Sumsub Compliance Digest—September 2023
Learn about all the latest compliance updates from the past month
Every month, Sumsub’s compliance team prepares a single digest with all the latest news and updates in the world of AML and beyond. We cover everything from gambling to fintech.
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Crypto and taxation
United States 🇺🇸
US Treasury Department issued a Notice of Proposed Rulemaking on digital assets reporting
What happened?
On August 29, the United States Treasury Department issued a Notice of Proposed Rulemaking on digital assets reporting for several purposes, including taxation. Under the proposed regulations, brokers, including digital asset trading platforms, digital asset payment processors, and certain digital asset-hosted wallets, would be obligated to submit information returns and provide payee statements that report digital asset purchase or exchange transactions. In addition, the proposed regulations would require real estate reporting persons, who are treated as brokers in reportable real estate transactions, to include the fair market value of digital assets received by real estate sellers in their field information returns and furnished payee statements.
Who’s affected?
Virtual asset providers, real estate brokers
Deadline
Written or electronic comments must be received by stakeholders by October 30, 2023. A public hearing on the proposed regulation has been scheduled for November 7, 2023.
Read more
European Union 🇪🇺
EU tax transparency rules for crypto-asset transactions (DAC8)
What happened?
The European Union Directive on Administrative Cooperation (DAC) dates back to 2011, providing a set of guidelines and regulations to enhance cooperation between EU member states in administrative matters related to taxation.
In September 2023, the EU Council approved the DAC8 Directive. DAC8 expands the range of automatic exchange of information within DAC to include transactions and transfers pertaining to crypto assets and e-money by crypto-asset service providers. Additionally, it serves as a supplementary framework to recently enforced regulations on markets in crypto-assets (MiCA) and anti-money laundering measures.
Starting in 2026, it will be mandatory for crypto-asset service providers to carry out thorough client due-diligence processes and inform EU tax authorities of their findings.
Who’s affected?
Crypto asset providers and operators
Deadline
January 1, 2026
Read more
Tax transparency rules for crypto-asset transactions (DAC8)
Gambling
United Arab Emirates 🇦🇪
Establishment of the General Commercial Gaming Regulatory Authority (GCGRA) in UAE
What happened?
On September 3, the United Arab Emirates officially established the General Commercial Gaming Regulatory Authority (GCGRA), which is charged with creating the country’s regulatory framework for the gambling industry. The general plan of the GCGRA is to implement a robust and secure regulatory framework for the gambling industry in the near future.
Who’s affected?
Gaming businesses in UAE
Deadline
Not specified
Read more
Commercial Gaming Regulator Established in UAE
Curacao 🇨🇼
Curacao National Ordinance on Games of Chance comes into force starting from September 1, 2023
What happened?
The Curaçao National Ordinance on Games of Chance, known as the “Landsverordening op de Kansspelen (LOK),” is effective starting September 1, 2023. This ordinance serves as a comprehensive framework for regulating all games of chance conducted in or from Curaçao. It includes general provisions applicable to all gambling activities and covers various aspects, such as prohibited gambling, issuance and control of licenses (including provisional ones), responsible gambling measures, the establishment of a new regulatory body called the Curaçao Gaming Authority (CGA), and effective enforcement and supervision of these regulations.
The CGA will be responsible for granting licenses, ensuring swift enforcement of the law, and providing neutral oversight in the implementation of these regulations. The new licensing process commenced on September 1, with the Gaming Control Board (GCB) overseeing it.
Who’s affected?
Gaming operators with Curaçao sub-licenses
Deadline
In force
Read more
Indonesia 🇮🇩
Minister of Communication and Information Takes Action Against Online Gambling in Indonesia
What happened?
The Minister of Communication and Information in Indonesia, Budi Arie Setiadi, has issued an instruction letter (No 1 of 2023) regarding the eradication of online gambling or slot gambling. This instruction letter is directed towards the Director General of Informatics Applications, as well as all intermediate and primary high officials within the Ministry of Communication and Information Technology. The specific instructions are to take preventive and proactive measures to eliminate any form of online gambling or slot content on digital platforms and social media within seven days of receiving this ministerial instruction.
Furthermore, it is also that regular evaluations will be conducted on all gambling platforms to ensure ongoing prevention.
Who’s affected?
Online gambling companies
Deadline
In effect
Read more: –
Artificial intelligence
United Kingdom 🇬🇧
UK Competition and Markets Authority proposes Principles for Responsible Development and Usage of Artificial Intelligence
What happened?
The UK Competition and Markets Authority (CMA) recently released a report on September 18, proposing consumer protection and healthy competition measures in the development and usage of Foundation Models (FMs). For clarity, FMs are artificial intelligence (AI) systems with versatile capabilities that can be adapted for various purposes, such as predictive analytics, personalization, data analysis tools, and so on.
The guiding principles put forward are as follows:
- Accountability: Developers and deployers of FMs are held responsible for the outcomes and outputs provided to consumers
- Access: There should be continuous and unrestricted access to key inputs for FMs without unnecessary limitations or restrictions
- Diversity: The business models surrounding FMs should maintain a diverse ecosystem, inclusive of both open and closed approaches
- Choice: Sufficient options should be available to businesses so they can choose how to utilize FMs according to their specific needs
- Flexibility: The ability to adapt and customize FMs is vital in order to accommodate various situations and circumstances
Who’s affected?
Developers and deployers of foundation models (FMs)
Deadline
The CMA will publish how the principles have been received and adopted in early 2024. Stay tuned to learn about the deadline.
Read more
AI Foundation Models: Initial Report
AML legislation
United States 🇺🇸
FinCen publishes a guide to beneficial ownership reporting requirements for small entity enterprises
What happened?
The Corporate Transparency Act (CTA) was passed by the US Congress in 2021. This legislation aims to establish a reporting obligation for beneficial ownership information, as part of the U.S. government’s AML legal framework. The Act endeavors to hinder individuals with malicious intent from concealing or profiting from their unlawfully obtained assets by utilizing shell companies or other complicated ownership setups.
In September 2023, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Guide on beneficial ownership reporting requirements for small entity enterprises. The new regulations require many corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners.
Who’s affected?
Limited liability companies and other entities created in or registered to do business in the United States.
Deadline
Reporting small enterprises have to submit beneficial ownership information starting from January 1, 2024.
Read more
Switzerland 🇨🇭
Switzerland AML shortcomings
What happened?
FINMA identified shortcomings in the area of money laundering in Switzerland. It was discovered that a significant proportion of risk evaluations reviewed did not meet fundamental criteria.
Specifically, some analyses lacked a sufficient definition of the acceptable level of risk for money laundering (referred to as “risk tolerance”), which serves as the essential framework for comprehensive risk analysis.Additionally, certain structural components necessary for proper risk assessment were found to be absent in certain instances.
Switzerland has announced that it has prepared new regulations to strengthen its money laundering laws to eliminate the identified deficiencies.
Who’s affected?
AML reporting entities in Switzerland
Deadline
Following consultation, the Swiss government will present the newly drafted rules to parliament in 2024. Stay tuned to learn about the deadline.
Read more
