Anti-Money Laundering (AML) Trends for 2023

As we leave behind a year of extreme activity for compliance teams thanks to global events and new regulations, we will discuss a few trends that potentially shape the AML industry in the coming year.

While crypto, which has become a concern with the collapse of FTX, continues to be at the center of fraud in 2022, the increasing risks in real estate with them show that new regulations are on the way. Artificial intelligence, which is developing day by day, affects RegTechs; it also highlights the importance of regulators cooperating with RegTech.

Enhanced Crypto Regulations

By taking advantage of cryptocurrency’s anonymity, scammers can transfer significant funds without being noticed more efficiently than ever. Hackers stole $4.3 billion worth of cryptocurrency in 2022, which equates to a 37% increase over 2021. In the last two years, most crypto scams have been carried out through social media platforms.

The participants of the crypto money markets, which spent an unbalanced year, think that the legal regulations in 2023 can restore confidence in the sector. The United States, the European Union, and many other countries have announced their intention to develop a more robust regulatory framework for crypto in 2023. After the collapse of FTX, while questions about the future of crypto and what regulators will do next are occupying the agenda, it is becoming clear that improving crypto rules is one of the AML trends that should be considered in 2023. 

Real Estate: Strict Regulations

Real estate remains an attractive money laundering tool due to the high value of properties and the ability to transact in cash. In February 2022, Transparency International revealed that Russians linked to corruption charges had invested £1.5 billion in the UK real estate market. According to a Global Financial Integrity (GFI) report, more than $2.3 billion has been laundered in the US real estate sector over the past five years. Transparency International found that at least £4.4 billion of investment in UK real estate comes from politically exposed persons (PEPs) in high-risk corruption jurisdictions. Europol also found that 68% of criminal organizations in the EU use the real estate market to launder their illicit income. 

To change the way of handling AML compliance and strengthening AML practices and regulations, the US has taken several steps: 

• The KLEPTO Act, introduced in the Senate, aims to help law enforcement agencies track down the luxury assets of Russian oligarchs. 
• FinCEN has renewed and expanded its Geotargeting Orders. 
• The Treasury Department’s National Strategy to Combat Terrorist and Other Illegal Financing includes real estate as a significant security vulnerability. 

Increasing Use of Artificial Intelligence Technology

Although Artificial Intelligence (AI) and AML are very different fields, they interact with each other to a great extent. While AI supports the AML process, AML helps improve the accuracy and efficiency of AI systems. At the same time, AI and AML have features that can be alternatives to each other, and thanks to these features, they support each other.

Given that the security of financial institutions transcends geographical boundaries, AI can help deal with several issues that arise due to digitalization. While we know that artificial intelligence cannot literally replace humans, it will be necessary to reduce the need for human empowerment and accelerate various aspects of AML. 

Cooperation Between Regulators And RegTech Companies 

The companies’ Regulators and Reg-Tech serve each other for very different purposes. Regulators are tasked with enforcing regulations in financial systems, while Reg-Tech companies provide services to facilitate the enforcement of these regulations. Both aim to implement regulations in financial systems more effectively. 

In 2023, there needs to be more cooperation between regulators and Reg-Tech firms. As fraudsters modify and develop their strategies to carry out illegal crimes, cooperation between regulatory agencies and RegTech companies will make progress and help companies detect anomalies in a short period of time. 

Regulations to Be Considered

The United States of America’s Corporate Transparency Act

The Corporate Transparency Act (CTA), which became law in January 2021, protects the country’s financial system from being used in money laundering and other illegal activities. In September 2022, with the release of the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) bureau “Final Rule,” or Requirements for Reporting Right to Benefits Information, individual and foreign organizations must report their true beneficiary information (BOI) to the bureau. This will provide a stricter measure to combat illegal financial activities. The Final Rule will come into effect on January 1, 2024. However, companies formed prior to the effective date and subject to the rule must submit their BOI by January 1, 2025. 

Amendments to the Anti-Money Laundering Law in Switzerland 

The changes in AMLA, which came into effect on January 1, 2023, are: 

1. Financial intermediaries now have to verify the information and identities of their actual beneficiaries only before creating the information needed. 
2. Financial intermediaries need to check and update customer data periodically. 
3. The suspicious activity report (SAR) will be filed with the Money Laundering Reporting Office (MROS) if there is reasonable suspicion or concrete indications of money laundering.

How Does the Sanction Scanner Help? 

Sanction Scanner supports compliance and risk needs with easy-to-use case management interfaces, fast integration approach, and our principle of high-level customer satisfaction. It provides an AML screening solution for screening customers and transactions in 3000+ sanction lists, watchlists, and PEP lists in 220+ countries. Also, the Sanction Scanner AML Monitoring tool can monitor every transaction in real-time. It also provides all-in-one compliance with 360° customer risk assessment by analyzing customer data instantly and presenting it as a report to its users. 

Contact us to learn more about our tools and request a demo.