The United States is a magnet for money laundering. It tops the money laundering leaderboard, with over $250 billion laundered here every single year. To put that into perspective, the total estimated value of money laundering in the US is greater than the UK, France, and Germany combined, and these countries rank 2nd, 3rd, and 4th on the same leaderboard.

It’s a problem that’s not going away anytime soon, but the US government has implemented increasingly strict rules and regulations to keep it under control.

Known as Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations, these rules are there to protect consumers and fight back against money laundering.

What is the Current KYC and AML Landscape?

The Financial Crimes Enforcement Network (FinCEN) is the main financial regulator in the USA. It is tasked with protecting the nation’s financial system and guarding against money laundering and fraud.

As in other countries, AML and KYC regulations provide a much-needed level of transparency across multiple sectors and activities. They require companies to perform due diligence when operating in high-risk industries or dealing with high-risk consumers.

The core components of customer due diligence are as follows:

·         Identify and confirm the customer’s identity.

·         Identify and confirm the identity of all beneficial owners who have a stake of 25% or more.

·         Learn the nature of customer relationships to create risk profiles.

·         Conduct ongoing due diligence checks to identify and report suspicious activity.

What are the Latest AML and KYC Policies?

The Anti-Money Laundering Act 2020 (AMLA) was introduced to deal with the threat of online money laundering in the United States. Prior to this, everything was centered around the Bank Secrecy Act (BSA), launched in 1970, and the Patriot Act of 2001.

The AMLA requires all companies to report ownership information to FinCEN. The information is then stored in a database, where it can be accessed by relevant authorities as part of ongoing money laundering investigations.

On September 30, 2022, FinCEN published the Beneficial Ownership Information Reporting Rule, better known as the “Final Rule”. The rule requires specific legal entities to submit a report relating to the beneficial owner of a reporting company.

These entities include most limited liability companies and corporations registered in the United States. The purpose of the rule is to provide more transparency with regard to who runs these companies and what their purpose is. It is hoped that it will reduce the formation of shell companies and take power away from criminal organizations operating in the USA.

The “Final Rule” will be effective from January 1, 2024. After this date, all companies registered before 2024 will have one year to file their reports. Companies formed after this date have 30 days to file.

US companies that offer products and services internationally might also be subject to the rules and regulations of those countries. Such is the case with General Data Protection Regulation (GDPR), a data protection law that exists in the United Kingdom and the European Union.

Why are These Regulations Important?

KYC and AML regulations are important because they play a significant role in reducing fraud and money laundering. They help to chip away at the billions of dollars that are being “cleaned” every year in the USA, money that may then be used to fund human trafficking, drug trafficking, terrorism, and other illegal activities.

These regulations are the answer to the USA’s problem of money laundering. They are the government’s way of fighting back against a trillion-dollar issue that has a serious impact on the economy and funnels money into terrorism and organized crime.

A few regulations aren’t going to make the problem go away, but they do make life harder for criminals. They also combat corruption and fraud by making high-risk companies and processes more transparent.

As a company involved in the legal, financial, gambling, or investment sectors, you will be expected to adhere to these regulations. They also apply in industries known to transfer large sums of money, including real estate, art, precious metals, and antiques.

Why Must You Keep Up with this Information?

Anti-money laundering laws are not a suggestion. They are not something you can choose to implement for the benefit of your customers or ignore if you don’t feel like it. They are a requirement, and failure to comply could result in sizeable penalties.

For example, companies that don’t meet beneficial ownership regulations could face a criminal fine of up to $10,000, along with additional charges of $500 per day. 

Regulators operate whistleblowing programs for partners and employees who have proof that their current or former employers are breaking these rules. Confidentiality is guaranteed through these programs and whistleblowers are also given a reward of up to 30% of the total recovered amount.

Needless to say, it’s very important for companies and individuals to abide by these regulations, and that’s something that A Data Pro can help with.

How Can You Keep Up with this Information?

The USA has some of the strictest AML and KYC restrictions in the world. It can be difficult to navigate these and as there are severe penalties for companies that fail, it’s not something that you can take lightly.

At A Data Pro, we can help you to remain compliant, even in the face of ever-changing and increasingly complex regulations.

We have sanctions lists that you can use to check for sanctioned individuals, with real-time updates and global sourcing that helps you to highlight problematic individuals and companies.

Following the war in Ukraine and the resulting sanctions on Russian entities, these lists are more important than ever. You don’t need to worry about doing business with a recently sanctioned entity as our sanction lists run regular checks.

We also offer due diligence reports to help you safely navigate increasingly complex AML and KYC regulations. There are over 25 reports to choose from and our options are growing all of the time.

Contact A Data Pro today to learn more about the services that we offer.

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