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Examples of good and poor practices provide helpful guidance, and a reminder of supervisory expectations.

By Frida Montenius, Jonathan Ritson-Candler, and Charlotte Collins

The FCA has published TR18/3, setting out the findings from its thematic review of the anti-money laundering (AML) and counter-terrorist financing (CTF) systems and controls in 13 Electronic Money Institutions (EMIs). Although the review only focused on EMIs, the findings have wider read-across and therefore are of interest to all firms within scope of the Money Laundering Regulations 2017 (MLRs 2017).

Indeed, given the FCA’s current focus on financial crime as a priority area in its supervisory (and enforcement) activities — and the fact that updating policies and procedures to reflect changes brought about by the MLRs 2017 perhaps may have been overlooked by some — now is a good time for firms to reflect on AML and CTF systems and controls and check that they are up to date and meeting expectations.

New EU anti-money laundering measures have been approved by European legislators.

By Stuart Davis and Charlotte Collins

The European Parliament and Council have finally signed off on the text of the fifth Anti-Money Laundering Directive (known as MLD5).

Overview

The new directive is of particular interest to the FinTech sector as, amongst other things, MLD5 includes measures to increase transparency around more recently developed instruments of payment — namely cryptocurrencies and prepaid cards. Both these instruments lend themselves to anonymity and raise concerns that they could be used to help fund terrorist activities.

MLD5 will lower the threshold for identifying the holders of anonymous prepaid cards from €250 to €150. It will also require know-your-customer (KYC) checks to be performed for remote payment transactions exceeding €50, or if a withdrawal of more than €50 is made. The new provisions will also mandate that prepaid cards issued outside the EU can only be used in the EU if they comply with equivalent anti-money laundering (AML) standards (although it seems that this is left for the EU acquirer to judge). This is largely driven by European lawmakers’ concerns that individuals can fund terrorism “on a shoestring”, as evidenced by the fact that rental cars used in terror attacks have been paid for using prepaid cards.