Anti-money laundering and countering the financing of terrorism
Fighting money laundering and terrorist financing contributes to global security, integrity of the financial system and sustainable growth. Laws to combat money laundering and the financing of terrorism are designed to prevent the financial market from being misused for these purposes.
The European Union adopted robust legislation to fight against money laundering and terrorist financing which contributes to those international efforts. The Commission ensures effective application of this legislation by reviewing transposition of EU acquis and working with networks of competent authorities.
Firms must comply with the Bank Secrecy Act and its implementing regulations ("AML rules"). The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.
The competent authority reviews a firm’s compliance with AML rules under which sets forth minimum standards for a firm’s written AML compliance program.
- The program has to be approved in writing by a senior manager.
- It must be reasonably designed to ensure the firm detects and reports suspicious activity.
- It must be reasonably designed to achieve compliance with the AML Rules, including, among others, having a risk-based customer identification program (CIP) that enables the Bank to form a reasonable belief that it knows the true identity of its customers.
- It must be independently tested to ensure proper implementation of the program.
- Each Bank must submit contact information for its AML Compliance Officer.
- Ongoing training must be provided to appropriate personnel.
- The program must include appropriate risk-based procedures for conducting ongoing customer due diligence, including (i) understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and, (ii) conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information, including information regarding the beneficial owners of legal entity customers.