With 322 working days left till the go-live date of the Fifth Anti-Money Laundering there is still a lot of work to be done and data challenges to be resolved. It has been a longstanding goal of the global groups such as the G7, World Bank, the International Monetary Fund and the Financial Action Task Force (FATF) to deconstruct complex company structures through effective data management in order to identify their real business owners. Transparency and accountability in this regard is crucial to reducing the risk that these corporate and legal entities might be used to act as corporate smoke screens, hiding corruption, financial crime, and money laundering.
The European Commission (EC) continues to build on these goals through the Fifth Amendment of the Anti-Money Laundering Regulation (AMLD V), which establishes even more granular and prescriptive requirements on firms to maintain and report ‘adequate, accurate, and current’ information on Ultimate Beneficial Owners. On top of the big changes required under AMLD IV, as of 10th January 2020 firms will have to comply with three new client data obligations:
- New data. Implicit in Article 18, firms will now need to obtain the following information (points 1 – 6) on every business relationship or transaction involving high-risk third countries:
- additional information on the customer and on the beneficial owner(s);
- additional information on the intended nature of the business relationship;
- information on the source of funds and source of wealth of the customer and of the beneficial owner(s);
- information on the reasons for the intended or performed transactions;
- the approval of senior management for establishing or continuing the business relationship;
- conducting enhanced monitoring of the business relationship by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination
- Mandatory reconciliation. With the introduction of new UBOs, Article 30 will require firms to report any discrepancies they find between the beneficial ownership information available in the central national registers and the beneficial ownership information available to them
- Explicit penalties. Perhaps most importantly, firms will also need to obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held. Firms who fail to comply with this requirement under Article 30 are now subject to ‘effective, proportionate and dissuasive measures or sanctions.’
Obtaining, maintaining, and analysing client data appropriately from a financial crime lens has caused significant challenges for firms, with many still in the process of developing cost-effective and efficient ways to obtain UBO data without harming client relations; and the right controls in order to be able to monitor and screen UBO data to identify suspicious activity and discrepancies in the data. Focus should be placed on using technology to reduce manual and duplicative processes, whilst managing the risks of failing to utilise client data appropriately and effectively. Our Eight CMS SIG (Client Management Special Interest Group) will look to do just that.
Join JWG and over 25 financial crime specialists from leading institutions on the 11th October at ING, London to help develop a view on the latest trends on the use of advanced risk-management tooling for Anti-Money Laundering (AML) prevention. Issues the subject matter experts will be discussing are:
- UBO Registries: the central repository for customer data and firm obligations
- Control frameworks and high-level data requirements
- Senior management oversight challenges, priorities and gaps
JWG’s CMS special interest group is running its third AMLD V focused workshop to help the industry agree a common framework for AMLD V implementation. Please get in-touch with us through firstname.lastname@example.org if you would like to reserve your seat.