Welcome to the Q1 2025 AML Round-up. In this issue, we spotlight major AML developments shaping the global landscape including, the upcoming launch of AMLA, the EU’s new AML supervisory authority; Switzerland’s efforts to drive greater financial transparency through legislative reform; and the implications of the U.S. Outbound Investment Security Program, which took effect in January.
Managing Risk. Enhancing Efficiency – New Strategic Partnership with K2 Integrity: We have partnered with K2 Integrity to help fund managers raise capital faster from a wider pool of investors while ensuring compliance with current and emerging regulatory obligations efficiently and cost-effectively. This new collaboration leverages Sonata One’s platform and fully supported fund lifecycle solution with K2 Integrity’s world-leading risk management expertise. Read more here.
If you would like to learn more about the benefits of our partnership with K2 Integrity or have any questions about the topics covered in this round-up, please get in touch with Louis Dodd or Askender Ouazzani.
USA
Outbound Investment Security Program: On October 28, 2024, the Treasury Department issued a final rule (the Outbound Rules) implementing the Outbound Order (first issued in August 2023) with an effective date of January 2, 2025 “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern”.
The Outbound Order requires notification of or prohibits certain outbound investments into mainland China, Hong Kong, and Macao in sectors such as:
- Semiconductors and microelectronics
- Quantum information technologies
- Certain artificial intelligence technologies
The Final Rule came into effect on January 2, 2025. U.S. persons, as defined in the rule, must ensure “reasonable and diligent inquiry” to meet the Knowledge Standard. Fund managers should review and update their due diligence procedures to ensure compliance — both up the ownership chain and down the investment chain — to enable them to prevent prohibited transactions and meet notification obligations.
Europe
Launch of AMLA: The European Union’s new AML supervisory authority, the Anti-Money Laundering Agency (AMLA), based in Frankfurt, will commence operations on July 1, 2025. AMLA was created following Regulation (EU) 2024/1620 of the European Parliament and of the Council of May 31, 2024 (AMLAR), to ensure efficient and adequate supervision of obliged entities that pose a high risk regarding money laundering and terrorist financing (ML/TF), and to strengthen a uniform supervisory approach across all obliged entities.
AMLA will combine both direct and indirect supervisory competences and provide a support and coordination mechanism for Financial Intelligence Units (FIUs). Its powers will improve AML/CFT supervision across the Union, including driving group-wide compliance with requirements set out in the AML/CFT framework and other binding Union acts.
Switzerland
Revisions to AML Legislation: The Swiss Parliament is currently debating proposed revisions to the Anti-Money Laundering Act (AMLA), including the introduction of a transparency register and the inclusion of advisors (lawyers and notaries) under the Act. These changes are important steps towards further improving Switzerland’s toolkit in the fight against money laundering, indicating the jurisdiction’s commitment to aligning with international standards ahead of its next FATF mutual evaluation in 2027/2028.
Luxembourg
The Luxembourg House of Financial Technology is running a ‘Mutualisation’ Bootcamp in May. The Bootcamp, which brings together 6 firms, including Sonata One, is the final stage of the LHoFT’s Catapult Future Foundation program. Supported by leading financial associations including ALFI and the LPEA the program aims to solve one of the financial services industry’s toughest challenges: secure and efficient data and document exchange with a focus on AML and KYC, communication and document transfer, IT security and cloud services and ESG. Interested financial institutions, service providers, and fintech enthusiasts are invited to join selected sessions and engage with participants.
United Kingdom
Digital Wallets: In February, the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) issued a joint feedback statement assessing the usage and impact of digital wallets. This follows a call for action to better understand the opportunities and risks associated with their growing popularity — with digital wallet use rising from 8% of card transactions in 2019 to 29% in 2023.The statement noted benefits for consumers, including convenience, enhanced security, and greater financial inclusion. However, concerns were also raised around competition, which have been referred to the Competition and Markets Authority.
New FCA Portal — “My FCA”: As of March 31, firms can access My FCA as a single point of sign-in for regulatory reporting tasks, including submitting regulatory data and paying fees. According to the FCA, the portal will make it easier for firms to meet their regulatory responsibilities while improving user experience.
Jersey
PEP Feedback: The JFSC has published feedback following a 2024 examination of how supervised persons meet their Politically Exposed Persons (PEP) obligations. Areas for improvement include:
- Compliance monitoring plans not adequately testing controls addressing PEP risks;
- Backlogs and deficiencies in periodic reviews for high-risk PEP customers;
- Premature declassification of PEPs.
Supervised persons are advised to review the findings and consider necessary adjustments: 2024 Politically Exposed Persons Examination Feedback.
Thematic Examination Programme 2025: The JFSC has announced its 2025 Thematic Examination Programme, responding to perceived and emerging regulatory risks. This year’s themes are:
- Conflicts of interest
- Suspicious Activity Reporting (SAR)
- Outsourcing arrangements
Q2 and Q3 examinations will focus on SARs, following a recommended action point from Jersey’s 2024 MONEYVAL Evaluation Report. Assessments will focus on:
- Knowledge or suspicion reporting
- Internal reporting procedures
- Money Laundering Reporting Officer (MLRO) responsibilities
- Suspicious activity reporting
- FIU consent and tipping off
- Training
- Group disclosures
Full details and key dates for the examination programme are available here.
Registry Supervision Feedback: In March, the JFSC released feedback from its Q4 2024 Registry Supervision Inspection Programme, which focuses on ensuring beneficial ownership and controller information is adequate, accurate, and readily available. The feedback highlighted examples of good practice and areas of non-compliance. Boards, senior management, and owner-operators are encouraged to review the findings carefully.
Seven Quick Wins for Financial Crime Compliance: Ahead of its broader financial crime examination feedback, the JFSC identified seven common areas of non-compliance it believes should be relatively easy to address. Read the full list here.
Guernsey
MONEYVAL 5th Round Evaluation Report: In February, MONEYVAL published a detailed assessment of Guernsey’s compliance with international AML/CFT standards. The report gave Guernsey a strong endorsement, highlighting its robust compliance and commitment to global best practices.
Client Money Thematic Reports: Also in February, the Guernsey Financial Services Commission issued thematic reports on Client Money arrangements for the Investment and Fiduciary sectors. The Commission found that firms generally maintain strong controls to safeguard Client Money, with most holding funds at Approved Banks. While access to Approved Banks can involve additional cost and time, the reports reaffirm that Guernsey remains open for business. Firms are encouraged to review the reports — particularly the areas for consideration and the self-assurance questionnaires — when updating their internal policies and procedures.
Cayman Islands
Updated Fees: The Cayman Islands Monetary Authority (CIMA) and the General Registry have updated government fees for select services, effective January 1, 2025. Full details are available here.
Singapore
Regulatory consultation: The Monetary Authority of Singapore (MAS) has proposed a new regulatory framework for retail private market investment funds. The framework is intended to respond to growing retail investor interest in private markets and adapts existing requirements to better suit the characteristics of these funds. MAS is consulting on two possible structures and the appropriate regulatory requirements for each. Responses can be submitted online until May 26, 2025.
International
FATF update: On February 21, FATF updated its list of jurisdictions under increased monitoring (the “Grey List”). Following the review:
- Lao PDR and Nepal were added;
- The Philippines was removed.
Read the full update here.
