Is your firm prepared for a post-BREXIT tightening of AML regulations?

The signs are becoming ever clearer that UK firms should be preparing to beef up their AML systems and processes as a response to the post-Brexit landscape, and the inevitable additional regulatory requirements that this will bring.

A new report released by Lexis Nexis has suggested that close to four fifths (78%) of compliance professionals across the UK’s regulated industries are predicting more anti-money laundering (AML) regulation is on the way following the UK’s departure from the EU.

What do regulators want?

From the start of 2021 regulators have highlighted the need for more ‘purposeful’ AML systems, and have gone as far as to suggest that many UK firms’ current systems and compliance functions are not purposeful in ensuring new risk and highted regulatory requirements are met.

Government and regulators alike are requiring UK firms to adapt to new regulatory ways of working that they believe are better suited to the UK’s changing compliance landscape.

What of 5AMLD and 6?

Most UK firms have yet to fully integrate 5AMLD controls as they feel there has been a lack of guidance on implementing more efficient, risk-based AML controls. 6AMLD will not be implemented in the UK and will impact those dealing with European counterparts and clients – they will need to ensure that not only are they abiding by UK compliance standards, but also 6AMLD standards as well. Compliance processes and systems will need to ensure that CDD, SARs reporting and periodic reviews which are conducted are more robust and in-depth than ever before.

UBO challenges

One of the biggest challenges facing UK firms is to obtain UBO information. If they do not get their UBO reporting right, it can result in significant penalties from not only UK entities, but international ones too.

With heightened KYC and AML systems and practises expected from UK regulators, UK firms will need to ensure that their UBO reporting is as robust as it can be in deterring bad actors from conducting financial crime.

Obtaining UBO information is a lengthy process though, and places greater strain on onboarding protocols, not to mention the upkeep of accurate information.

UK businesses will need to ensure that they are recording accurate data at all times and doing this means a combination of the right automotive processes and crucially the right resource monitoring them.

How can the right resource help you achieve his regulatory utopia?

These additional regulatory pressures mean that many UK firms are facing a scenario of trying to get yet more regulatory compliance implemented into their systems and processes, to effectively detect and deter financial crime.

With most, according to the regulator, already struggling to meet current AML requirements, predictions of additional regulatory scrutiny and processes increasing following BREXIT, mixed with an ever-changing set of rules to keep up with, mean that firms must ensure they always have the right resource in place in their compliance teams.

The right people remain a vitally key component in your compliance function to ensure regulatory changes, challenges and priorities are both met and adhered to. Automation of your current AML processes and systems can only take you so far – they need to be purposeful, and the right people will very much be needed to achieve this.

Ensuring that the skills and suitability of the individuals you retain are just as imperative, if not more so than the technology automation you implement. The human element is still the single most important element of your compliance function and regardless of what technological development or trend comes to play, this will always be true.

Ultimately, hiring the right talent should be at the forefront of ensuring your compliance team is as resilient and prepared as it can be.

If you require assistance in the form of additional resource for your compliance teams to try and keep up with new regulatory demands, contact us to see how we can help your planning, structuring, and onboarding of the right talent.