Posted: 29 June 2017
Below are some frequently asked questions that we thought maybe useful. If you need general information about The European Union’s Fourth Anti-Money Laundering Directive (EU4MLD) please see here.
Are existing AML V2 Searches still compliant?
Yes. AML Search v2 provides Enhanced Customer Due Diligence Searches which are fully compliant with the new regulations. There are however other changes that you need to consider to your Risk Assessment procedures in order to demonstrate your firm’s compliance.
Can I continue to use AML Search V2?
Yes. It is recommended that firms review their Risk Assessment procedures in line with the new regulations. The regulations make specific reference to Simplified Due Diligence no longer being an accepted approach without a Risk Assessment, Financial Sanctions and Politically Exposed Persons electronic screening. Simplified Due Diligence in the past has involved taking copies of identity documents, this as a minimum now needs to be augmented with electronic Sanctions and PEP screening and a Risk Assessment. AML Search v2 already provides all these features.
What is Simplified and Enhanced Due Diligence?
Simplified Due Diligence is typically for 'Low Risk' work or transactions and requires a Risk Assessment, documentary evidence of the Client's Identity and Address, and electronic screening of Financial Sanctions, Specially Designated Nationals and Politically Exposed Persons data.
Enhanced Due Diligence is typically for 'Medium and High Risk' work or transactions and requires a Risk Assessment and, in addition to the documentary evidence and screening required by Simplified Due Diligence, additional positive and negative electronic verification of the client's identity, date-of-birth and address.
AML Search v4 provides both Simplified and Enhanced Due Diligence options as a part of an automated Risk Assessment process.
Should we review our risk assessment criteria and procedures?
Yes. There are significant changes in the regulations as to how firms are required to Risk Assess their Clients, carry out on-going Due Diligence, how quickly firms must demonstrate their compliant procedures and how long records can be kept.
How does AML Search v4 compare to AML Search v2?
AML Search v4 automates the additional procedures for firms, making the process as simple for you as carrying out a search using AML Search v2. AML Search v4 allows you to confidently demonstrate your compliance, at any time, with law and regulations, dramatically reducing the time and cost of your regulatory compliance.
Take a look at this comparison sheet to understand the differences
How can I comply?
Evidencing your compliance does not have to have a significant impact. AML Search can provide simple workflows, and accurate compliant Client Due Diligence, reducing the time and expense of carrying out and demonstrating AML compliance.
If you are an existing AML Search user and screen all Clients using AML Search v2, then you may only need to review and update your Risk Assessment procedures and AML Search Risk Profiles to reflect any changes in your internal procedures.
If you are an existing AML Search user and do not currently screen all Clients using AML Search v2, we recommend that you review the new regulations relating to Simplified and Enhanced Due Diligence and assess your implementation of Risk Assessments and Enhanced Client Due Diligence using AML Search v4.
What happens if I don't comply?
The penalties for failing to comply with obligations under the regulations have increased. In addition to penalties that can be imposed by regulators, including the Solicitors Regulatory Authority and Financial Conduct Authority, the Policing and Crime Act 2017 has increased fines up to £1,000,000 (plus 50% of funds in some cases) and increased prison sentences from 2 to 7 years where ‘the person has breached a prohibition, or failed to comply with an obligation, that is imposed by or under financial sanctions legislation’.