05 Jul 2024, 58 mins ago

The anti-money laundering (AML) regulatory landscape continues to evolve at a fast pace.  In this article, we highlight the FATF’s role and significance in AML regulation, and the importance of adequate AML compliance controls.

What is the FATF?

The Financial Action Task Force (FATF) is a globally recognised authority tackling money laundering, terrorist and proliferation financing by setting international standards and promoting policies that aim to combat financial crime. Alongside its research into how money is laundered and how terrorism is funded, the FATF issues recommendations on risk mitigation and its assessment of whether countries are taking effective action.

On an on-going basis, the FATF reviews jurisdictions and identifies those that are considered to have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. These are then added to the FATF’s list of jurisdictions under increased monitoring (known as the “grey list”). Such review is what has led to the addition of Monaco and Venezuela to the FATF’s grey list, and to the removal of Jamaica and Turkey from the list as of 28 June 2024.

What is money laundering?

Money laundering is the process of disguising the origins of illegally obtained money to make it appear legitimate.

What is the grey list and what are the implications of being added to it?

When FATF puts a jurisdiction on the “grey list”, this means that the jurisdiction is subjected to increased monitoring by the FATF, due to “strategic deficiencies identified in their regimes to counter money laundering, terrorist financing, and proliferation financing.”.

Once put on the grey list, the jurisdictions are asked to report (albeit on a voluntary basis) on their progress in improving their policies on tackling money laundering, terrorist financing and proliferation financing. Although this reporting is voluntary, jurisdictions usually strive to be removed from the grey list, not least because it is widely relied upon as a reputable guide to navigating AML compliance rules and regulations.

Why is the addition of Monaco significant?

On 28 June 2024, FATF added Monaco and Venezuela to its grey list, which subjects the jurisdictions to increased monitoring due to the jurisdictions’ AML/CFT deficiencies.

The addition of Monaco, in particular, is somewhat surprising given its proximity to jurisdictions that are considered to have strong AML controls in place. Although Monaco is not officially part of the EU, it participates in certain EU policies, including customs and border controls and, through its relationship with France, uses the EURO as its sole currency.

Why is AML compliance important?

The above updates illustrate that robust AML compliance structures are important in the efforts to combat illegal financial activities, to protect your business’s reputation, and contribute to a secure financial environment. It requires adhering to laws and regulations designed to detect and prevent money laundering and the financing of terrorism. Failure to comply with AML regulations can result in severe consequences, including criminal liability, large fines and significant reputational damage.

Companies need to maintain awareness of the fluctuating regulatory landscape, including staying abreast of all updates and changes to guidance and regulations at both the international and national levels. These changes can be far-reaching and affect not only the specific compliance measures in place, but also the methods in which these measures are implemented at the company’s organisational level.

Given the ever-evolving landscape, compliance considerations require consistent attention to ensure continued efficacy. Engaging legal professionals with expertise in AML compliance can greatly assist your efforts.

At Gherson, our specialist financial crime lawyers can provide tailored advice catered to your industry, helping you implement and maintain satisfactory compliance strategies, including by providing firm-wide training and assisting with setting up or reviewing and revising compliance policies and programmes suitable to your specific needs.

For a discussion on implementing effective strategies to improve AML compliance, please refer to our earlier article.

How Gherson can assist

Gherson’s regulatory, white-collar and investigations team are highly experienced in providing assistance, advice and guidance on how you can successfully navigate and adhere to legal requirements regarding corporate compliance. This includes providing a comprehensive and unparalleled range of regulatory and compliance services to prospective customers.

If you have any questions arising from this blog, please do not hesitate to contact us for advice, or send us an e-mail. Don’t forget to follow us on XFacebookInstagram, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2024