Anti-money laundering continues to be an important practice for financial institutions around the globe. Effective AML practice shave grown in importance as the EU released its largest AML package to date.
While the EU’s policies are designed to provide greater support in the fight against money laundering, the EU’s new proposal will eliminate member states' autonomy for independent approaches to AML and as a result, financial institutions must be prepared to adapt their AML policy in order to comply with changing regulations.
The EU’s package was originally unveiled in July of 2021 and consists of four legislative proposals that target four key areas:Introducing a single AML rulebook, new AMLA supervisory authority, FIU coordination and support mechanism, as well as new requirements for crypto transfers. Last week we discussed the new AML rulebook being introduced by theEU and how organizations can best adapt to this coming rulebook. This week we will discuss the second of the four key areas, a new AMLA supervisory authority.
New AMLA supervisory authority
The EU’s new supervisory authority will be known as theAnti-money Laundering Authority (AMLA) and is designed to allow for better cooperation between regulators within the EU and organizations.
The AMLA will focus its attention on high-risk financial institutions to ensure that the organization is following compliance guidelines with the new AML rulebook. The AMLA will have three key roles for organizations.
1. Ensuring Compliance
The AMLA will be designed to ensure compliance for entities that are deemed high-risk as well as maintain a database of potential risks associated with designated organizations. The AMLA will also be an advisory body to ensure that the organization is properly following the AML rulebook guidelines as well as offer evaluations of AML strategy.
2. AMLA’s Powers
The AMLA will have the power to investigate and fineorganizations who have not complied with guidelines set by the AML rulebook aswell as offering fines to those who violate money laundering (ML) and counterterrorism financing (CTF) standards.
Organizations outside of the AMLA’s desired focus will be required to report to the AMLA and notify the supervisory body of any potential risk in regards to ML and terrorist financing (TF). The AMLA may also probe organizations that are deemed unsatisfactory supervisors regardless of whether or not this organization was to be originally supervised by the AMLA.
What organizations can do
While the AMLA is designed to bring a more cohesive and cooperative approach to AML standards and reporting, organizations may find themselves struggling to ensure that all compliance standards are met. Organizations must be prepared to reevaluate their AML strategy and transparency in order to comply with new set standards. Organizations can do this by adopting governance, risk, and compliance software to ensure that their organizations are following set guidelines and minimizing potential risk. GRC software can also automate previously manual processes associated with reporting to ensure that reporting is done in an effective and efficient manner.