New standards of KYC and AML expectations set for US entities

Knowing your customer is a cornerstone of anti-money laundering and sanctions compliance procedures, but it is not always straightforward, especially as more sophisticated, and aggressive financial criminals have entered the market in recent months.

So, what can businesses expect in the weeks and months to come from a compliance perspective and how can a contingent workforce ensure that additional KYC and AML support is given?

What has changed in response to the Ukraine crisis?

In response to Russia’s invasion of Ukraine, the US imposed broad sanctions and export controls on Russia’s banks, elite individuals, and other state-owned enterprises, all of whom might be involved in planned transactions. The Biden Administration has issued a warning to businesses, stating that it is stepping up efforts to implement these new regulations and has alerted the rest of the world to the potential implications.

The US Treasury Department’s Office of Foreign Assets Control (OFAC) issued another batch of fresh instructions on Friday last week, reiterating that US persons and organisations must comply with extremely broad sanctions against Russia, even when “facilitating” transactions with cryptocurrencies.

The Department of Justice (DOJ) recently announced the formation of the KleptoCapture Task Force, an interagency task force that will seek to ensure the full effect of the sanctions “by targeting the crimes of Russian officials, government-aligned elites, and those who aid or conceal their unlawful conduct,” in keeping with a whole-of-government approach {1}.

The Department of Justice announced the prosecution of a U.S. citizen the next day for providing services to a Russian individual sanctioned in 2014 during the previous round of Russia/Ukraine related sanctions .

What does this mean for your current KYC and AML functions?

The Administration’s increased enforcement posture poses a huge regulatory burden for U.S. organisations, particularly financial institutions and FinTech firms.

In an increasingly digital environment, sophisticated individuals and entities find it simpler to conceal their identities, nationalities, and locations, especially when supported by tier one foreign state actors.

All potential linkages to Russia, including the amount to which they have activities, clients, business partners, vendors, and workers in this region, should be thoroughly investigated by U.S. organisations with global operations. Companies should also verify that KYC and anti-money laundering (AML) procedures are in place and that they meet or exceed industry standards and government requirements, including undertaking a comprehensive evaluation and strengthening of their KYC and AML controls {2}.

Contingent labour will have to become a key component of US corporate structures

Firms will need to be quick to adapt to and adopt a new hiring strategy that embrace the shifting personnel picture in a landscape with greater financial crime risks, increased regulatory pressure, and additional BAU workflows following delays to wider regulatory updates during the pandemic.

With contemporary trends in hiring and retaining employees becoming ever more prevalent in the US, more companies are turning to the contingency staffing model to help them deliver on crucial projects, deal with surges in work, and get back to business as usual.

Crucially, the contingent model addresses a significant difficulty of staffing in a timely and cost-effective manner without the need for lengthy interviews or onboarding.

The recruitment process can often be slow in an otherwise fast-paced business market. Recruiting good, competent people can take months, and candidate validation is a time-consuming and expensive process. The risk of selecting the incorrect individual is that the organisation may suffer reputational harm, project delays, and ultimately monetary loss.

Working for a corporation that is misrepresenting itself also poses a risk of career damage and financial loss to the candidate.

Hiring contingent teams has several advantages, one of which is cost savings. Firms are choosing to keep their overheads low, but they are challenged when aiming to do so due to rising labour costs and a scarcity of experienced specialists, so they frequently turn to contingent teams to assist in filling the skills gap.

Of course, society and wider societal ways of working has also evolved, as seen by ‘the great resignation.’ Professionals are increasingly eschewing traditional ‘jobs’ in favour of flexibility and fulfilment.

With all of this in mind, the need for an adaptive and flexible hiring policy which aligns with the contingent staffing model has never been more pertinent and in-demand that in 2022.

Get in touch with our expert team of consultants to discuss your contingent workforce requirements.


Works cited:

{1} (2022). Attorney General Merrick B. Garland Announces Launch of Task Force KleptoCapture. [online] Available at: [Accessed 9 Mar. 2022].

{2}The National Law Review. (2022). KYC in a Digital World, How New Sanctions and AML Expectations Have Upped the Stakes and What you Need to Do About it. [online] Available at: [Accessed 24 Mar. 2022].