The State of Financial Crime
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Survey Methodology
The State of Financial Crime 2024 is based on a survey of 600 C-suite and senior compliance decision-makers across the US, Canada, UK, France, Germany, Netherlands, Singapore, Hong Kong, and Australia.
All respondents currently work in financial services and fintech organizations, with 50+ employees and total assets worth $5 billion+.
4 Financial Crime Trends for 2024
The Geopolitical Outlook
US-Mexico Relations and the Fight Against Opioid Cartels
The US will tighten restrictions on Mexican drug cartels and their allies, including Chinese businesses. Mexico's instability could also become anr issue in the US presidential campaign. The US will take tougher action against cartels and intensify its efforts to combat cybercrime originating from Russia.
US and Allies to Target Russian Malign Influence and Proxies Worldwide
The US and its allies will increase efforts to counter Russia's malign influence in Eastern Europe, while focusing on imposing sanctions and closing potential loopholes. This approach will also extend to Russian proxies, such as the Wagner Group, operating in Africa, the Middle East, and potentially even Latin America.
How Global AML Regulations Will Evolve in 2024
Examine the evolving anti-money laundering regulatory landscape in major economies and emerging hotspots using the interactive map below.
Hover and click to learn more
United States
United States
As firms mustcomply with the Corporate Transparency Act (CTA), the US government will continue to explore legislation and regulation to manage the risks of technological innovation, with AML/CFT remaining a national security concern.
The focus will also be on emerging threats in crypto assets and artificial intelligence, while the Securities and Exchange Commission (SEC) prioritizes information security and AML in market examinations.
Canada
China
Australia
European Union
Canada
Canada plans to modernize its AML/CFT regime by implementing measures outlined in its 2023 budget. The country has established the Canada Financial Crimes Agency (CFCA) to respond to complex financial crime cases. The government will introduce several amendments to Canadian legislation in 2024, such as giving law enforcement the ability to freeze and seize virtual assets and criminalizing the operation of an unregistered MSB.
China
China's Three-Year Action Plan (2022-2024) aims
to combat money laundering crimes, including fake gold exchanges, illegal fundraising, and digital currency transactions. Additionally, Hong Kong's VASP regime under the Anti-Money Laundering
and Counter-Terrorist Financing Ordinance (AMLO) went live in June 2023, and the Guidelines on AML/CFT for Authorised Institutions were amended in May 2023 to include virtual assets and clarify requirements for non-Hong Kong PEPs.
European Union
The EU's latest AML package is expected to be finalized in Q1 2024, followed by a three-year transition period. It aims to standardize AML/CFT measures across the EU and comprises four instruments:
A regulation establishing an AML Authority (AMLA).
A new Anti-Money Laundering Directive.
A regulation providing clarity for obliged entities.
Updated Transfer of Funds Regulations (TFRs) for crypto asset transfers. The TFRs were adopted in June 2023.
Germany
Switzerland
Germany
Germany will implement provisions set out under the draft “Improving the Fight Against Financial Crime” bill passed in October 2023. This bill restructures and re-envisages powers to fight financial crime in Germany, including establishing a new AML “super-agency” and a new money laundering investigation hub. Additional reforms include the ability to carry out administrative asset investigations and identify “economic beneficiaries”
of suspected proceeds of crime.
France
French authorities will expect firms to comply with new provisions and changes to regulations introduced
in 2023. In March 2023, the French Ministry of the Economy issued a decree changing the definition
of PEPs and expanding the scope of AML/CFT regulations. It established a list of national politically exposed functions to align with EU AML/CFT directives, including political, judicial, and other relevant high-level political functions and state-owned enterprises.
European Union
France
Germany
Bulgaria
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Trusted by
More risk-averse
61%
Firms are clearly braced for a year of uncertainty.
How do you expect your organization’s risk appetite related to PEPs to change in the next 12 months?
If your organization is increasing its compliance budget, which areas do you plan to invest in?
Open banking, contactless payments, digital wallets, buy-now, pay-later (BNPL) schemes, and digital currencies are all revolutionizing the customer experience. While these services pose challenges for financial crime compliance, the ultimate benefits to consumers are great.
Open banking is rapidly gaining popularity worldwide through application programming interfaces (APIs) that allow firms to share data with third-party service providers, enabling instant (real-time) payments. Over 60 countries have implemented instant payment systems based on different models, including centralized or decentralized APIs, with varying degrees of regulatory involvement.
of organizations shared that they were already part of a real-time payments program, with an additional
46
In our global survey,
Hover to reveal more
“In addition to remaining abreast
of guidance and international agreements around AI, compliance leaders exploring AI solutions should ensure they understand and document the rationale behind exploring a solution and have
the right clean data to train AI models.”
– Iain Armstrong, Global Regulatory Affairs Practice Lead
Keeping Up with the Rise of AI
“Firms should have a list of PEPs whose accounts should be monitored, particularly if they are up for election. They should identify markets in which they operate that may be affected
by elections and monitor for regime change and capital flight.”
– Alia Mahmud, Global Regulatory Affairs Practice Lead
Navigating a Complex PEP Environment
What Does This Mean For My Firm?
Balancing the Increasing Cost of Compliance
“Financial crime prevention teams must use multi-layered approaches
to prevent and detect illicit financial flows. They should utilize advanced technology, financial intelligence sharing, and continuous training
to support their workforce.”
