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Navigating Regulatory Changes and Trends in 2024 for AML, KYC, and Digital Assets

In a Fenergo webinar, titled ‘Guidance on the Global 2024 Regulatory Changes’, we dove deep into the regulatory trends for 2024 and the incoming changes to anti-money laundering (AML) and know-your-customer (KYC) regulations. 

Beneficial Ownership Information (BOI) Reporting and CDD in the US

One of the key topics the panel touched on is FinCEN’s new Beneficial Ownership Information (BOI) reporting rules for financial institutions under the US Corporate Transparency Act (CTA) and the implications of these updated regulatory requirements in the US, which will likely need to update their beneficial ownership onboarding processes once the Act is harmonized with existing Customer Due Diligence (CDD) rules. 

Focus on Crypto Regulation and Sanctions Evasion in the EU

They also discussed regulatory harmonization progress in the European Union, particularly the EU's Sixth Anti-Money Laundering Directive (6AMLD) and new regulations like the Markets in Crypto-Assets Regulation (MiCA), which aims to increase regulatory harmonization and bring crypto assets in line with existing AML/CTF requirements.

Regulators' increased focus on areas like cryptocurrencies being potentially used for terrorism financing was also addressed, with the panel agreeing that the crypto sector needs more regulation now, particularly following the demise of several large crypto exchanges, to address issues like terrorism financing and sanctions evasion.

Rory Doyle highlighted that it's time we consider cryptocurrency, just like the EU has stated, as a financial product the same as any other on the market right now. The same as fiat currencies, it needs to have transaction monitoring, suspicious activity reporting, and beneficial owner transparency in order to understand where this money is coming from, where it’s going to, who controls it, and who ultimately owns it.

“I think it's about time that we recognize that crypto needs regulation, more than regulation needs crypto…There's no gray area anymore when it comes to cryptocurrency.” – Rory Doyle, Principal Regulatory Specialist

The Global Regulatory Outlook for 2024: What Can FIs Expect?

Overall, the consensus was that 2024 will be an important year for continued regulatory changes, and financial institutions will need to carefully assess the resource and technology impacts to ensure they remain compliant with evolving rules.

New technologies like artificial intelligence have the potential to help with ongoing issues like collecting BOI across different jurisdictions by automating some compliance processes.

Some of the key takeaways from the panel discussion include:

  • Regulatory requirements around AML/KYC and beneficial ownership are continually evolving, especially in the EU, and will require ongoing effort from financial institutions to implement changes.
  • Updates to regulatory frameworks like the CTA and 6AMLD aim to increase harmonization, but will also pose challenges for cross-border compliance.
  • Cryptocurrencies are increasingly being scrutinized and regulators are intending to bring them in line with existing AML, counter-terrorism financing, and sanctions rules.
  • Accurate BOI remains difficult across different jurisdictions and is a process that would benefit from more automation at FIs.
  • Ensuring adequate resourcing and budget for technology upgrades will be important as rules evolve and workloads increase from rising suspicious activity reports.
  • The impact of new regulations on compliance processes, data needs, and staffing should be carefully assessed by financial institutions.

Watch the webinar on-demand now.