I recently attended the AMLP 12th Annual European AML & Financial Crime Conference in London, and there were some fascinating sessions over the course of the 2 days that addressed many of the challenges currently facing the regulatory community across Europe.
I’ve summarised some of the key takeaways from the event below.
There was lots of discussion around virtual currencies and pretty much every one of them mentioned the need to have this area regulated. Despite the fact that virtual assets might be considered as low-risk, they are still a draw for criminals due to their unregulated status. There was a call for some industry consensus on the value of regulation here. An interesting example of a system that can help detect criminal activity in crypto was shown, so there is already mechanisms in place to help trace this should regulation come into effect. I suspect this will be a subject that comes up time and again at this type of event.
Communication, or lack thereof, was raised as a significant barrier to tackling ML and TF across the EU. A particular issue was that communication of potential criminal activity tends to only go in one direction – from the bank to the FIU. There’s a call for FIUs and other law enforcement agencies to proactively share their own intelligence of potential criminals/criminal activity with the banks too, to allow them to put measures in place to help capture them. A lack of communication directly with customers was also highlighted as a risk, so there was a call to redirect resource into this area in order to improve it. If customers are better informed in how to spot a financial crime taking place, the activity can be stopped at source.
Beneficial ownership registers
This was a subject that was raised several times, particularly the view that there is a lot of inconsistency across the EU in how much progress has been made on this by member states. 5MLD is looking to address this, but the message from this conference was that there are many challenges in this area that have to be addressed.
The role of FinTech/RegTech
There were some interesting discussions around how FinTech and RegTech can help in the fight against ML/TF. Examples were given for how these technologies can help in identifying risk through more effective client screening, transaction monitoring and client onboarding. It’s encouraging to see a lot of research being placed in this area, but it may be a while before we see any wholesale improvements to financial crime figures.
There was an interesting session on corruption across Europe, which highlighted some worrying practices taking place. The fundamental view was that anti-corruption bodies in many countries (predominantly in Eastern Europe) are having little or no impact on the corrupt practices taking place. Romania was cited as a significant exception to this though, so maybe more can be learned from their approach by some of their neighbours.
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