Anti-Money Laundering has been in development for a long time. It will continue to evolve as technology evolves, as new crimes emerge, and existing measures become insufficient.
All regulatory bodies work very hard to prevent Money Laundering; both global and local regulations are updated periodically. Changing and updating regulations has changed AML quite a lot.
History of Anti-Money Laundering Regulations
Anti-money laundering initiatives became famous when a group of countries worldwide created the Financial Action Task Force (FATF) in Paris in July 1989. The Financial Action Task Force (FATF) was founded to study and develop anti-money laundering measures, establish international standards for anti-money laundering, and promote their implementation. In these times, banks, for example, had little responsibility for money laundering cases. In October 2001, however, following the September 11 terrorist attacks, the FATF expanded its mission to combat terrorist financing and greatly enhanced existing regulation. In this case, the responsibilities of the institutions that have to comply with these regulations have increased considerably.
Another important institution in the fight against money laundering is the International Monetary Fund (IMF). Like the FATF, the IMF regulates and pressures 189 member states to comply with international standards to prevent terrorist financing.
The European Union also complied with the first anti-money laundering Directive in 1990 to prevent the financial system from misusing money laundering. European Union AML directives are constantly being revised to reduce the risks associated with money laundering and terrorist financing. It is the 6th anti-money laundering regulation prepared by the European Union, and the member states of the European Union are preparing to comply with this regulation.
In the United States, the Financial Crimes Enforcement Network (FinCEN) has a mission to protect it from misuse of financial crimes, including money laundering and other illegal activities. At this point, FinCEN acts as the appointed administrator of the Bank Secrecy Act (BSA). BSA, one of the most important tools in the fight against money laundering, was established in 1970. Then, the US has also developed and modified the BSA to provide numerous other regulatory agencies with the most effective tools for anti-money laundering. The chronological order of these laws is as follows;
- 1970-Bank Secrecy Act
- 1986-Money Laundering Control Act
- 1988- Anti-Drug Abuse Act
- 1992-Annunzio-Wylie Anti Money Laundering Act
- 1994-Money Laundering Suppression Act
- 1998- Money Laundering and Financial Crimes Strategy Act
- 2001-Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA Patriot Act)
- 2004- Intelligence Reform&Terrorism Prevention Act
Sanction Scanner asks some AML experts, “How has anti-money laundering changed over time?” Here are some of the answers we got:
“I think numerous scandals and big cases lead to greater transparency and reveal lots of gaps in legislation. The opportunities in the field of AML are also changing swiftly. If we looked back 30 years ago, there was no cryptocurrency, fast payments, and e-wallets, but today a great amount of digital solutions are available to everyone today.”
Anastasija Slobodenuka, Lawyer, CAMS, PricewaterhouseCoopers Legal Law Firm
“The AML profession has become more complex and demanding. Regulations and requirements are changing dynamically, threats are always on the rise, funds are moving faster, and tracing them is growing to be more difficult. On the other hand, Compliance and AML are actively present in the Board of Directors, and their opinions and recommendations are appropriately perceived.”
Wael Saikaly, Head of AML/CFT at CreditBank SAL
The Evolution of Money Laundering
Money laundering uses fraud to legalize illegal funds. Rules and regulations for laundering money must be avoided, so criminals use money laundering techniques to hide dirty money. The act of money laundering corrupts financial systems by damaging the integrity of financial institutions. When money launderers transfer money through illegitimate businesses, they compete with real business owners.
When money launderers invest dirty money in hard-to-detect markets to wash down, they inflate those markets the wrong way. In addition, money laundering makes it harder for law enforcement to track down criminals, stop dangerous and illegal behavior, and seize counterfeit funds. Today’s financial criminals are equipped with the latest well-funded technology. This makes it more difficult than ever for financial institutions, law enforcement, and regulators to stay one step ahead.
Financial criminals use modern financial tools to trick systems into accepting dirty money. Accessing programming systems enables criminals to use new tactics to disguise their identities and spread illegal transactions. In this case, it can be quite difficult for financial institutions to protect themselves. In this case, it can be quite challenging for financial institutions to protect themselves.
AML Efforts of Financial Institutions That Have Changed Over Time
AML regulations developed over time have led to an increase in the responsibilities of financial institutions. Institutions that have increased responsibilities in the face of regulations have also increased their AML Efforts. According to the regulations, financial institutions should establish an effective AML compliance program, and then this program should be audited with a third party at certain periods.
To deal with changing money laundering crimes and risks, institutions have started to use technology-friendly solutions. With the automatic Know Your Customer and Customer Due Diligence solutions, institutions are now able to identify who the customer really is. Even for high-risk customers like PEP, risks can be easily identified using Enhanced Due Diligence solutions. In addition, thousands of Sanctions and PEP lists need to be scanned by customers. With artificial intelligence-supported AML scanning solutions, transactions can be realized in seconds.
Apart from this, to prevent financial crimes and minimize risks in institutions such as banks where financial transactions take place frequently, it is not sufficient to scan the customer’s identity, but the instant transactions of the customers should be checked. Technology’s answer is Transaction Monitoring. Transaction Monitoring solutions have just started to enter our lives, and researches show that this solution will have a very important place in the coming years. With Transaction Monitoring solutions, customers’ transactions can be monitored instantly, and the compliance team triggers suspicious transactions.
All institutions responsible for complying with AML regulations must strictly follow these regulations. AML has changed a lot over time, and it is bound to change and evolve as long as crimes are not completely abolished. At this point, institutions should use the benefits of technology to combat financial crimes, minimize their risks and comply with changing and challenging regulations. Creating an AML compliance program, complying with this program, and passing the audits easily may seem like a nightmare, but these processes are now very easy for institutions that have chosen Sanction Scanner, which offers artificial intelligence-supported AML solutions. Save time and keep up with the times while minimizing your risks.
June, 2021, Published on Sanction Scanner