– Andrew Davies, Global Head of Regulatory Affairs
“Firms need to rethink how they fight financial crime. They will need to ensure they can stay on top of emerging payments legislation, best practices,
and guidance issued around emerging payment models.”
– Alia Mahmud, Global Regulatory Affairs Practice Lead
Driving Innovation
Western Countries Cautious about Sanctions
as a Solution to Global Issues
Western countries are becoming more cautious about using sanctions as a solution to international problems. The US and other countries have reduced the frequency of new sanctions designations against non-core targets, and are aware of the negative consequences of using sanctions in certain cases. The US, EU, and others have refrained from imposing heavy sanctions against coup leaders in Africa, letting regional players take the lead. This trend will continue in 2024, unless there are significant human rights abuses.
Increased Focus on Tackling State Support of Islamist Terrorism
In 2024, there will be a renewed focus on the financing
of Islamist extremist groups, particularly on state financial support from Iran. The US, EU, and others may impose sanctions against state supporters of terrorism. However, the level of alignment between the US and its allies
in Europe remains uncertain.
US to Intensify Action Against Russian Cybercriminals and Seek Allies' Cooperation
The US will intensify actions against cybercriminals, especially those in Russia. Hostile states providing 'safe havens' for cybercrime will also face tougher measures. The US will seek more cooperation from allies, such as the UK, to combat this predicate offense of money laundering.
• Russian businesses and politically connected individuals with links to the Putin regime.
Iain Armstrong I Global Regulatory Affairs Practice Lead
• Potentially suspect Russian proxies
in sub-Saharan Africa's metals and mining sector.
• Potential links to Hamas and Hezbollah linked facilitators, business entities, and charities in countries such as Lebanon, UAE, and Qatar.
• Cyber intrusions and cybercrime
for crypto businesses.
In 2023, the FATF issued updated papers on best practices
to prevent terrorist financing abuse of non-profit organizations and crowdfunding for terrorist financing. The watchdog plans to release public guidance on beneficial ownership and transparency of legal arrangements in February 2024.
The Wolfsberg Group will also continue to publish best practice standards and guidance for financial institutions.
Global AML/CFT Developments
Global standard setters and international organizations are developing policy recommendations and standards for the crypto asset space to manage risks across different countries.
The G20 adopted a Roadmap on Crypto Assets in October 2023, which includes ten key recommendations for countries to consider when regulating crypto. The International Monetary Fund’s joint report with the Financial Stability Board sets out policies for crypto assets, including regulatory powers and tools, cross-border cooperation, and governance. It also discusses crypto-assets' implications, including macroeconomic and financial stability, regulatory issues, and other risks.
The Crypto Asset Digital Framework
Andrew Davies I Global Head of Regulatory Affairs
As AML/CFT becomes a national security issue, legislation and regulation are being updated globally. Compliance leaders should monitor these developments and assess their impact on their business. Firms need to update their policies, procedures, and systems to align with new laws and regulations and train their staff accordingly.
What Does This Mean For My Firm?
Firms must comply with guidelines on using automated systems, data privacy, and bias. They should document their risk assessment and management processes for AI, including model governance, testing, and decision-making for explainability. To avoid bias, firms should use data from multiple sources, covering all demographics and geographies.
What Does This Mean For My Firm?
Businesses must comply with new beneficial ownership rules in different countries. Seek legal counsel, invest in Know Your Business (KYB) compliance tools and training, and stay informed about updates to national legislation. Ensure comprehensive due diligence, including identifying and verifying beneficial ownership information as required by local law.
56 percent of firms are involved in public-private partnerships, with 39 percent planning to join soon, according to our State of Financial Crime 2024 survey. Maximizing the opportunity requires firms to engage with local FIUs and integrate joint advisory findings.
It is imperative for companies to keep up with the constantly changing payment landscape, and adopt real-time payment systems. To do so, firms should review the relevant legislation and work closely with their IT departments to ensure that their payment processes and policies are updated in accordance with ISO20022. Additionally, firms must have strong transaction screening and fraud detection systems in place, and educate their customers to identify and avoid potential fraudsters.
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What Does This Mean For My Firm?
2024
24
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The State of Financial Crime
indicating that they have plans to join a real-time payments program in the next 12 months.
44
are somewhat comfortable compromising explainability
in exchange for greater automation and efficiency.
89%
While many firms believe they’re on track to meet regulators’ expectations,
In anticipation of evolving financial crime threats, firms are strategically allocating resources to embrace technological advancements. Our 2024 State of Financial Crime survey highlights an almost unanimous commitment among respondents to increase compliance budgets, emphasizing investments in technology, personnel, training, and enhancing capabilities. The predominant focus lies in automating processes and upskilling existing teams, signaling a proactive approach to address industry shifts before considering new hires.
More than 40 countries will hold elections in 2024, including the US, India, and the UK. This will make the politically exposed person (PEP) environment even more complex and pressure firms’ AML programs,
as allegations of corruption, money laundering, and judiciary intervention could emerge as part of political posturing.
Our survey shows that firms are clearly braced for a year of uncertainty
and will be changing their risk appetite to accommodate the unpredictable PEP climate to come.
AI is increasingly being deployed in compliance solutions such as customer onboarding, adverse media and sanctions screening, transaction monitoring, and automated reporting to regulators.
However, a growing area of concern is the concept of explainability,
or the ability to explain how and why an AI model recommends particular decisions or outcomes. Regulators are increasingly looking to those using or providing AI models to have clear and understandable information on the AI model’s capabilities and limitations and transparent and traceable decision-making processes.
