Greg Kilminster
Head of Product - Content
FATF plenary report
The Financial Action Task Force (FATF) has wrapped up its fifth Plenary under the Singaporean presidency, marking significant progress in global anti-money laundering and countering the financing of terrorism (AML/CFT) efforts.
Key highlights from the plenary include the launch of a public consultation on potential changes to wire transfer information recommendations and the adoption of new guidance on trusts. The FATF also voiced concerns over Russia’s increasing financial ties with North Korea and Iran, and proliferation financing and cyber threats.
The Plenary coincided with recent actions by the US Department of the Treasury to enhance financial transparency and combat illicit finance domestically. Treasury Secretary Janet L Yellen commended the FATF’s work in strengthening global standards.
Under Secretary for Terrorism and Financial Intelligence Brian E Nelson updated the FATF on Treasury’s recent AML/CFT efforts, including beneficial ownership information systems and proposed rulemaking targeting vulnerabilities in real estate and investment sectors.
Looking ahead, the FATF is aiming to strengthen global AML/CFT standards through consultations and guidance updates. The focus remains on enhancing compliance, mitigating regulatory disparities, and strengthening risk mitigation strategies across sectors.
In a statement, the FATF condemned Russia’s actions in Ukraine and urged vigilance against financial risks. The FTF also concluded that Mexico will assume the FATF presidency in July 2024.
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Canadian regulator updates Russian AML guidance
Canadian financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has updated its guidance on financial transactions with Russia.
The new guidance includes requirements that:
- enhance existing obligations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations; and
- extend obligations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.
The new requirements are as follows:
- Every financial transaction originating from or bound for Russia must be treated as a high-risk transaction for the purposes of subsection 9.6(3) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
- The identity of any client requesting or benefiting from such a transaction in accordance with Part 3 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations must be verified.
- Customer due diligence in relation to any such transaction, including ascertaining the source of funds or virtual currency, the purpose of the transaction and the beneficial ownership or control of any entity requesting or benefiting from the transaction must be carried out.
- A record of any such transaction, in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, regardless of the monetary thresholds set out in those Regulations must be retained.
The new guidance came into force on 24 February 2024 via a ministerial directive on financial transactions associated with Russia.
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MAS commences investigations against compliance manager and director of money transfer business
The Monetary Authority of Singapore (MAS) and Singaporean police have launched investigations into a Director and Compliance Manager of Samlit Moneychanger Pte. Ltd. (Samlit), following suspicions of fraudulent activities and failure to comply with licensing obligations. This comes after reports surfaced of beneficiaries in China being unable to access remitted funds due to freezing or confiscation by Chinese authorities.
The joint investigation by the Police and MAS is based on suspected fraudulent trading and failure to comply with licensing obligations. MAS has taken steps to secure Samlit’s corporate bank accounts to ensure funds availability for outstanding remittance obligations.
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ESMA publishes guidelines compliance tables
The European Securities and Markets Authority (ESMA) recently released a series of documents outlining the compliance status of national competent authorities (NCAs) with respect to ESMA’s guidelines on a variety of topics. These topics include Fund Management, Supervisory Convergence, central counterparty clearing house (CCP), and post-trading. In more detail:
Fund Management
CCP
- Guidelines on valuation of contracts
- Guidelines on failing or likely to fail
- Guidelines on Early Intervention Measures
- Guidelines on temporary restrictions
- Guidelines on CCP recovery plan indicators
- Guidelines on CCP recovery plan scenarios
Post Trading
Note that most of the NCAs have declared their intention to comply with these guidelines or have already implemented measures to comply with them.
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HKMA issues circular on portfolio-based approach to suitability assessment
The Hong Kong Monetary Authority (HKMA) has released a circular to provide additional guidance on the portfolio-based approach to suitability assessment (PBA) for investment advisory and trade execution services.
Noting that some banks may be hesitant to adopt PBA, the HKMA has conducted a review of supervisory requirements and, through this circular, issued updated and consolidated guidance clarifications in the form of frequently asked questions.
This circular does not include new supervisory requirements.
For background, PBA is a suitability assessment conducted by establishing an investment agreement at the outset, outlining the key features of a suitable investment portfolio based on the client’s circumstances. The PBA approach aims to enhance the customer experience, making the selling process more efficient while providing investor protection.
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