What is the Difference Between Rules and Regulations?

Blog / What is the Difference Between Rules and Regulations?

Rules and regulators might be confused even though they are pretty different. They differ from each other in their purpose even though both must be followed.

Rules are guidelines and instructions for doing something right. It is created to manage behavior in an organization or country. They are written principles. On the other hand, regulations are directives made in addition to the laws in a particular country. They are imposed to address gaps in the existing system.

The main difference between rules and regulation is that rules are more flexible. On the other hand, regulations are more stringent. Rules are set according to individuals and organizations, regulations according to the state. Another difference is that the rules are the set of instructions given to the public. Regulations are rules accepted legally by the administration. Rules are part of the regulation, but regulations are part of the law.

The reason why the two concepts are confused is that they have many similarities. For example, both are part of the constitution. However, violation of both concepts can result in penalties.

What Are The Rules For AML?

The purpose of the AML rules is to help detect and report suspicious activities, including antecedents for money laundering and terrorist financing. The rules are flexible, as mentioned above. For this reason, regulations have a more important place in the AML sector.

What Are The Regulations For AML?

Each country has its own AML regulations. The regulatory bodies impose AML regulations in their countries. Some of the major AML organizations are:

Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) recommendations are internationally accepted standards against money laundering and terrorist financing. FATF is an intergovernmental organization, and it has 36 members. Its primary task is to set global standards for AML compliance. FATF's requirements are mainly to know your customer, customer due diligence measures, regularly monitor suspicious financial activities, and impose effective sanctions against individuals and institutions that do not comply with FATF regulations.

European Union AML Directives

These are directives prepared by the European Union. The aim is to harmonize the AML / CFT legislation of the member states. It is published periodically and is prepared, considering the risks the market faces and the potential to encounter. There are six directives published so far. They had made some changes in these directives depending on when they were issued. For example, the 5th AMLD was published when there was an agenda for appreciating cryptocurrencies. The directive contains regulations against cryptocurrencies.

Disclosure and Implementation of 5AMLD

Expected Changes For Sixth Anti-Money Laundering Directive (6AMLD)

Financial Conduct Authority (FCA)

The Financial Conduct Authority is the body responsible for regulating financial services in the UK. FCA operates independently from the UK government. The 2021 Financial Services law created it. The establishment purpose of FCA is to regulate the behavior of financial firms. To achieve this goal, it has the powers to set rules, implement, investigate and execute.

Bank Secrecy Act (BSA)

The Bank Secrecy Act is governed by the United States money laundering regulation. Its focus is money laundering and other financial crimes. Under BSA, financial institutions must comply with compliance programs report and keep records. Financial institutions that do not comply with BSA regulations might face penalties.

Hong Kong Monetary Authority (HKMA)

The Hong Kong Monetary Authority is responsible for Hong Kong's banking and monetary policy stability. The HKMA is accountable for anti-money laundering and combating terrorist financing. It ensures that financial institutions meet various ban requirements and develop the AML / CFT program. Under the HKMA AML policy, companies should pay attention to risk assessments, procedures, and compliance officers' training.

Monetary Authority of Singapore (MAS)

The Monetary Authority of Singapore (MAS) regulates the service and financial sector as the state's central bank. Among MAS duties are conducting monetary policy, supervising financial institutions, managing reserves, and assets, and improving Singapore's international economic situation. Financial institutions must comply with MAS's AML policies. The standards set by MAS are mainly; customer due diligence, know your customer, reporting, and monitoring.

Australian Transaction Reports and Analysis Center (AUSTRAC)

The Australian Transaction Reports and Analysis Center (AUSTRAC) is the Australian government's primary financial intelligence agency. Its main task is to combat money and terrorist financing. In addition, AUSTRAC tries to detect criminal threats and gaps in the Australian financial system. The standards that companies are expected to comply with are mainly detection, monitoring, and reporting.

Comply with AML Regulations with Sanction Scanner?

Sanction Scanner provides AML Compliance solutions compatible with global and local AML Regulations. Organizations can use Sanction Scanner's software to comply with regulations, avoid regulatory penalties, and protect their reputation.

With Sanction Scanner, you can scan your customer's more than 3000 thousand Sanction, PEP, and Adverse Media data during and after your customer's onboarding process to identify their risks. With Ongoing Monitoring, you can constantly monitor your risky customers. You can present them to regulatory authorities as evidence in audits by keeping the history of all scans and accessing historical records at any time. Meet Sanction Scanner today and protect yourself from regulatory penalties.

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