Our survey revealed how firms are thinking about AI. But, at times, it can appear contradictory.
More firms embrace AI solutions – but how
do they walk the ethical tightrope?
Hover to reveal more
Hover to reveal more
will expand into new markets or territories
36%
will add new technologies or capabilities
49%
will look to upgrade legacy systems
37%
will focus on educating and training the wider workforce
42%
43%
will hire new personnel to address the talent gap
will hire more personnel to grow existing teams
44%
will invest in upskilling and training compliance teams
46%
No change
19%
Less risk-averse
19%
Not accepting PEP clients
1%
1
Australia
Australia has committed AUS$14.3 million over four years to support necessary legislative and regulatory reforms for anti-money laundering and counter-terrorism financing. AUSTRAC will publish a national risk assessment on money laundering in early 2024
and release numerous guidance papers, including
on de-banking and customer identification for online gambling accounts. In 2024, Australia is expected
to release draft legislation to license crypto asset providers and introduce a new regulatory regime for firms providing access to digital assets and custody services.
• Review local guidance and incorporate relevant measures into their compliance programs. • Conduct enhanced due diligence when dealing with commodities subject to complex sanctions. • Keep risk assessments up to date and adjust their systems to identify new modes of sanctions circumvention. • Train employees on sanctions evasion techniques and provide clear ways to report evasion.
“
”
To comply with local and international laws and avoid penalties,
firms operating across borders should:
Iain Armstrong I Global Head of Regulatory Affairs Practice Lead
Iain Armstrong I Global Head of Regulatory Affairs Practice Lead
Andrew Davies I Global Head of Regulatory Affairs
Alia Mahmud I Regulatory Affairs Practice Lead
Alia Mahmud I Regulatory Affairs Practice Lead
Croatia
Croatia was added to the FATF grey list in June 2023 and will likely update national laws and regulations to improve their AML/CFT frameworks.
Bulgaria
Bulgaria
Bulgaria was added to the FATF grey list in October 2023 and will likely update national laws and regulations to improve its AML/CFT frameworks.
Croatia
France
The Republic of Ireland
The Republic of Ireland
Ireland adopted European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) (Amendment) Regulations in June 2023, aligning the definition of “high-risk third country”
to the EU and detailing access to Ireland’s central registers solely where there is ‘legitimate interest.
Croatia
Italy
Italy
In May 2023, Italy’s financial intelligence unit (FIU) published provisions on AML anomaly detection.
The Institute for the Supervision of Insurance (IVASS) launched a consultation on AML/CFT measures by firms in June 2023, and the Bank of Italy published guidance on AML requirements for private banking in August 2023.
Latvia
The Republic of Ireland
Latvia
In 2023, Latvia put forward a bill amending the Anti-Money Laundering and Counter-Terrorism and Proliferation Financing (AML/CTPF) Act alongside amendments to the Enterprise Registry Act. Changes include amending the definition of UBOs as they apply to trusts and requiring customer due diligence (CDD) to be carried out on transactions above €500. Changes are expected to be implemented by January 6, 2025.
Italy
The Netherlands
The Netherlands
In the Netherlands, the Ministry of Finance carried out
a consultation on the Markets in Crypto Asset Regulation Implementation Act, a consultation on a Regulation on Information to Accompany Transfers of Funds and Transfers of Crypto Assets and a consultation on proposed amendments limiting access to UBO registers. The Dutch Banking Association (NVB) also issued new standards for risk-based money laundering investigations.
Latvia
Spain
Spain
Spain launched a Central Register of Beneficial Owners under Royal Decree 609/2023 that will be available initially to national authorities and then to Spanish-obliged persons. However, firms cannot solely rely on the register and should carry out additional checks.
The Netherlands
Sweden
Sweden
Sweden has amended the Money Laundering Act to increase penalties for AML/CFT breaches by gambling operators that would come into effect on April 1, 2024.
Spain
Switzerland
Switzerland
Switzerland will present new AML/CFT rules
to Parliament in 2024, bringing into scope lawyers
and consultants who work in real estate or set up legal entities and arrangements. They will also introduce tighter requirements for regulated firms to manage sanctions evasion. The country also plans to create a beneficial ownership registry at the Federal Department of Justice and Police.
Sweden
European
Union
Indonesia
Indonesia strengthened its AML/CFT laws and regulations with Regulation (POJK) No.8 in June 2023. The regulation applies to various financial services firms and introduced requirements on proliferation financing, risk assessment, and submission of suspicious financial transaction reports.
Indonesia
Brazil
In June 2023, Brazil published Federal Decree 11,563/2023, which brought VASPs under the purview of the Bacen,
the central bank. Going forward, Bacen will be issuing requirements to comply with AML/CFT laws.
Brazil
The British Virgin Islands
In 2023, the British Virgin Islands updated its regulations to combat money laundering and terrorist financing. The Anti-Money Laundering (Amendment) Regulations, 2023, provided a clearer definition of control, while the Anti-Money Laundering and Terrorist Financing (Amendment) Code of Practice, 2023, included updated requirements
for trustees regarding beneficial ownership.
The British Virgin Islands
Jamaica
In March 2023, Jamaica introduced the Companies (Amendment) Act 2023, which mandates transparency of beneficial ownership and grants powers to the corporate registrar to verify beneficial ownership information. The Act also includes additional AML/CFT reforms, such as allowing information exchanges between national authorities and adopting effective sanctions for non-compliance with beneficial ownership requirements.
