7 Trends in AML Compliance
2. Get ready for more information on Ultimate Beneficial Owners
Since the release of the Panama Papers, the many creative ways criminals use shell companies and offshore structures to hide their cash have become public knowledge. To counter this, in 2019 we expect ultimate beneficial ownership legislation to become a prominent feature of the financial crime landscape. The need to increase transparency around UBOs has long been moving up the agenda of policymakers and in 2018 was a focus of the G20 Summit, where leaders made clear a desire to implement ‘international standards and the availability of ultimate beneficial ownership information’.
We predict that the global focus on UBO transparency will ramp up in 2019 as a consequence of various legislative actions from the year that’s passed. The US continued its pioneering work around Geographic Targeting Orders (GTO) which will be extended well into 2019. The implementation also of the FinCEN Final Rule on Customer Due Diligence showed that the US is committed to increasing transparency of ownership. In 2018 the EU published the Fifth Money Laundering Directive which will make ownership registries, compiled under the Fourth Directive, publically accessible. In the UK, steps were taken to introduce ultimate beneficial ownership registers for companies in overseas territories by the end of 2020. Expect to see further progress in all of these jurisdictions in 2019.
Tip: Start thinking about how UBO information which will become available in the next few years will impact your compliance process. How will you incorporate it into the risk rating of different clients and how will this change your perception of their expected behavior?