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Fourth AMLD risk assessment ‘unlikely’ to affect compliance

Fran Warburton | Payments Compliance | 14 July 2017

PA’s Richard Grint, financial services expert, is quoted in an article in Payments Compliance about the financial sector's vulnerabilities to money laundering.

The article explains that three reports were published by the European Commission at the end of last month, to coincide with the implementation deadline of the 4th Anti-Money Laundering Directive (4th AMLD).

The article goes on to say that according to the risk assessment, vulnerabilities in the payments sector are largely centered around e-money, with anonymous prepaid products labelled “inherently exposed” to money laundering threats, and remittance companies.

Richard explains that the findings were “useful to a certain extent” on a macroeconomic level, but most compliance teams are probably already aware of those threats: “The issue is that with this kind of exercise only being completed every couple of years, that is quite a long timeframe.”

He goes on to say: “Most of the things that are in there are relatively obvious, so by this stage almost every bank and almost every financial intelligence unit (FIU) will know this.”

The article explains that the timing of the risk assessment’s publication also lead to complaints that the information would have been more useful earlier, while implementation laws were still being drafted. Richard believes that this would have been an “ideal” scenario, but there were also clear reasons for the commission to wait until June 26.

Richard says: “In practice, the fact that it has come out now doesn’t stop banks doing what they have to do; they still have to comply with the local versions of the 4th AMLD. “It would have been useful for them to have had that information earlier, but I can see for optic reasons why they have aligned the two.”

The article goes on to say that the commission said that lack of a centralised organisational framework “hampers the supervision and the controls” of fund flows.

Richard goes on to say that the commission also rightly identified a further problem: there is widespread fragmentation between intelligence units in different member states.

He explains: “The document is very clear that the standards of FIUs differ across certain countries. They have different focus areas, they have different areas of capabilities – both technical and otherwise – and it's not working towards a level playing field.”

He adds that the flow of information from authorities to the private sector continues to prove insufficient: “One thing that is becoming increasingly clear is that financial crime, money laundering and terrorist financing can’t be solved by any member of the ecosystem in isolation; you can’t just set some regulation and hope the banks fix it,” says Richard.

Richard concludes: “It has to be FIUs, regulators, financial institutions and law enforcement working together seamlessly. It's also making sure that the information they receive from financial institutions through suspicious activity reports or otherwise is in a format or mechanism that is useful for them.”

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