Jamaica
The Cayman Islands
In 2023, the Cayman Islands updated their AML regulations, which included the adoption of a risk-based approach, effective sanctions for non-compliance, and additional requirements for CDD, record-keeping, and reporting. The regulations also highlight the need to appoint an MLRO, identify and keep records of wire transfers, virtual assets, correspondent banks, shell banks, and DFNBPs.
The Cayman Islands
The United Arab Emirates (UAE)
The UAE will continue to carry out changes to make its financial system hostile to ML and TF as it works to get off the FATF grey list, which it was added
to in 2022. Since then, the country has implemented AML/CFT guidelines and adopted the ‘GoAML’ platform to allow financial institutions to file suspicious activity reports. Amendments have also been made to various laws, and the UAE Central Bank continues to carry out inspections, issue fines, and seize funds related to AML/CFT breaches.
The United Arab Emirates (UAE)
Cameroon
Cameroon was added to the FATF grey list in June 2023 and will likely update national laws and regulations
to improve their AML/CFT frameworks.
Cameroon
Vietnam
Vietnam was added to the FATF grey list in June 2023 and will likely update national laws and regulations
to improve their AML/CFT frameworks.
Vietnam
Nigeria
Nigeria was added to the FATF grey list in February 2023 and will likely update national laws and regulations to improve their AML/CFT frameworks.
Nigeria
South Africa
South Africa was added to the FATF grey list in February 2023 and will likely update national laws and regulations to improve their AML/CFT frameworks.
South Africa
Singapore
Singapore
A multi-billion-dollar money laundering case is driving Singapore’s regulatory changes and reforms in 2024. An Inter-Ministerial Committee will be established to review the effectiveness of Singapore's AML/CFT framework and identify further measures. The Committee will focus on preventing corporate structures from being misused and enhancing controls within financial institutions. MAS will also unveil its digital information-sharing platform with the private sector in the second half of 2024.
Based on a survey of 600 senior compliance decision-makers.
“
Businesses should review their screening and transaction monitoring measures for exposure to:
”
600
%
%
%
Unpack the results of our global survey on what senior financial crime decision-makers believe will shape 2024.
2
40+ elections spur firms to fortify
their PEP screening programs
Tech investments and upskilling drive businesses toward agile transformation
3
4
Real-time payments adoption grows amidst
compliance challenges
Circumventing Sanctions
Public-Private Partnerships
Real-Time Payment Schemes
Beneficial Ownership and Corporate Transparency
As countries continue to apply complex sanctions to increase
the costs of Russia’s war in Ukraine, sanctions circumvention will remain a key area of regulatory focus. While there has been a growth in the scope and maturity of sanctions programs, there have been concerns that although sanctions have contributed to a shrinking economy in Russia, they may not have their full intended effect due
to sanctions circumvention.
Public-private partnerships (PPPs) are growing worldwide, using various models to combat financial crime. PPPs yield unique insights and lead to better results in tackling economic crime. At the global level, the REPO Task Force issued a Global Advisory on Russian Sanctions Evasion, recommending firms to take part in existing PPPs. At the national level, MAS
is developing COSMIC with six banks
to identify money laundering and financing of terrorism. Other public-private information-sharing collaborations include Salv-AML Bridge, AML Utility, TMNL,
and Fintel Alliance.
Real-time payments and transparency remain key focuses as the world adopts a new global standard (ISO20022). The World Bank monitors fast payment systems, and its data shows that Europe and Central Asia have the best access. The new global standard is expected to be adopted for 80 percent of payments worldwide by 2025, bringing greater efficiencies in compliance and fraud prevention. European policymakers are driving the adoption of real-time payments, and new rules have been introduced to reduce reliance on third-country financial institutions and identify potential fraud.
Transparency is crucial in preventing financial crimes, and many countries
are exploring the creation or reform
of their beneficial ownership registries.
The FATF is developing risk-based guidance on beneficial ownership registries. The FATF is developing risk-based guidance on beneficial ownership and transparency of legal arrangements, to be published in February 2024.
Countries in the process of implementing beneficial ownership registries include Hungary, Italy, Lithuania, Norway, and Switzerland.
As the use of AI increases
in financial crime management, policymakers must mitigate perceived risks. The FATF calls for governance, explainability, and monitoring. The G7’s priorities include human rights, system security, democratic values, privacy, safety, alignment of AI objectives, inclusion, lack of bias, and explainability. The Bletchley Declaration on AI safety also highlights the need for international cooperation.
As the use of AI increases
in financial crime management, policymakers must mitigate perceived risks. The FATF calls for governance, explainability, and monitoring. The G7’s priorities include human rights, system security, democratic values, privacy, safety, alignment of AI objectives, inclusion, lack of bias, and explainability. The Bletchley Declaration on AI safety also highlights the need for international cooperation.
AI Regulations
Explore the main regulatory themes the financial industry is likely to see in 2024.
Key Regulatory Themes for 2024
Download the report
Explore the top four trends shaping today’s financial landscape and their implications for 2024.
Uncover five key sanctions trends firms must pay attention to in 2024.
Hover to reveal more
AI Regulations
Explore the top four trends shaping today’s financial landscape and their implications for 2024.
