Our webinar, 5AMLD: In Theory and Practice, is a deep dive into key areas of the directive. 5AMLD presents a great number of challenges for financial institutions (FIs) and none of them have a simple solution.
The webinar is led by our guest host Matthew Redhead, Associate Fellow at the Centre for Financial Crime and Security Studies from the Royal United Services Institute in London and he’s joined by two expert panelists.
Our first panelist is Denisse Rudich. Denisse is the Director of Rudich Advisory, a strategic advisory firm where she helps businesses and charities of all types and sizes with navigating the complexities of regulation and financial crime prevention. Denisse was also the former Head of Policy for AML and Sanctions at Royal Bank of Scotland and co-founded the first crypto assets AML/CFT working group at an international level and is Director of the G7 and G20 research groups in London.
Matthew is also joined by Benjamin Whitby from Regulatory Affairs at Qredo. Ben has been engaged in crypto assets since 2013 with HSBC in the bank’s financial crime team having moved from its global compliance team. He now examines AML/CFT from a crypto perspective and at Qredo he’s helping to build a platform for the governance of those assets for banks today.
Our expert panel discussed how the legislation works at a practical level as well as the new ground that the directive covers and the limitations they face in a real-world setting – highlighting the importance of internal debate and discussion on these issues before they are put into law.
The panel looked at the concept of UBO registers and changes to existing national datasets that are yet to come in. The UK’s Persons of Significant Control register is a strong example of a data source that needs revamping to be functionally useful in preventing financial crime.
Governments are not the only source of UBO data. As one panelist notes, charities have worked to put together UBO registers into the public domain but the progress is limited as it’s a highly challenging endeavor. It’s again a situation where governments have required FIs to do something without delivering the infrastructure to make it possible.
The panel discussed the impact of the new PEPs lists that are expected to be a powerful tool in the fight against financial crime. Governments are meant to have compiled ‘functional’ PEPs lists but there is nothing but confusion as to how that is to be achieved.
Our panel touches on the impact of 5AMLD and high value goods in the AML/CFT arena. It’s a wide-spanning issue with almost incalculable difficulty and breadth of application. But the panel breaks it down on a day-to-day basis.
5AMLD made a few key changes that have had a significant impact on crypto firms. It defined cryptocurrencies and made the AML/CFT requirements the same as fiat currencies. A move in line with FATF changes. Crypto firms need to give focus and time over to compliance obligations in order to prevent themselves from losing their licenses to operate, it’s a time-consuming process but one that has become necessary for crypto firms to conduct business in the EU.
The AMLDs are part of a Europe-wide initiative to tackle financial crime and money laundering. However, the directives leave the methodology up to individual member states in how they’re applied and transposed leading to a significant degree of regulatory divergence.
The panel discusses whether or not it’s worth moving away from directives entirely and focusing on a supranational approach to regulations instead, AMLRs rather than AMLDs. Such an approach could lead to a truly harmonized approach to regulation throughout the EU and may be far more realistic in tackling financial crime than directives that are followed in an individualistic way.
Figuring out how to navigate the practicalities of 5AMLD isn’t easy, but our webinar discusses the realities and implications of the directive.