Firms could face earlier AML deadline

UK firms told to up their game to catch up to European rivals on key regulatory issues.

British firms must embrace tougher Anti-Money Laundering standards before the June 2017 requirement to implement new European standards if they are going to keep pace with EU rivals, experts have warned.

Addressing delegates at London FinTech Week, Michael O’Neill, Financial Regulation Group solicitor at Pinsent Masons, said the transition to the fourth anti-money laundering directive will be quicker than firms had previously anticipated given the urgency being stressed by some regulators.

O’Neill explained that the German watchdog, BaFin, will implement AMD4 – which tightens rules on customer due diligence and sanctions – on 1 January 2017. This is six months earlier than required under European law.

He said the German regulator’s decision to bring the rules in sooner could trigger a similar reaction from other jurisdictions across Europe.

He explained: “Change is coming sooner… We are seeing change taking place in the AML regime and we are going to see that in the next three to six months in the UK.

“This morning, BaFin made some strong statements about the way it expects to implement the fourth money laundering directive. They have [sic] voiced some strong concerns on digital identification techniques and lots of FinTech companies are using these techniques in isolation.

“They are pushing through security standards and a tiering structure based on risk. While the German regulator has announced it will be bringing these in by 1 Jan 2017, I would expect to see other jurisdictions doing the same.”

O’Neill said that anti-money laundering standards are changing rapidly, saying that the market should expect to see widespread change over the coming six months to a year.

He said regulatory concern has been driven not just by challenges raised by FinTech innovation but also by the evolution of the digital market. 

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