4 Financial Crime Trends for 2024
Open banking, contactless payments, digital wallets, buy-now, pay-later (BNPL) schemes, and digital currencies are all revolutionizing the customer experience. While these services pose challenges for financial crime compliance, the ultimate benefits to consumers are great.
Open banking is rapidly gaining popularity worldwide through application programming interfaces (APIs) that allow firms to share data with third-party service providers, enabling instant (real-time) payments. Over 60 countries have implemented instant payment systems based on different models, including centralized or decentralized APIs, with varying degrees of regulatory involvement.
Real-time payments adoption grows amidst compliance challenges
4
of organizations shared that they were already part of a real-time payments program, with an additional
46
%
indicating that they have plans to join a real-time payments program in the next 12 months.
44
%
In our global survey,
In anticipation of evolving financial crime threats, firms are strategically allocating resources to embrace technological advancements. Our 2024 State of Financial Crime survey highlights an almost unanimous commitment among respondents to increase compliance budgets, emphasizing investments in technology, personnel, training, and enhancing capabilities. The predominant focus lies in automating processes and upskilling existing teams, signaling a proactive approach to address industry shifts before considering new hires.
Tech investments and upskilling drive businesses toward agile transformation
3
will expand into new markets or territories
36%
will look to upgrade legacy systems
37%
will focus on educating and training the wider workforce
42%
43%
will hire new personnel to address the talent gap
will hire more personnel to grow existing teams
44%
will invest in upskilling and training compliance teams
46%
will add new technologies or capabilities
49%
If your organization is increasing its compliance budget, which areas do you plan to invest in?
Click to reveal more
More than 40 countries will hold elections in 2024, including the US, India, and the UK. This will make the politically exposed person (PEP) environment even more complex and pressure firms’ AML programs, as allegations of corruption, money laundering, and judiciary intervention could emerge as part of political posturing.
Our survey shows that firms are clearly braced for a year of uncertainty and will be changing their risk appetite to accommodate the unpredictable PEP climate to come.
40+ elections spur firms to fortify their PEP screening programs
2
More risk-averse
61%
No change
19%
Less risk-averse
19%
Not accepting PEP clients
1%
Firms are clearly braced for a year of uncertainty.
How do you expect your organization’s risk appetite related to PEPs to change in the next 12 months?
Click to reveal more
AI is increasingly being deployed in compliance solutions such as customer onboarding, adverse media and sanctions screening, transaction monitoring, and automated reporting to regulators.
However, a growing area of concern is the concept of explainability, or the ability to explain how and why an AI model recommends particular decisions or outcomes. Regulators are increasingly looking to those using or providing AI models to have clear and understandable information on the AI model’s capabilities and limitations and transparent and traceable decision-making processes.
Our survey revealed how firms are thinking about AI. But, at times, it can appear contradictory.
More firms embrace AI solutions – but how do they walk the ethical tightrope?
1
are somewhat comfortable compromising explainability
in exchange for greater automation and efficiency.
89%
%
While many firms believe they’re on track to meet regulators’ expectations,
Driving Innovation
“Firms need to rethink how they fight financial crime. They will need to ensure they can stay on top of emerging payments legislation, best practices, and guidance issued around emerging payment models.”
– Alia Mahmud, Global Regulatory Affairs Practice Lead
Balancing the Increasing Cost of Compliance
“Financial crime prevention teams must use multi-layered approaches to prevent and detect illicit financial flows. They should utilize advanced technology, financial intelligence sharing, and continuous training
to support their workforce.”
– Andrew Davies,
Global Head of Regulatory Affairs
Navigating a Complex PEP Environment
“Firms should have a list of PEPs whose accounts should be monitored, particularly if they are up for election. They should identify markets in which they operate that may be affected by elections and monitor for regime change and capital flight.”
– Alia Mahmud, Global Regulatory Affairs Practice Lead
Keeping Up with the Rise of AI
“In addition to remaining abreast of guidance and international agreements around AI, compliance leaders exploring AI solutions should ensure they understand and document the rationale behind exploring a solution and have the right clean data to train AI models.”
– Iain Armstrong, Global Regulatory Affairs Practice Lead
What Does This Mean For My Firm?
Download the report
Iain Armstrong I Global Regulatory Affairs Practice Lead
Download the report
What Does This Mean For My Firm?
• Cyber intrusions and cybercrime
for crypto businesses.
• Potential links to Hamas and Hezbollah linked facilitators, business entities, and charities in countries such as Lebanon, UAE, and Qatar.
• Potentially suspect Russian proxies in sub-Saharan Africa's metals and mining sector.
• Russian businesses and politically connected individuals with links to the Putin regime.
“
”
Businesses should review their screening and transaction monitoring measures for exposure to:
Andrew Davies I Global Head of Regulatory Affairs
As AML/CFT becomes a national security issue, legislation and regulation are being updated globally. Compliance leaders should monitor these developments and assess their impact on their business. Firms need to update their policies, procedures, and systems to align with
new laws and regulations and train their staff accordingly.
“
”
What Does This Mean For My Firm?
Download the report
Global standard setters and international organizations are developing policy recommendations and standards for the crypto asset space to manage risks across different countries.
The G20 adopted a Roadmap on Crypto Assets in October 2023, which includes ten key recommendations for countries to consider when regulating crypto. The International Monetary Fund’s joint report with the Financial Stability Board sets out policies for crypto assets, including regulatory powers and tools, cross-border cooperation, and governance. It also discusses crypto-assets' implications, including macroeconomic and financial stability, regulatory issues, and other risks.
