Important AML Regulatory Updates in 2024

With an increasingly cashless society, credit and financial institutions must implement effective practices in order to follow the applicable laws and regulations for combatting Money Laundering (ML) and Terrorism Financing (TF). To achieve that, staying up to date with the latest regulatory updates is crucial to enhance their operations. 

With this blog post, Evdokia Pitsillidou, an instructor at the institute,  delves into the significance of staying up to date with the upcoming regulatory changes on a national and European level, exploring the 3rd MONEYVAL Follow-up report. Further, she continues to discuss the EBA guidelines on national restrictive measures, the weaknesses and good practices addressed in the Cyprus Securities and Exchange Commission (CySEC) Circulars C516 and C550, respectively. In addition, a complete online course is offered through the IforPE platform, titled Know all 2024 Anti-Money Laundering Regulatory Updates. 

Towards the end of this blog post, you will find detailed information and gain valuable knowledge, acquired upon course completion, exploring the anticipated changes in AML regulation, and how to implement them in practice. 

Who is MONEYVAL?
To address ML and TF with a unified global approach, the Financial Action Task Force (FATF) has developed 40 Recommendations. The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) is tasked with evaluating EU Member States that are not members of the FATF through a national risk assessment and annual follow-up reports. Overall, Cyprus has attained Compliance (C) or Large Compliance (LC) in the majority of the 40 recommendations, with only three areas being rated as Partially Compliant (PC) following its upgrade concerning Recommendation 15 in MONEYVAL’s 3rd follow-up report. 

Identified weaknesses and good practices
CySEC conducts reviews and inspections on its supervised entities, and some of the identified weaknesses it documented are: 

• Executive Summaries of AMLCO Annual Reports were not structured as instructed in previous circulars and did not contain all references outlined herein. 
• No sufficient analysis was provided of the specific method employed for the conduct of inspections and reviews by the AMLCO. 
• Where significant deficiencies and weaknesses were identified the seriousness, as well as the risk implications, were not sufficiently noted. 
• In some instances, information about clients assessed as high risk was not always included in the reports. 
• Data provided about the systems and procedures applied for the ongoing monitoring of clients’ accounts and transactions was inadequate. 
• Some reports submitted by external investment fund managers provided only consolidated information; detailed analysis is required. 

Some of the good practices addressed by CySEC concern:

• AML/CFT Internal Control Measures, 
• Record keeping, 
• Governance. 

EBA Guidelines on National Restrictive Measures
CySEC issued Circular C614 in relation to the two sets of EBA Guidelines published regarding national restrictive measures. The initial set of Guidelines concerns financial institutions and prudential supervisors, outlining regulatory expectations for internal governance, as well as senior and risk management. Similarly, the second set of Guidelines is aimed at Payment Service Providers (PSPs) and Crypto Asset Service Providers (CASPs), emphasizing Know Your Customer (KYC) procedures, screening, and due diligence procedures. 

The first set of Guidelines includes measures on: 

• Governance framework and the role of the management body
• Conducting a restrictive measures exposure assessment
• Effective restrictive measure policies and procedures
• Training

The second set of Guidelines contains information related to:

• Restrictive measures screening
• Due diligence and verification measures for alert analysis
• Freezing and reporting measures
• Ensuring the ongoing effectiveness of restrictive measures screening policies, procedures, and systems