FCA commences charges for unauthorised activity
The Financial Conduct Authority has begun criminal proceedings against three individuals for misconduct between 1 September 2014 and 7 November 2018 involving offering loans and sale-and-rent-back agreements on behalf of Secure Property Consultants Ltd (trading as Secure Property Buyers and Secure Property Sales) without being approved by the regulator.
SIFMA takeaways from AML 2023
The Securities Industry and Financial Markets Association (SIFMA) has published a helpful note of key points from their recent anti-money landering conference in May. Key points form the conference report are as follows:
- The current threat landscape for illicit finance has evolved significantly. Fraud is the most significant proceed-generating crime in the United States, overshadowing other forms of money laundering. Current threats include COVID-stimulus related fraud, ransomware attacks, cyber-enabled crime, digital payments, domestic violent extremism, corruption, and the fentanyl epidemic.
- The upcoming National Risk Assessment report in January 2024 will focus on those frauds seen as increasing, including healthcare, telemedicine, elder care, and opioid abuse frauds. Elder fraud is particularly targeted, and initiatives are being implemented to protect this vulnerable group.
- Money laundering trends are categorised into four categories: the financial system, trade-based money laundering, real estate, and virtual currency. While virtual currency receives significant attention, the three former categories remain the most prevalent sources of money laundering. Broker-dealers are more likely to encounter account takeovers or securities fraud compared to traditional banks dealing with drug trafficking and organised crime.
- Despite the use of sanctions, Russia has found ways to continue financing its oligarchs and government during the Ukrainian conflict. Vulnerabilities in the AML/CFT system, have been exploited, leading to increased focus on addressing these vulnerabilities.
- The AML Act of 2020 required a complete rethink of the regulatory landscape, with Financial Crimes Enforcement Network (FinCEN) is tasked with its implementation. Beneficial Ownership Information Reporting requirements will go live on January 1, 2024, and efforts are underway to finalise the Access Rule and develop guidance for businesses to comply with their legal obligations. Changes to the Customer Due Diligence (CDD) Rule to comply with the Corporate Transparency Act (CTA) are also expected.
- Financial firms must have modern and well-designed AML programs, strong data and procedural controls. Training, awareness, and robust Know Your Customer (KYC) processes are crucial in preventing illicit activity.
- Suspicious Activity Reports (SARs) are vital tools for collaboration and intelligence sharing. They serve as proactive leads and reactive case support for law enforcement agencies. Notably, the number of SARs filed by depository institutions and securities/futures entities has been increasing over the years.
- Writing well-structured and informative SARs is important, and law enforcement contact should be included in the report as a critical management tool.
US Treasury speaker on CBDC
Graham Steele, Assistant Secretary for Financial Institutions at the Treasury Department has been speaking about the potential for a central bank digital currency (CBDC) at the Transform Payments USA conference in Austin, Texas.
Steele discussed the ongoing evaluation of CBDCs in the United States, emphasising the importance of striking a balance between various objectives such as financial inclusion, privacy, and financial stability. He also noted decisions regarding intermediaries, privacy, offline capabilities, and the needs of marginalised communities are all crucial in shaping the potential benefits and risks associated with a US CBDC.
The US has not yet decided whether it will pursue a CBDC, but the Treasury is leading an interagency working group to provide a broader perspective on the implications of a potential US CBDC. The working group is evaluating policy objectives related to global financial leadership, national security, privacy, illicit finance, and financial inclusion.
Steele also addressed the FedNow service for faster payments and open banking.
A selected summary of key developments for regulated financial institutions
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