Welcome to the latest edition of our AML round-up, covering the key regulatory developments across AML and tax impacting the private markets. This issue includes recent updated guidance around PEPs in the UK, the postponement of the FinCEN Investment Advisor rule in the United States, the EU’s latest package of sanctions against Russia and updates to the Financial Action Task Force’s ‘grey-list’. We also cover the recently issued Executive Order issued by President Trump, aimed at democratising alternative assets to 401(k)s, a major step in expanding private markets access.
United States of America
Executive Order on democratising access to alternative assets – In August, President Trump issued an Executive Order aimed at broadening access to private market assets for defined contribution retirement plans such as 401(k)s. The order seeks to reduce regulatory burdens and litigation risks that have historically limited wider participation in private markets. Within 180 days, the Secretary of Labor is required to review the Department of Labor’s past and current guidance on fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) and clarify the Department’s position on the inclusion of alternative assets. This includes guidance on the fiduciary processes necessary when offering asset allocation funds that contain alternative investments under ERISA.
This is a significant step in expanding access to the private markets.
Investment adviser rule delayed: In August, the Treasury’s Financial Crimes Enforcement Network issued an exemptive relief order delaying the effective date of the Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers.
Originally set to take effect on 1 January 2026, the order exempts covered investment advisers from all requirements until 1 January 2028. FinCEN also confirmed it intends to issue a Notice of Proposed Rulemaking to establish a new effective date, no earlier than 2028.
FinCEN issues new orders to counter Fentanyl – In June, FinCEN issued unprecedented orders designating three Mexico-based financial institutions—CIBanco, Intercam Banco, and Vector Casa de Bolsa—as being of primary money laundering concern due to links with illicit opioid trafficking. The orders prohibit certain fund transfers involving these institutions. These are the first actions taken under the Fentanyl Sanctions Act and the FEND Off Fentanyl Act, which give the U.S. Treasury additional authorities to target money laundering tied to fentanyl and other synthetic opioids. In August, FinCEN extended the effective dates of these orders, with covered financial institutions required to comply by 20 October 2025.
62nd Bank Secrecy Act Advisory Group Plenary: In June, FinCEN held the 62nd semi-annual BSAAG plenary meeting, where Deputy Secretary of the Treasury Michael Faulkender outlined the guiding principles for modernising the Bank Secrecy Act.
Key themes included:
- Ensuring regulation supports financial stability and consumer protection.
- Striking an appropriate balance between costs and benefits.
- Promoting clarity and consistency across the industry.
Faulkender emphasised the importance of a risk-based approach, under which financial institutions are permitted to focus resources on higher-risk customers and activities.
Europe
Additional EU sanctions against Russia – In May and July, the EU adopted its 17th and 18th sanctions packages, expanding export bans, tightening controls on Russia’s “shadow fleet,” lowering the oil price cap, and adding further banking and energy restrictions. The total number of individual listings now exceeds 2,500.
AMLA signs MoU with the European Supervisory Authorities (EBA, EIOPA, and ESMA) – On 3 July, the Anti-Money Laundering Authority signed a multilateral Memorandum of Understanding with the European Supervisory Authorities. The agreement sets out how the parties will exchange information and collaborate to combat money laundering and terrorist financing.
AMLA and ECB sign cooperation agreement – The Memorandum of Understanding sets out how the Anti-Money Laundering Authority and the European Central Bank will work together to strengthen cooperation between prudential and AML supervision, maximise effectiveness, and avoid duplication of effort.
New Screening Rules for Foreign Investment in the EU – On 8 May, the European Parliament adopted revised rules aimed at preventing security risks from foreign investments. Under the new legislation, sectors including media services, critical raw materials, and infrastructure will be subject to mandatory screening by Member States to identify and address security risks related to foreign investment, including indirect investment.
Procedures supporting national screening mechanisms will be harmonised, and the European Commission will have the power to act on its own initiative where disagreements arise in relation to a specific investment. The rules will also apply to transactions within the EU where the direct investor is owned by a non-EU country.
Luxembourg
Money laundering risk assessment – In May, the Luxembourg Ministry of Justice released the 2025 National Risk Assessment of Money Laundering. The report formalises Luxembourg’s understanding of ML risks and provides the foundation for a risk-based approach for policymakers, law enforcement authorities, supervisors, obliged entities, and professionals. Its aim is to ensure that AML measures applied are proportionate and aligned with the risks identified.
Response to consultation paper – In June, the Association of the Luxembourg Fund Industry responded to the European Banking Authority’s consultation on proposed regulatory technical standards for AMLA’s supervisory powers. ALFI highlighted concerns over unnecessary administrative burdens and significant additional costs for the investment fund and asset management industry, particularly given the substantial data sets these firms already provide to the regulator. It called instead for a risk-based approach tailored to the sector.
