In recent years, regulators have adjusted their priorities to strengthen their AML/CTF frameworks. As the world becomes even more digital, legal acts related to virtual currencies, digital art, and crypto-related services have moved to the forefront. To keep up with this rapidly transforming regulatory landscape, let’s observe how global AML/CTF rules will change in 2022.
In March 2021, the Financial Conduct Authority (FCA) included crypto companies on its list of businesses required to submit financial crime reports. Accordingly, crypto-asset companies must submit these reports annually (within 60 business days after their first accounting reference date). Since March is just around the corner, companies need to prepare for the formal submission date.
This requirement generally applies to any business falling under the Money Laundering Regulations (MLRs), such as:
The FCA’s extension of annual financial crime reporting obligations has increased the number of obligated companies to 7,000. The affected regulated companies include, but are not limited to:
Accordingly, these new reporting requirements will allow the FCA to get firm-specific information about financial crime from a wider set of business sectors.
Crypto asset companies are required to provide the following information in their reports:
Also, the company should express its opinion about the top three most prevalent frauds, including:
Crypto companies should submit their reports through the appropriate online systems available on the FCA’s website, such as RegData.
Deadline. The U.K.’s Financial Conduct Authority (FCA) expects to receive the first reports within 60 business days of each company’s accounting reference date. The directives come into force on March 30th, 2022.
The potential 2022 amendments to the Money Laundering Regulations (MLR) will mark significant revisions to the primary AML law in the UK.
The amendments could affect a range of sectors, including digital art traders. Meanwhile, the following low ML/TF risk industries could possibly be excluded:
Account information service providers and payment initiation service providers may also be excluded from the regulated sector if they only provide account information or payment initiation services.
Generally, the UK financial institutions and individuals involved in transactions—such as lawyers, accountants, and estate agents—will have to follow updated AML Regulations.
The proposed amendments are related to the art sector, which has been extensively targeted by money launderers. Here are the changes and amendments to expect:
In addition, there will be clarificatory changes to describe how the AML/CTF regime operates, which will cover the:
Consultation on these amendments lasted until October 2021. Secondary legislation is expected from March 20 until June 21st, 2022.
Since December 2021, FinCEN awaits public comments on potential recordkeeping and reporting requirements under the Bank Secrecy Act (“BSA”) for certain persons involved in real estate transactions. There are two proposed rules. One suggests implementing specific reporting requirements for regulated businesses to collect and report certain information, such as beneficial ownership. The other focuses on AML monitoring reporting requirements and requires the following:
The goal is to implement a system to collect and use information about potential money laundering associated with non-financed transactions in the US real estate market. All suggested requirements aim to combat money laundering by purchasing real estate, which is still a massive problem for the US financial system.
This rule affects certain persons involved in non-financed purchases of commercial and residential real estate in the country, including:
FinCEN suggests determining who should be responsible for reporting information concerning real estate transactions, with the following options on the table:
Accordingly, these regulations may impact a wide range of stakeholders.
FinCEN is suggesting potential regulations and seeking comments regarding:
Generally, there are 82 specific questions to comment on the proposed regulations.
Deadline. If real estate businesses professionals and other interested parties comment on FinCEN’s proposed rules by February 4th, 2022, they will have a chance to shape the requirements.
The PISA framework is the Eurosystem’s oversight framework for electronic payment instruments, payment schemes, and payment arrangements. Its aim is to make the EU’s future payments ecosystem safer and more efficient by complementing:
The Eurosystem already controls individual payment system operators. These operators won’t be assessed against the PISA framework if all significant risks for a payment scheme/arrangement have already been evaluated.
In general, the framework will influence:
The framework applies in the same way to all payment schemes and arrangements (unless otherwise excluded). Excluded parties are encouraged to apply the principles of the framework voluntarily.
The Eurosystem will use an improved PISA framework to control companies enabling and supporting the use of:
The framework will also regulate the following activities:
Additionally, this framework will complement upcoming EU regulations on crypto assets and international standards for global stablecoins.
The framework doesn’t directly address channels of electronic payments such as personal computers, mobile devices, payment terminals, etc.
Deadline. The European Central Bank (ECB) Governing Council approved the framework on November 15th, 2021, and it shall become applicable on November 15th, 2022. New schemes/arrangements should implement the PISA framework within one year of being notified that they fall within the framework’s scope.
After two years of discussions, the Swiss Parliament adopted the revised version of AMLA, taking into account the recommendations of the FATF’s country report and aiming to strengthen the integrity of the Swiss financial center.
AMLA applies to financial intermediaries and dealers that accept payments in cash. Persons facing these potentially changing requirements include:
Intermediaries might expect an increase in their compliance workload due to additional verification obligations in high money-laundering risk situations.
The revisions cover a broad set of requirements, including the role of advisors within the scope of AMLA. Here are the particular changes brought by the revised Swiss AML Act:
Deadline. The amended Swiss AMLA, including its implementing secondary legislation, comes into force by mid-2022.
Last December, the Estonian government approved draft legislation that tightens regulation of Virtual Asset Service Providers (VASPs). The new legislation brings VASPs in line with payment service providers but doesn’t directly affect individuals who use private wallets from owning crypto. Therefore, it’s time for regulated crypto businesses to get prepared.
The amendments are aimed at Virtual Assets Service Providers (VASPs) operating in Estonia, including:
The definition of ‘VASP’ will include decentralized platforms, ICOs, and other services if the amendments enter into force. It’s worth mentioning that VASPs should get a license from the Financial Intelligence Unit (FIU) to operate in Estonia.
You can learn more about complying with the new Estonian AML Act in our article on How the New Estonian AML Act Affects Virtual Currencies.
Below are the significant changes that virtual currency services will face when the amendments come into force.
2. License application requirements. The documents/information that will be required in addition to the VASP license application include:
Detailed financial information (assets and share capital size, documents evidencing payment and size, applicant’s opening balance sheet, an overview of income, expenses, profit, and cash flows and prerequisites for these, etc.);
The Financial Intelligence Unit decides whether to grant a virtual currency service provider a license within 60 days after receiving all required documents and information.
Although only companies operating in Estonia or connected to Estonia can apply for a VASP license, the current rules allow the resale of licensed companies to third parties.
The draft act doesn’t include information about the withdrawal of existing licenses. It could mean that VASPs will lose active operational licenses only if they fail to comply with new requirements before March 2022.
3. VASPs are required to follow the FATF Travel Rule. The FATF’s Recommendation 16 on Wire Transfers, aka “Travel Rule,” requires VASPs, financial institutions, and regulated companies in member countries to exchange identifying information about the originator and beneficiary of transactions above €1,000 with counterparties.
Deadline. If the Act passes, virtual currency service providers will have to bring their operations and documents into compliance by March 18th, 2022.
To sum up, legislative authorities worldwide will continue focusing on digital currency protection and electronic payment instruments in 2022. This will include new industries, such as the digital art trade. Therefore, businesses—especially those operating globally—should be aware of requirements and stay compliant.
Sumsub continues to track all the regulatory changes and will keep you updated.