AML/ATF – Increasing Complexity – Are you ready?

Anti-Money Laundering/Anti-Terrorism Financing (AML/ATF) compliance is growing in complexity, and fund structures must expand their assessments to include several key factors at the time of establishment and also periodically when factors change. These factors include:

  1. Domicile. Does the selected jurisdiction of domicile have the infrastructure in place to keep pace with rapidly changing benchmarks?
  2. Service Provider. Does the service provider have the resources and technology to adapt to continuously changing requirements?
  3. Monitoring . Is there sufficient dedicated internal review resources to ensure policies, procedures, and outcomes are in line with the regulations?

This year we continue to see evolution in this space. The EU Commission announced recently on May 7, 2020, their efforts to bolster the fight against money laundering with a Comprehensive EU Policy. The six-point anti-money laundering action plan includes the proposal for a new EU AML authority and a better alignment of its third-country blacklist with the Financial Action Task Force list of non-cooperative countries and territories. These changes have immediate and long -term implications, such as an increase in the structuring of India-based investment strategies through Singapore. For reference, see the link below. .

In addition to changes in regulatory complexity, legacy IT systems and siloed processes appear to be a source of ongoing struggles for financial institutions as they tend to create operational inefficiencies. Ideally, a financial institution should have complete oversight of its structure by having the ability to monitor and share its customers’ transactions across businesses, and potentially jurisdictions, helping to facilitate the identification of any unusual transactions and behaviors as well as exposure to any potential sanctions violations. Many financial institutions continue investing in systems or people to manage the output. However, those institutions should consider what will be sustainable for the long-term instead of aiming only to meet today’s minimum regulatory requirements.

Krypton expects the AML/ATF standards and reporting requirements to increase for the financial sector. Therefore, we have invested heavily in this space to provide a dynamic, scalable solution for servicing our clients that will evolve with changing market needs. Please contact us today to learn more about our approach to AML.