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The Long Reach of European Regulation

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The European Union (EU) has a habit of regulating in ways which extend beyond its own borders. This is not just a testament to its commercial and trading reach, but also to the thoroughness of its regulatory frameworks. The EU’s General Data Protection Regulations (GDPR), for example, have reshaped how data is managed worldwide, influencing policies far outside Europe. Similarly, the EU’s increasingly active approach to anti-money laundering (AML) is likely to have a global impact.

A New Era in EU Regulation

At the heart of these efforts is the EU’s newly established Anti-Money Laundering Authority (AMLA), headquartered in Frankfurt, Germany. Its primary aim is to curb money laundering within the EU, but AMLA’s scope will become internationalized as it will, by default, also oversee transactions that cross EU borders. Consequently, AMLA’s influence is expected to be considerable, including in US businesses trading with EU partners and some sectors not previously associated with stringent AML controls.

Amongst others, the EU’s regulatory expansion will extend to high-stakes businesses, such as soccer clubs. Financial Services European Commissioner Mairead McGuinness has already highlighted the inclusion of new categories under AML regulations. In particular, she’s emphasized the risks associated with large cash transactions and the anonymity afforded by cryptocurrencies. The move reflects a broader trend towards looking at risk-laden contexts previously underexplored in the context of AML.

Financial Transaction Networks Invite Regulations

The implications of these regulatory trends are not confined to Europe. In North America, where the approach to cryptocurrency regulation has been comparatively lenient, the EU’s stricter measures are likely to influence policy and practice, at least indirectly. Any business trading with EU partners will need to comply with EU requirements. Thus, regional norms gradually become international and of wider application.

Adapting to these changes requires the adoption of a compliance service that is customizable and flexible, to ensure effective AML protection. That service will need to deliver genuinely comprehensive support that stays up to date with changing regulations in the EU, the US, the UK, and other jurisdictions.

The Vital Role of Customizable Compliance Services

This is where services like Compli from Essiell Compli come into play. Compli offers a range of features designed to ensure compliance with AML regulations, both current and forthcoming. Its capabilities, including thorough Know Your Customer (KYC) processing, high levels of automation, and a powerful custom rules engine, make it an essential tool for businesses aiming to stay ahead in an environment where regulations change frequently.

Compli brings multiple benefits. Streamlined compliance processes mean enhanced efficiency, and the agility to adapt quickly to new regulatory requirements. This is complemented by its global client profiling and always-on transaction monitoring, which together offer a profound level of oversight. Effective compliance is essential, but it needs to be responsive too.

Future Proof Compliance

The new European AMLA has made clear its focus will be on cleaning up EU finances. But its policies will inevitably impact EU-bound transactions originating elsewhere. For North American banks, credit unions, and other financial entities, staying compliant means embracing services like Compli that future-proof compliance – to go beyond checkboxes for real-life, real time solutions.

By Declan Morton, staff writer at Essiell and Essiell Compli Ltd.


For reference

EU’s new Anti-Money Laundering Authority to be based in Frankfurt, Yahoo News, February 22, 2024

New EU AML measures bringing soccer into the scope of anti-money laundering laws, Moody’s Analytics, February 26, 2024

Europe’s new anti-money laundering watchdog will scrutinise crypto from Frankfurt, DL News, February 23, 2024

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