Finance Monthly November 2019 Edition

grips with 6AMLD now so that they can devise plans to ensure they are compliant come June 2021. 6AMLD – what you need to know If 5AMLD was about expanding the scope of businesses’ obligations in countering money laundering, 6AMLD provides the detailed definition of these requirements. As is often the case, regulators cast the net wide in order to tackle emerging money laundering activities but are now clarifying and refining the rules in order to make them more effective and practical. 6AMLD is highly significant for a number of reasons, namely due to the fact it provides context around the newest forms of money laundering which are emerging within an increasingly digital-driven global economy. The new regulation lists 22 predicate offences relating to money laundering, providing for clear and harmonised definitions of each specific crime. Importantly, the last of these offences is cyber- crime, which for the first time is included within AML regulation. This is significant because it enables organisations and regulators to root out money laundering crimes more easily and effectively across a wide range of online activities. In addition to this, 6AMLD is noteworthy because it is very clear in its objective of pinpointing the individuals within an organisation who are responsible for money laundering crimes. The introduction of new offences such as ‘aiding and abetting’ and ‘attempting and inciting’ also extends criminal liability from those directly responsible for converting the proceeds of crime to accomplices in the laundering process. No longer can individuals hide behind a business entity; the regulation is designed to provide complete transparency around who owns and controls these entities. However, the real headline-grabber for 6AMLD is the introduction of far tougher punishments for money laundering crimes, with member states required to impose minimum prison sentences of five years, up from the previous minimum of one year. Finally, the new regulation enshrines the requirement for member states to co-operate in the prosecution of money laundering crimes. For example, should two member states each have jurisdiction over the prosecution of an offence, they are required to collaborate and agree to prosecute in a single member state. Flexibility the key to meeting 6AMLD requirements and driving future growth While 6AMLD is very much consistent with the spirit of both 4AMLD and 5AMLD, it will require regulated organisations to review their AML monitoring processes and identify areas for improvement within their customer onboarding and operational models. This will undoubtedly mean further adoption of regulatory technology (RegTech) to automate more of their onboarding processes and tap into a far more comprehensive pool of information on prospective customers, both individuals and businesses. However, while 6AMLD is set to be the next big deadline, risk and compliance professionals across all relevant sectors should recognise that AML regulation won’t stop there; as new money laundering threats continue to evolve rapidly across the global economy, the pace and scale of new regulation in this area will inevitably accelerate exponentially. Faced with this level of complexity and change, businesses need to take a broader view of compliance and operational best practices and adopt new processes and technologies in order to stay on the front foot. So, rather than taking a reactive approach and focusing solely on being compliant with 6AMLD come June 2021, business leaders should focus on instilling a more agile and flexible approach to compliance and strive to establish a governance framework which operates at a higher level than the next, most immediate regulatory requirement, whether that be 6AMLD, 7AMLD or whatever comes next. Many organisations are now realising that a ‘do the bare minimum’ approach to compliance is simply not sustainable in the digital economy. Instead they are coming to view compliance, and in particular the adoption of RegTech, as a revenue generator and key strategic differentiator. By ensuring they have the flexibility to adapt to changing regulatory requirements easily and quickly, banks can ensure they can be first to market with new products and services, whilst simultaneously minimising their risk. Indeed, that is why so many businesses are positioning risk and compliance at the centre of their operational model. Whereas once the compliance department was viewed and treated as a back-office function, we see Heads of Risk and Heads of Compliance being elevated into strategic roles and playing a major part in shaping the future direction of the business. So, as business leaders turn their attention to 6AMLD heading into 2020, they should not only ensure they have the processes, systems and technologies to fulfil their new obligations and minimise risk, but also look on their efforts to do so as an opportunity to achieve a higher level of governance, setting them apart from their competitors in the market. By ensuring they have the flexibility to adapt to an ever-more complex and dynamic regulatory environment, businesses can acquire the speed and agility needed to thrive in the future economy. www.trulioo.com 21 www.finance-monthly.com FINANCE & BUSINESS - ANTI-MONEY LAUNDERING