In a recent Fenergo During the webinar “Guidance on Global Regulatory Changes in 2024”, experts examined upcoming regulatory trends for 2024.
The focus was on planned adjustments to anti-money laundering (AML) and know your customer (KYC) regulations.
One of the key points discussed was the introduction of FinCEN’s new Beneficial Ownership Information (BOI) reporting rules under the US Corporate Transparency Act (CTA). These changes will require US financial institutions to revise their beneficial ownership onboarding processes, aligning them with existing customer due diligence (CDD) rules.
The panel also highlighted progress in regulatory harmonisation within the European Union. Key developments include the EU’s Sixth Anti-Money Laundering Directive (6AMLD) and the Markets in Crypto-Assets Regulation (MiCA). These regulations aim to integrate crypto-assets into existing anti-money laundering and counter-terrorism financing (CTF) frameworks.
There was widespread recognition that the cryptocurrency sector, particularly in the wake of the failures of major cryptocurrency exchanges, requires stricter regulation. This is essential to address concerns such as terrorist financing and sanctions evasion.
Rory Doyle, a senior regulatory expert, stressed the need to treat cryptocurrencies like any other financial product. He said: “I think it’s time we recognised that cryptocurrencies need regulation, more than regulation needs cryptocurrencies… There’s no grey area when it comes to cryptocurrencies anymore.”
The year 2024 is shaping up to be a pivotal year for regulatory change. Financial institutions (FIs) need to prepare for the resource and technology implications of ensuring compliance with evolving regulations. Innovations such as artificial intelligence could play a significant role in streamlining compliance processes, including the collection of BOIs across various jurisdictions.
The main lessons learned from the discussion are as follows:
- The continued evolution of AML/KYC and beneficial ownership regulations, particularly in the EU.
- The challenge of cross-border compliance due to updates to regulatory frameworks such as CTA and 6AMLD.
- Strengthen regulators’ oversight of cryptocurrencies, aligning them with existing AML, CFT and sanctions rules.
- The complexity of obtaining accurate BOIs across different jurisdictions, a process that would benefit from automation in financial institutions.
- The need for financial institutions to allocate sufficient resources and budget to technological advancements as regulations evolve and demand for suspicious activity reporting increases.
Watch the full webinar here.
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