European Regulator Proposes Cross-Border Anti-Money Laundering Compliance Rules
The European Banking Authority has proposed new cross-border anti-money laundering compliance guidelines that would mandate a more robust and independent AML compliance function.
The proposed guidelines would generally require a separate AML compliance function that would be headed by one person reporting to a responsible Board member or independent C-suite executive. The guidelines would charge the AML compliance officer with recommending policies and procedures, reporting mechanisms, and resource allocation to combat money laundering and financial fraud. They would also require the AML compliance officer to approve any suspicious transactions. The Guidelines seek to harmonize and ultimately replace specific country or company AML policies.
The EBA exercises significant influence over AML practices. Whether or not the guidelines are formally adopted, expect regulatory authorities and serious companies to adopt the guidelines as best practices. Historically, AML practices in the EU have spilled over into SEC and FINCEN recommendations. U.S. banks, investment advisers, broker-dealers and funds should consider implementing some of the less onerous recommendations such as centralization and independent reporting.
Read consultation paper here.