Switzerland
FINMA updates organisational structure – As of 1 April, the Swiss Financial Market Supervisory Authority has adapted its structure with the creation of a new Integrated Risk Expertise division, bringing together risk functions including liquidity, capital, and money laundering to pool knowledge and strengthen integrated supervision.
FINMA has also merged its Asset Management and Markets divisions to enable more incisive and effective supervision across banking, insurance, and asset management.
Canada
Canada’s Strong Borders Act – key AML changes: The Strong Borders Act makes amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, aimed at tightening AML supervision and enforcement.
Key measures include:
- Stronger AML supervision, compliance and enforcement – with increased civil and criminal penalties.
- Targeted action on common laundering methods – such as restrictions on large cash transactions and third-party deposits.
- Expanded registration – requiring all AML-regulated businesses to enrol with FINTRAC.
- Broader intelligence sharing – allowing FINTRAC disclosures to the Office of the Commissioner of Canada Elections.
- Improved public-private cooperation – clarifying information-sharing rules to support the new Integrated Money Laundering Intelligence Partnership.
The Bill also proposes that the Director of FINTRAC be made a permanent member of the Financial Institutions Supervisory Committee, enabling closer coordination and intelligence exchange with Canada’s top financial regulators.
United Kingdom
Guidance on the treatment of PEPs for AML purposes – In July, the FCA published finalised guidance on the treatment of politically exposed persons (PEPs) for anti-money laundering purposes. The guidance reiterates the expectation for firms to take a risk-sensitive approach to identifying PEPs and applying enhanced due diligence. It also clarifies the treatment of domestic PEPs and outlines changes to the sign-off process and the role of the MLRO.
Jersey
Financial crime examination feedback – In June, the Jersey Financial Services Commission (JFSC) published a feedback paper outlining key findings from its financial crime examinations conducted between Q4 2023 through to the end of 2024. The paper is designed to help supervised persons evaluate the effectiveness of their systems and controls for preventing and detecting financial crime, while ensuring compliance with Jersey’s legal and regulatory framework. Notably, it highlights recent enhancements to the JFSC’s processes, with a stronger focus on a risk-based approach. It also shares common and high-risk findings from examinations, alongside practical examples of good practice and self-assessment prompts.
2024 Compliance monitoring feedback – The JFSC has published feedback from its 2024 compliance monitoring thematic examination, which assessed how firms test compliance with internal policies and procedures, applicable legal and regulatory requirements, the effectiveness of systems and controls, and the action taken to address deficiencies. Overall, the examination found a good level of compliance. However, areas most frequently identified for improvement included weaknesses in internal systems and controls, ineffective testing, inadequate policies and procedures, and incomplete or inaccurate record-keeping.
Consultation on proposed enhancements to the AML/CFT/CPF Handbook – The JFSC is seeking industry feedback on proposed updates to the AML/CFT/CPF Handbook. The changes aim to address MONEYVAL’s recommended actions and improve the overall usability of the Handbook. Comments should be submitted to the JFSC by 4 September 2025.
Proliferation Financing National Risk Assessment – In April, the Government of Jersey published its first Proliferation Financing (PF) National Risk Assessment. The assessment aims to identify, assess, understand, prevent, and mitigate PF risks in Jersey. The report concludes that Jersey’s main vulnerability lies in the PF process stage of obscuring funds and money flows, most likely through the abuse of corporate and financial infrastructure by proliferators and their associates. Overall, the Island’s level of PF risk is assessed as Medium–Low.
Guernsey
Streamlined Private Investment Fund regime – In May, the Guernsey Financial Services Commission announced a simplified and streamlined PIF regime designed to provide an innovative and flexible fund structure suitable for a wide range of private capital investment strategies. The new regime consolidates what were previously two separate routes into a single framework, while retaining the Family PIF as a distinct option for high-net-worth investors.
Cayman Islands
Revisions to Regulatory Handbook and Enforcement Manual – In July, the Cayman Islands Monetary Authority (CIMA) revised its Regulatory Handbook and Enforcement Manual. The updated Regulatory Handbook, which sets out CIMA’s policies and procedures, strengthens provisions relating to external membership and stakeholder engagement. Updates to the Enforcement Manual – which establishes the framework for CIMA’s enforcement regime in cases of non-compliance with regulatory acts by authorised persons – consolidate procedures covering enforcement actions, administrative fines, publication, and loss of contact.
Other
Financial Action Task Force jurisdictions under increased monitoring – In June, the FATF published an update to its list of jurisdictions under increased monitoring (the “grey list”). Following its latest review, Bolivia and the British Virgin Islands have been added, while Croatia, Mali, and Tanzania have been removed.
If you have any questions relating to these updates, please contact Louis Dodd or Askender Ouazzani.
