Newsletter - 15 October 2019 – AML Compliance

What we’re hearing…

After launching Arctic’s free AML Pulse Check survey we received hundreds of responses from regulated entities across 12 industry sectors and 10 countries. This survey was designed to help regulated entities to understand where they might have gaps in their AML Programs and ML/TF Risk Assessments and this survey will remain open – click here to take your AML Programs pulse…!

Next month, we plan to publish some detailed (and of course anonymised!) insights from the AML Pulse Check survey but in the meantime, here are some of the key findings, which highlight that many businesses despite being regulated for well over a decade, still lack even a basic understanding of their money laundering and terrorism financing vulnerabilities.

1. No ML/TF risk assessment or AML Program

6% of respondents have not conducted an ML/TF risk assessment and 10% do not have an AML Program

As AML/CFT laws are risk-based regulated entities are required by law to conduct an initial and ongoing assessment of their money laundering and terrorism financing risks and then put in place an AML Program to mitigate and manage these risks in an appropriate and proportionate manner. There are obviously still businesses out there that are either not aware of these obligations or are simply ignoring them.

2. Limited understanding of how to identify, assess, mitigate and manage ML/TF risks

30% of respondents have not updated their ML/TF risk assessment within the last 12 months and many of those that have appear to be missing fundamental concepts

Whilst a third of respondents are conducting ML/TF risk assessments less frequently, the results that confounded me the most were some of the other responses that indicate the inherent risks are not being assessed for customers (24%), for channels (15%) or countries (18%).

If regulated entities are failing to assess the likelihood and impact (i.e. inherent risk) on the fundamental risk categories, then it seems many businesses lack the capacity and capability to conduct ML/TF risk assessments, which is a core requirement of a risk-based approach.

Added to this, 48% of respondents indicate they do not assess the existence and effectiveness of mitigating controls – meaning that nearly half of respondents that have conducted a risk assessment do not understand the concept of residual risk – which is risk management 101.

The AML Pulse Check survey has given us a glimpse of some of the challenges that are being faced by regulated entities and we will publish more insights over the coming months but if any businesses want to strengthen their ML/TF risk management processes then please get in touch with me or any of our team.

Over the last month we have seen a fair bit of activity from the Australian Government and AUSTRAC in the run up to the follow-up mutual evaluation visit by the Financial Action Task Force (FATF), which is expected to start in November.

– Anthony Quinn, CEO and Founder, Arctic Intelligence

News in brief

The Financial Action Task Force has updated its consolidated assessment ratings. These provide an up-to-date overview of the ratings assessed countries obtained for effectiveness and technical compliance. Read more.

AUSTRAC has issued a $252,000 infringement notice to Compass Global Holdings Pty Ltd for failing to report international funds transfers between 2018 and 2019. This is a timely reminder to all 14,700 reporting entities in Australia that AUSTRAC is shifting their enforcement posture and starting to take action.Read more.

AUSTRAC has ordered an external auditor be appointed by PayPal Australia to examine ongoing concerns regarding PayPal Australia’s compliance with the AML/CTF Act. Read more.

Australia’s biggest ever methamphetamine haul sees 1.2 tonnes of the drug, with a street value of over $1 billion dollars, seized at Geraldton, WA as Yacht runs aground. Read more.

The US Financial Crimes Enforcement Network (FinCEN) has launched its Global Investigations Division. The unit will be responsible for implementing targeted investigation strategies in FinCEN’s unique authorities under the Bank Secrecy Act. Read more.

New European Union rules commenced on 14 September 2019, impacting the way banks and payment services providers must verify customer identities and validate specific payment instructions. Read more.

The latest from Arctic insights

To browse our full catalog of articles, press releases, case studies and interviews click here.

Arctic Intelligence has launched content tailored for the United States and Canadian markets. Hear from one our our clients Bendix Foreign Exchange and Payment Solutions about how AML Accelerate has helped them with their ML/TF Risk Assessment and AML Program to meet FINTRAC requirements. Read More.

Arctic Intelligence was pleased to exhibit at the ACAMS 18th Annual AML & Financial Crime Conference in Las Vegas. Over 2,500 anti-financial crime professionals, regulators, law enforcement investigators and government officials attended (many taking home their own little Australiana gift!).

Last weekend we delivered a major release of the AML Accelerate platform. on 4th October. Enhancements included additional contextual questions, changes to multiple risk categories, more granular control effectiveness assessment, improved audit trail, plus much more.

If you are a client and haven’t yet checked out the new enhancements we would encourage you to take a look at the release notes for a summary of all the changes – it might be a good time to refresh your ML/TF risk assessment.

If you would like more information on AML Accelerate, our ML/TF risk assessment solution for money laundering risks tailored to over 30 financial and non-financial industry sectors, please get in touch with [email protected] to arrange a demo.

Arctic Intelligence presents at the RegTech Association’s RegTech Edge Showcase. On the 10th October, the RegTech Association hosted the RegTech Edge industry showcase event, bringing together participants from across the RegTech eco-system to highlight solutions from 18 member firms. Imelda Newton, Head of Business Development for Arctic Intelligence presented Arctic’s capabilities and commented “RegTech Edge was a great opportunity for regulated businesses to see a broad range of new technology in the one session. Market need is continuing to drive some great innovation.” Read More.

Upcoming Seminars

Our partner, AML Solutions Australia is holding AML/CTF seminars in October.
Seats still available. Book now to secure your seat.
Southport, Sunnybank , Kedron, Ipswich