This Week in Compliance Vol. 3

What's been occupying our compliance attention lately? Here's a rundown of notable updates and regulatory happenings from the past weeks.

FATF Ministers commit to stepping up efforts to fight money laundering, terrorist and proliferation financing

The Financial Action Task Force (FATF) Ministers met in Washington, D.C. on 18th April, reaffirming their unwavering commitment to combat money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction. During this biennial meeting, they recognized achievements in enhancing the FATF Standards, including measures related to asset recovery and beneficial ownership transparency. The focus remains on protecting the financial system from illicit finance and countering terrorist financing.

Germany’s Commerzbank fined €1.45M for AML failings at subsidiary

Germany’s financial watchdog, BaFin, has fined Commerzbank’s subsidiary, Comdirect Bank, €1.45 million for failing to meet anti-money laundering obligations. The fine addresses lapses in updating customer data and inadequate security measures. Despite these shortcomings, Commerzbank asserts that it completed the necessary compliance updates in 2022. The fine, emphasizing the critical nature of AML compliance, has been in effect since March 28, 2024.

UK Finance Unveils Model Clauses for VRPs

UK Finance and law firm Addleshaw Goddard have introduced model clauses for variable recurring payments (VRPs), allowing customers to authorize payment service providers (PSPs) to initiate variable payments from their bank accounts. These clauses aim to streamline agreements between account providers and PSPs, fostering competition and reducing negotiation costs.

Basel Committee’s Stance on AI in Banking

Pablo Hernández de Cos, Chair of the Basel Committee on Banking Supervision, highlighted the dual nature of AI and ML in banking—its capacity to boost efficiency and risk management, alongside the risks it poses to financial stability and societal norms. He called for a balanced approach to AI integration, ensuring it aids anti-money laundering efforts without overshadowing the necessity for human oversight in decision-making.

FinCEN Notice: Counterfeit U.S. Passport Cards and Financial Fraud

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), in collaboration with the Department of State’s Diplomatic Security Service, has issued a notice to financial institutions regarding fraud schemes involving counterfeit U.S. passport cards. The notice outlines typologies associated with passport card fraud, highlights red flags for identifying suspicious activity, and emphasizes reporting obligations under the Bank Secrecy Act. Financial institutions play a crucial role in detecting and preventing identity theft and fraud, and this notice aims to enhance vigilance in safeguarding against such criminal activities.

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