AML/CTF Regulation 2017 – Dates for the Diary

December 22, 2016 5 minute read

As 2016 draws to a close we highlight the main AML/CTF regulatory changes that will come into force in 2017. What does the year ahead have in store for regulated industries and how this will shape 2018?

2017 to 2018 – Regulation, Re-evaluations and Reversals

In 2017 regulators will have to adapt and respond to the rise of new technologies in banking. FinTechs and RegTechs will continue to mature requiring regulators to cement their commitment to innovation by forging a friendly regulatory environment. Which could set an important precedent for the future regulation of smart technologies as connected devices become increasingly ubiquitous.

Regulators are likely to continue to diversify the range of penalties they serve out to companies and individuals who break the rules. 2016 saw the lowest level of fines issued by the FCA since 2007. However, it also saw the use of alternative enforcement tools such as Deferred Prosecution Agreements (DPAs) and restricting new deposits for a set number of days. This style of alternative punishment is likely to be used more frequently in the future.

2017 will set the groundwork for many events in 2018. The FATF is due to carry out its mutual evaluation of the UK in 2018, which means that we will most probably see a second UK National Risk Assessment of Money Laundering and Terrorist Financing being produced in 2017.

Crucially for the UK, the outcomes of both the French and German Presidential elections in the first half of 2017 will give a good indication of how the Brexit negotiations will be conducted. Giving regulators and financial institutions more clarity, enabling them to plan for their post Brexit futures.

And lastly, 2017 will see the inauguration of President Trump. After campaigning on a promise to cut financial regulation, 2017 and 2018 could see the reversal or relaxed enforcement of the Dodd-Frank Act.

The regulatory landscape is changing, here is what you need to know:

Financial Crime Returns – 31st December 2016

From the 31st December 2016 a range of financial service providers will have to submit a Financial Crime Return, 60 days after the end of their next reporting period. Within this return companies must list the number of politically exposed persons (PEPs) that they deal with and the geographic concentration of their customer base. Firms will also be required to submit the number of SARs they produced both internally and the number they submitted to the FCA in that year.

The information gathered in these reports will allow the FCA to better perform its supervisory role and to identify problems and trends at an earlier stage.

Police and Crime Bill – 1st January 2017

The Police and Crime Bill is a wide ranging bill which brings in a whole host of reforms to the powers of law enforcement. Of specific note to the compliance community are the changes to the implementation and enforcement of financial sanctions.

Currently implementation of new sanctions is seen as being too slow and punishments for breaching sanctions too lenient. Presently, the UK must wait for the EU to put new sanctions into legislation before they come into effect, increasing the chance of capital flight. The Police and Crime Bill will give new powers to the Treasury to immediately adopt new sanctions from the UN. The Bill will also allow UK authorities to use alternative enforcement tools such as Deferred Prosecution Agreements (DPAs), Serious Crime Prevention Orders (SCPO) and monetary penalties for non-criminal prosecution to punish breaches.

AMLD4 + 5 and Wire Transfer Regulation Update -26th June 2017

The implementation of AMLD4 is the most important piece of AML/CTF regulation coming into force in 2017. EU member states will have to implement the rule that was created 2 years ago on the 26th June. The key changes to be aware of include changes to obliged entities, changes to when EDD and SDD needs to be performed, changes to the definitions of PEPs and broader Beneficial Ownership requirements. For a detailed explanation of the incoming changes click here to read our dedicated AMLD4 blog.


AMLD5 will aim to close the terrorist financing and money laundering loopholes that were highlighted by the terrorist attacks in France and the revelations in the Panama Papers. It will introduce important regulatory amendments for prepaid cards, virtual currencies, information sharing between FIUs and access to UBOs registries. We are likely to see a full draft of AMLD5 by the end of 2017.

Revised Wire Transfer Regulation

The revised wire transfer regulation will come into law on the 26th June in conjunction with AMLD4. It increases the number of types of payments that are covered by the regulation to include e-payment, digital device payments and payment cards. The revision also expands what information on the payer and the payee is required to be produced for specific transfers.

Revised Payment Services Directive (PSD2) – 2017

Although not strictly a regulation that directly affects AML/CTF compliance, PSD2 will affect the way payments are carried out. Which will have an impact on payment providers who have AML/CTF obligations.

PSD2 aims to maintain the gains made by PSD by updating it to encompass technological developments that have occurred since the original directive. The EU Payments market will remain competitive and the EU will continue to promote transparency and efficiency in the industry.

PSD2 will increase the remit of services that are covered in the regulation by expanding the definition of what a “Payment Institution” is. For consumers it will prohibit all “surcharges” on cards and aims to make payments more secure. For businesses, it makes it easier for FinTechs such as Third Party Providers (TPP) to enter the market by removing barriers to entry.