By Dan Byrne for AMLi
A British AML expert has warned businesses to brace for change in how they safeguard against financial crime, saying that Brexit and new rules will likely tie them to more responsibility.
Matthew Redhead of the Royal United Services Institute (RUSI) has said that the lack of clarity on Brexit still leaves doubt over AML laws in the UK going forward.
“Brexit is unlikely to be the ‘apocalypse for AML compliance’,” Redhead said. “But it will likely lead to change which must be calibrated, deliberate and not result in panic.”
“In the absence of further guidelines, I would say that businesses should follow the ‘spirit of AML and CFT’ where there is ambiguity. Be prepared, and be pragmatic,” he urged.
However, he considered it likely that the EU and UK would remain closely aligned on AML rules. He therefore warned companies to be prepared for further responsibilities going forward as those rules expand.
“Liability is changing,” he told a conference on ‘Designing Compliance for the Future’ Tuesday. “There is an expansion of scope from those involved with committing the offence, to those enabling it too.”
“The failure to prevent money laundering could be a potential crime in the future.”
There are a number of practical questions which business owners should be asking if there is a chance they could be exposed to financial crime going forwards, Redhead said.
“Do we have the right training for our key staff? Are we using our existing platforms as well as we could be? Are we using adverse media screening effectively? Do we have content that’s agile enough to work in a shifting risk environment?”
Understanding the risks, and the threats – both old and new – was key to success on the AML front, he finished, noting that it wouldn’t be enough to simply comply with the letter of the law anymore, but to also take initiative so that authorities would see that a given business is making the effort to prevent money laundering.
Meanwhile, Mr Redhead also echoed what has become a near-universal call across Europe for a harmonised approach to tackling financial crime.
The based logic has, in recent times, drifted towards the position that if criminals operate internationally with little concern for borders, then AML and CFT efforts should do the same.
It’s a call which has been reflected in five past EU directives on AML, and a sixth which is currently in the process of being transposed into member state laws ahead of a December 2020 deadline.
The UK has transposed the previous 5 directives in accordance with its past EU-membership and agreement to stick to European law during the transition period. But it will not transpose the sixth.
That said, Mr Redhead advised that the country already meets many of Europe’s AMLD requirements anyway, and will likely remain close with the EU for as long as both jurisdictions are aligned with the Financial Action Task Force (FATF).
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