitoring. But that’s not all – the proposed changes extend to cryptoassets and the Consumer Duty. What does this mean for regulated firms? In our latest blog, find out about the main updates proposed by the FCA and their implications for regulated firms. Find out more here: https://lnkd.in/e-rCJrxv #FCA #compliance #FinancialCrime #ConsumerDuty #FinancialCrimeGuide #crypto 

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#CryptoUK member Avyse Partners is hosting a webinar on Wednesday, 6 November, where Sam Jarvis - drawing on 15 years in the #FCA’s financial crime team - will share key insights on what to expect in FCA regulatory assessments. Some topics she will be covering includes: 1️⃣ What are the different FCA supervisory tools? 2️⃣ Spotlight on the use of "PAMLP" and dealing with the FCA Key Takeaways: ✅ How you can prepare ✅ How you can use their gap analysis tools ✅ How they can help For more information and to register for the webinar, visit Avyse’s blog 👉 ... #Crypto #UK #Regulation #PAMLP #Learning #Finance

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MONEYVAL's recent assessment of Guernsey's international AML/CFT/CPS standards underscores the continued focus on financial crime in the region. While results are pending, Joe French and Barney Lewis explain how firms can ensure their strategies remain effective against evolving risks: https://lnkd.in/exKdKCw7 #AML #FinancialCrime #FinancialRegulation

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A combination of macro and regulatory factors are creating a “perfect storm” for banks’ compliance teams working on entity verification, says leading fincrime expert Ted Datta from Moody's. Round after round of sanctions introduced by Western countries following Russia’s attack on Ukraine — alongside upcoming stringent European Union regulations on money-laundering — are putting considerable strain on entity verification activities of compliance, writes Giovanni Legorano. Datta says sanction requirements have now become a standalone “enterprise risk” for all banks, even for small- and medium-sized financial institutions. Read more 👉 https://lnkd.in/drKTtVWQ #sanctions #compliance #banking #Ukraine #Russia

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Attention Annex 1 firms; lenders, safe custody providers, money brokers & financial leasing companies - the Financial Conduct Authority has issued a 'Dear CEO' Letter highlighting concerns about financial crime control failings. Here's what you need to know: ✅ Conduct a gap analysis within 6 months ✅ Review your business model, risk assessments, due diligence, ongoing monitoring, policies, procedures, governance, MI and training ✅ Document findings and take prompt action to address gaps ✅ Ensure sufficient senior management engagement Inadequate responses could lead to FCA intervention, from mandating third-party reviews to enforcement action. Our financial services experts break down the FCA's findings and expectations in more detail at the link below ⬇️ https://lnkd.in/eb43SNmv #FCA #AML #AMLCompliance #FinancialCrime

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Katherine Ford, Associate Director, Strategic Operations at Financial Crimes Enforcement Network (Financial Crimes Enforcement Network, US Treasury) will give a keynote at RegTech Summit New York on November 21st, to discuss managing regulatory expectations and best practices for fighting financial crime, including: ✅Overview of FinCEN’s role in the regulatory landscape, including recent updates to anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. ✅Discussion of the consequences of non-compliance and recent enforcement actions. ✅How financial criminals are adapting to new technologies and market conditions, and the implications for financial institutions. ✅Recommendations for implementing effective AML/CFT programs, including the use of advanced data analytics, machine learning, and other technologies to detect and prevent financial crime. Don't miss this one - register here: https://lnkd.in/eGS_YVeC #RTSNYC #regtech #regtechsummit #FinCEN #financialcrime #AML #CFT #compliance #dataanalytics #machinelearning

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Katherine Ford, Associate Director, Strategic Operations at Financial Crimes Enforcement Network (Financial Crimes Enforcement Network, US Treasury) will give a keynote at RegTech Summit New York on November 21st, to discuss managing regulatory expectations and best practices for fighting financial crime, including: ✅Overview of FinCEN’s role in the regulatory landscape, including recent updates to anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. ✅Discussion of the consequences of non-compliance and recent enforcement actions. ✅How financial criminals are adapting to new technologies and market conditions, and the implications for financial institutions. ✅Recommendations for implementing effective AML/CFT programs, including the use of advanced data analytics, machine learning, and other technologies to detect and prevent financial crime. Don't miss this one - register here: https://lnkd.in/eGS_YVeC #RTSNYC #regtech #regtechsummit #FinCEN #financialcrime #AML #CFT #compliance #dataanalytics #machinelearning

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