The Week Of: October 21, 2019

This week’s news and stories of interest to the AML community. If you prefer a news roundup sent to you, subscribe to our weekly newsletter.

FATF and Virtual Assets

The Financial Action Task Force (FATF) on 18 October 2019 released a statement addressing the money laundering and terrorist financing risks of virtual assets. Two areas of concern raised were the possible mass adoption of virtual assets and person-to-person transfers that cut out the need for regulated middlemen.

The FATF focused particularly on “stablecoins”—cryptocurrencies backed by traditional money and designed to minimize price volatility—and reiterated that stablecoins should “never be outside the scope of anti-money laundering controls.” The statement was viewed as a response to Facebook’s push into digital payments with its Libra cryptocurrency. Read more from Reuters and the FATF.

Forex AML Costs Affecting Japanese Banks

Smaller regional banks in Japan are exiting the foreign exchange business due to high anti-money laundering costs while larger banks are raising fees for overseas remittances, according to Regulation Asia, which picked up a report from Japanese newspaper Yomiuri Shimbun.

Such costs are “estimated to be at least JPY 100 million (USD 919,000) in initial expenditures and tens of millions of yen each year to continue to operate them.” Banks also face large fines if these AML systems fail to detect illicit cash flow.

New fintech companies are sensing an opportunity and entering the business. There is fear, however, that they do not maintain adequate KYC and AML/CFT policies and could become a “hotbed” for money laundering.

U.S. Cracking Down on Shell Companies

The U.S. House of Representatives this week passed the Corporate Transparency Act on a 249-173 vote. The bill would amend the Bank Secrecy Act to require certain corporations and LLC’s disclose their true ownership to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

A version of the bill has been offered in the Senate, while the Trump administration has generally endorsed it but said some improvements were needed. Read more from The Hill.

Iceland Greylisted by FATF

The Financial Action Task Force (FATF) last week placed Iceland on its Grey List for failing to adequately comply with its anti-money laundering and counter-terrorist financing recommendations, according to Iceland Review.

The U.S. and U.K. reportedly fought to include Iceland on the list over its alleged lack of concern with money laundering and sluggish monetary reform. Also added to the list were Mongolia and Zimbabwe.