22 January 2024

Unpacking the EU’s New Anti-Money Laundering Regulation: 6 GRC Need-to-Knows

The EU’s Anti-Money Laundering Regulation (AMLR) will soon uniformize compliance across the bloc alongside its 6th Anti-Money Laundering Directive (AMLD6). The expansive rulebook will substantially impact governance, risk management, and compliance approaches. Here are 6 key points for GRC teams.

Central EU Monitoring Authority Launching in 2024

The AMLR legally establishes an Anti-Money Laundering Authority (AMLA) to centrally “ensure consistent application of Union rules.” AMLA oversight applies to most financial entities, with direct powers to “carry out investigations” and “adopt decisions directed at obliged entities” – meaning centralized audits verifying group policies.

Binding Standards Around Internal Controls and Procedures

The rules introduce extensive binding requirements around common control frameworks, mandating formal “policies, controls and procedures” spanning designated compliance staff, accounting, due diligence, monitoring, reporting, and more. Group-wide frameworks also must manage standardized data flows regarding emerging threats.

Stricter Beneficial Ownership Identification Through Multifactor Assessments

One of the chief aims is to close loopholes around beneficial ownership. The EU will demand “exhaustive evaluations” to “determine whether control is exercised via other means.” Identification won’t stop at ownership percentages either – things like familial ties, formal/informal agreements, and other possible control routes will undergo scrutiny before foreign entities are engaged.

Crypto and Art/Gem Entities Now Subject to Uniform Rules

Within its broader catchment of “anyone handling €10,000 sum deals,” the legislation calls out traders in precious objects like gemstones. As virtual assets formalize, uniform regulation now reaches these too, applying similar documentation, due diligence, and monitoring rules as traditional institutions to “mitigate risks of misuse.”

Instant Implications from Global Watchdog High-Risk Calls

The AMLR demands that EU-designated “high-risk” classifications mirror Financial Action Task Force findings. This expands capacities to identify and enact geographic risk controls rapidly. Compliance stakeholders must continually track emerging threat patterns flagged by global groups.

Breaking the Rules Causes Big Penalties

The AMLA enables much stronger punishments for financial companies who break the rules. EU member states are expected to deliver significant punishments in line with the legislation.

Who should GRC teams look to hire?

Financial institutions must reinforce talent pipelines around expanded compliance and risk management capacities. Front and center is hiring specialized governance, risk, and compliance experts boasting in-demand skillsets emerging from the new uniform requirements.

This starts with senior designations like Chief Anti-Money Laundering Officers, who can strategically transform fragmented legacy systems into rigorous, cross-border centralized frameworks. Regulated entities will also demand experienced data governance stewards who are able to institute and audit expansive control protocols.

As crucially, junior compliance analysts must support renovated workflows around client surveillance, documentation, due diligence, and reporting. Their contributions will feed streamlined violation identification and risk-scoring models to trigger reviews and escalation procedures.

Institutions should also emphasize advanced expertise in managing offshore relationships, virtual asset conformity and sanctions list integration when recruiting.

Ensuring GRC functions have robust policies for managing operations internally is of equal importance. Many organizations will need customized modules unpacking nuanced obligations and risk signals across emerging access channels.

With the AML Authority gearing up for unified, technology-powered enforcement in 2024, investing in sophisticated governance and compliance teams ensures companies secure market continuity when the new directive activates.

To talk us about your hiring needs, contact MBK Search today.

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