The Crypto Asset Digital Framework
In 2023, the FATF issued updated papers on best practices to prevent terrorist financing abuse of non-profit organizations and crowdfunding for terrorist financing. The watchdog plans to release public guidance on beneficial ownership and transparency of legal arrangements in February 2024.
The Wolfsberg Group will also continue to publish best practice standards and guidance for financial institutions.
Global AML/CFT Developments
US to Intensify Action Against Russian Cybercriminals and Seek Allies' Cooperation
Increased Focus on
Tackling State Support
of Islamist Terrorism
Western Countries
Cautious about
Sanctions as a Solution
to Global Issues
US-Mexico Relations
and the Fight Against
Opioid Cartels
US and Allies to Target Russian Malign Influence and Proxies Worldwide
Uncover five key sanctions trends firms must pay attention to in 2024.
The Geopolitical Outlook
Alia Mahmud I Regulatory Affairs Practice Lead
• Review local guidance and incorporate relevant measures into their compliance programs. • Conduct enhanced due diligence when dealing with commodities subject to complex sanctions. • Keep risk assessments up to date and adjust their systems to identify new modes of
sanctions circumvention. • Train employees on sanctions evasion
techniques and provide clear ways to
report evasion.
To comply with local and international laws and avoid penalties, firms operating across borders should:
“
”
Iain Armstrong I Global Head of Regulatory Affairs Practice Lead
Firms must comply with guidelines on using automated systems, data privacy, and bias. They should document their risk assessment and management processes for AI, including model governance, testing, and decision-making for explainability. To avoid bias, firms should use data from multiple sources, covering all demographics and geographies.
“
”
Alia Mahmud I Regulatory Affairs Practice Lead
56 percent of firms are involved in public-private partnerships, with 39 percent planning to join soon, according to our State of Financial Crime 2024 survey. Maximizing the opportunity requires firms to engage with local FIUs and integrate joint advisory findings.
“
”
Andrew Davies I Global Head of Regulatory Affairs
It is imperative for companies to keep up with the constantly changing payment landscape, and adopt real-time payment systems. To do so, firms should review the relevant legislation and work closely with their IT departments to ensure that their payment processes and policies are updated in accordance with ISO20022. Additionally, firms must have strong transaction screening and fraud detection systems in place, and educate their customers to identify and avoid potential fraudsters.
“
”
Iain Armstrong I Global Head of Regulatory Affairs Practice Lead
Businesses must comply with new beneficial ownership rules in different countries. Seek legal counsel, invest in Know Your Business (KYB) compliance tools and training, and stay informed about updates to national legislation. Ensure comprehensive due diligence, including identifying and verifying beneficial ownership information as required
by local law.
“
”
What Does This Mean For My Firm?
Survey Methodology
The State of Financial Crime 2024 is based on a survey
of 600 C-suite and senior compliance decision-makers across the US, Canada, UK, France, Germany, Netherlands, Singapore, Hong Kong, and Australia.
All respondents currently work in financial services and fintech organizations, with 50+ employees and total assets worth $5 billion+.
Based on a survey of 600 senior compliance decision-makers.
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The State
of Financial Crime
Unpack the results of our global survey on what senior financial crime decision-makers believe will shape 2024.
Download the report
The US and its allies will increase efforts to counter Russia's malign influence in Eastern Europe, while focusing on imposing sanctions and closing potential loopholes.
This approach will also extend to Russian proxies, such as the Wagner Group, operating in Africa, the Middle East, and potentially even Latin America.
The US will tighten restrictions on Mexican drug cartels and their allies, including Chinese businesses. Mexico's instability could also become anr issue in the US presidential campaign. The US will take tougher action against cartels and intensify its efforts to combat cybercrime originating from Russia.
Western countries are becoming more cautious about using sanctions as a solution to international problems. The US and other countries have reduced the frequency of new sanctions designations against non-core targets, and are aware of the negative consequences of using sanctions in certain cases. The US, EU, and others have refrained from imposing heavy sanctions against coup leaders in Africa, letting regional players take the lead. This trend will continue in 2024, unless there are significant human rights abuses.
In 2024, there will be a renewed focus on the financing of Islamist extremist groups, particularly on state financial support from Iran. The US, EU, and others may impose sanctions against state supporters of terrorism. However, the level of alignment between the US and its allies in Europe remains uncertain.
The US will intensify actions against cybercriminals, especially those in Russia. Hostile states providing 'safe havens' for cybercrime will also face tougher measures. The US will seek more cooperation from allies, such as the UK, to combat this predicate offense of money laundering.
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Circumventing Sanctions
Public-Private Partnerships
Real-Time Payment Schemes
Beneficial Ownership and
Corporate Transparency
AI Regulations
As countries continue to apply complex sanctions to increase the costs of Russia’s war in Ukraine, sanctions circumvention will remain a key area of regulatory focus. While there has been a growth in the scope and maturity of sanctions programs, there have been concerns that although sanctions have contributed to a shrinking economy in Russia, they may not have their full intended effect due to sanctions circumvention.
Public-private partnerships (PPPs) are growing worldwide, using various models to combat financial crime. PPPs yield unique insights and lead to better results
in tackling economic crime. At the global level, the REPO Task Force issued
a Global Advisory on Russian Sanctions Evasion, recommending firms to take part in existing PPPs. At the national level, MAS is developing COSMIC with six banks to identify money laundering
and financing of terrorism. Other public-private information-sharing collaborations include Salv-AML Bridge, AML Utility, TMNL, and Fintel Alliance.
Real-time payments and transparency remain key focuses as the world adopts a new global standard (ISO20022). The World Bank monitors fast payment systems, and its data shows that Europe and Central Asia have the best access. The new global standard is expected to be adopted for 80 percent of payments worldwide by 2025, bringing greater efficiencies in compliance and fraud prevention. European policymakers are driving the adoption of real-time payments, and new rules have been introduced to reduce reliance on third-country financial institutions and identify potential fraud.
Transparency is crucial in preventing financial crimes, and many countries
are exploring the creation or reform
of their beneficial ownership registries. The FATF is developing risk-based guidance on beneficial ownership registries. The FATF is developing risk-based guidance on beneficial ownership and transparency of legal arrangements, to be published in February 2024.
Countries in the process
of implementing beneficial ownership registries include Hungary, Italy, Lithuania, Norway, and Switzerland.
As the use of AI increases
in financial crime management, policymakers must mitigate perceived risks. The FATF calls for governance, explainability, and monitoring. The G7’s priorities include human rights, system security, democratic values, privacy, safety, alignment of AI objectives, inclusion, lack of bias, and explainability. The Bletchley Declaration on AI safety also highlights the need for international cooperation.
Explore the main regulatory themes the financial industry is likely to see in 2024.
Key Regulatory Themes for 2024
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South Africa
South Africa was added to the FATF grey list in February 2023 and will likely update national laws and regulations to improve their AML/CFT frameworks.
Nigeria
Nigeria was added to the FATF grey list in February 2023 and will likely update national laws and regulations to improve their AML/CFT frameworks.
Vietnam
Vietnam was added to the FATF grey list in June 2023 and will likely update national laws and regulations
to improve their AML/CFT frameworks.
Cameroon
Cameroon was added to the FATF grey list in June 2023 and will likely update national laws and regulations
to improve their AML/CFT frameworks.
The United Arab Emirates (UAE)
The UAE will continue to carry out changes to make its financial system hostile to ML and TF as it works to get off the FATF grey list, which it was added
to in 2022. Since then, the country has implemented AML/CFT guidelines and adopted the ‘GoAML’ platform to allow financial institutions to file suspicious activity reports. Amendments have also been made to various laws, and the UAE Central Bank continues to carry out inspections, issue fines, and seize funds related to AML/CFT breaches.
The Cayman Islands
In 2023, the Cayman Islands updated their AML regulations, which included the adoption of a risk-based approach, effective sanctions for non-compliance, and additional requirements for CDD, record-keeping, and reporting. The regulations also highlight the need to appoint an MLRO, identify and keep records of wire transfers, virtual assets, correspondent banks, shell banks, and DFNBPs.
Jamaica
In March 2023, Jamaica introduced the Companies (Amendment) Act 2023, which mandates transparency of beneficial ownership and grants powers to the corporate registrar to verify beneficial ownership information. The Act also includes additional AML/CFT reforms, such as allowing information exchanges between national authorities and adopting effective sanctions for non-compliance with beneficial ownership requirements.
The British Virgin Islands
In 2023, the British Virgin Islands updated its regulations to combat money laundering and terrorist financing. The Anti-Money Laundering (Amendment) Regulations, 2023, provided a clearer definition of control, while the Anti-Money Laundering and Terrorist Financing (Amendment) Code of Practice, 2023, included updated requirements
for trustees regarding beneficial ownership.
Brazil
In June 2023, Brazil published Federal Decree 11,563/2023, which brought VASPs under the purview of the Bacen,
the central bank. Going forward, Bacen will be issuing requirements to comply with AML/CFT laws.
Indonesia
Indonesia strengthened its AML/CFT laws and regulations with Regulation (POJK) No.8 in June 2023. The regulation applies to various financial services firms and introduced requirements on proliferation financing, risk assessment, and submission of suspicious financial transaction reports.
United States
As firms mustcomply with the Corporate Transparency Act (CTA), the US government will continue to explore legislation and regulation to manage the risks of technological innovation, with AML/CFT remaining a national security concern.
The focus will also be on emerging threats in crypto assets and artificial intelligence, while the Securities and Exchange Commission (SEC) prioritizes information security and AML in market examinations.
Canada
Canada plans to modernize its AML/CFT regime by implementing measures outlined in its 2023 budget. The country has established the Canada Financial Crimes Agency (CFCA) to respond to complex financial crime cases. The government will introduce several amendments to Canadian legislation in 2024, such as giving law enforcement the ability to freeze and seize virtual assets and criminalizing the operation of an unregistered MSB.
Singapore
A multi-billion-dollar money laundering case is driving Singapore’s regulatory changes and reforms in 2024. An Inter-Ministerial Committee will be established to review the effectiveness of Singapore's AML/CFT framework and identify further measures. The Committee will focus on preventing corporate structures from being misused and enhancing controls within financial institutions. MAS will also unveil its digital information-sharing platform with the private sector in the second half of 2024.
China
China's Three-Year Action Plan (2022-2024) aims
to combat money laundering crimes, including fake gold exchanges, illegal fundraising, and digital currency transactions. Additionally, Hong Kong's VASP regime under the Anti-Money Laundering
and Counter-Terrorist Financing Ordinance (AMLO) went live in June 2023, and the Guidelines on AML/CFT for Authorised Institutions were amended in May 2023 to include virtual assets and clarify requirements for non-Hong Kong PEPs.
Australia
Australia has committed AUS$14.3 million over four years to support necessary legislative and regulatory reforms for anti-money laundering and counter-terrorism financing. AUSTRAC will publish a national risk assessment on money laundering in early 2024
and release numerous guidance papers, including
on de-banking and customer identification for online gambling accounts. In 2024, Australia is expected
to release draft legislation to license crypto asset providers and introduce a new regulatory regime for firms providing access to digital assets and custody services.
Switzerland
Switzerland will present new AML/CFT rules
to Parliament in 2024, bringing into scope lawyers
and consultants who work in real estate or set up legal entities and arrangements. They will also introduce tighter requirements for regulated firms to manage sanctions evasion. The country also plans to create a beneficial ownership registry at the Federal Department of Justice and Police.
Sweden
European
Union
Sweden
Sweden has amended the Money Laundering Act to increase penalties for AML/CFT breaches by gambling operators that would come into effect on April 1, 2024.
Spain
Switzerland
Spain
Spain launched a Central Register of Beneficial Owners under Royal Decree 609/2023 that will be available initially to national authorities and then to Spanish-obliged persons. However, firms cannot solely rely on the register and should carry out additional checks.
The Netherlands
Sweden
The Netherlands
In the Netherlands, the Ministry of Finance carried out
a consultation on the Markets in Crypto Asset Regulation Implementation Act, a consultation on a Regulation on Information to Accompany Transfers of Funds and Transfers of Crypto Assets and a consultation on proposed amendments limiting access to UBO registers. The Dutch Banking Association (NVB) also issued new standards for risk-based money laundering investigations.
Latvia
Spain
Latvia
In 2023, Latvia put forward a bill amending the Anti-Money Laundering and Counter-Terrorism and Proliferation Financing (AML/CTPF) Act alongside amendments to the Enterprise Registry Act. Changes include amending the definition of UBOs as they apply to trusts and requiring customer due diligence (CDD) to be carried out on transactions above €500. Changes are expected to be implemented by January 6, 2025.
Italy
The Netherlands
Italy
In May 2023, Italy’s financial intelligence unit (FIU) published provisions on AML anomaly detection.
The Institute for the Supervision of Insurance (IVASS) launched a consultation on AML/CFT measures by firms in June 2023, and the Bank of Italy published guidance on AML requirements for private banking in August 2023.
Latvia
The Republic of Ireland
The Republic of Ireland
Ireland adopted European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) (Amendment) Regulations in June 2023, aligning the definition of “high-risk third country”
to the EU and detailing access to Ireland’s central registers solely where there is ‘legitimate interest.
Croatia
Italy
Croatia
Croatia was added to the FATF grey list in June 2023 and will likely update national laws and regulations to improve their AML/CFT frameworks.
Bulgaria
The Republic of Ireland
Bulgaria
Bulgaria was added to the FATF grey list in October 2023 and will likely update national laws and regulations to improve its AML/CFT frameworks.
Croatia
France
France
French authorities will expect firms to comply with new provisions and changes to regulations introduced
in 2023. In March 2023, the French Ministry of the Economy issued a decree changing the definition
of PEPs and expanding the scope of AML/CFT regulations. It established a list of national politically exposed functions to align with EU AML/CFT directives, including political, judicial, and other relevant high-level political functions and state-owned enterprises.
Bulgaria
Germany
Germany
Germany will implement provisions set out under the draft “Improving the Fight Against Financial Crime” bill passed in October 2023. This bill restructures and re-envisages powers to fight financial crime in Germany, including establishing a new AML “super-agency” and a new money laundering investigation hub. Additional reforms include the ability to carry out administrative asset investigations and identify “economic beneficiaries”
of suspected proceeds of crime.
European Union
France
European Union
The EU's latest AML package is expected to be finalized in Q1 2024, followed by a three-year transition period. It aims to standardize AML/CFT measures across the EU and comprises four instruments:
A regulation establishing an AML Authority (AMLA).
A new Anti-Money Laundering Directive.
A regulation providing clarity for obliged entities.
Updated Transfer of Funds Regulations (TFRs) for crypto asset transfers. The TFRs were adopted in June 2023.
Germany
Switzerland
How Global AML Regulations Will
Evolve in 2024
Examine the evolving anti-money laundering regulatory landscape in major economies and emerging hotspots using the interactive map below.
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UK
UK
The UK's Economic Crime and Corporate Transparency Act (ECCTA) was introduced in 2023 to combat illicit finance. The act included reforms such as a new failure
to prevent fraud offense, beneficial ownership registry, improved transparency, and enhanced intelligence-gathering powers for law enforcement. De-banking also became a significant regulatory obstacle in the UK after allegations of unfair treatment. The Financial Conduct Authority reviewed domestic PEPs and sent a letter
to banks requesting information on PEP controls. The final report is expected to be published by June 2024.
UK
The UK's Economic Crime and Corporate Transparency Act (ECCTA) was introduced in 2023 to combat illicit finance. The act included reforms such as a new failure
to prevent fraud offense, beneficial ownership registry, improved transparency, and enhanced intelligence-gathering powers for law enforcement. De-banking also became a significant regulatory obstacle in the UK after allegations of unfair treatment. The Financial Conduct Authority reviewed domestic PEPs and sent a letter
to banks requesting information on PEP controls. The final report is expected to be published by June 2024.
