Are You Ready for 6AMLD?
6AMLD, being asked by EU member states that financial institutions must make implementations to comply with its new measures by June 2021, this in tail will add even more rigid laws and procedures in place of what we already see as a stringent measure.
This is mostly due to increased digitalisation increasing year to year, which is amounting to more digital threats from cybercriminals finding loopholes in the regulatory system. The effect of 6AMLD will show more clarity for businesses needed to adapt, while assuring tougher penalties, encouraging cooperation but more importantly amending its amour to continue the fight against money laundering and financing of terrorism.
So, what is the difference between 5AMLD and 6AMLD?
In the rise the money laundering across a thriving list of activities including, online trading, business transactions, aiding and abetting to funding terrorism has led the UK to bring in a set of regulatory requirements issued by the European Union (EU) which we formerly know as The Anti Money Laundering Directive. It aims at shielding the financial system by mandating the requirements of certain procedures from financial institutions, legal persons active in professional activities, auditors, trusts, company service providers to trading goods and the extent of payments made over a certain threshold.
The key elements of the Anti-Money Laundering Directive (AMLD) are:
– Ongoing monitoring of risks and potential threats
– Data production and compliance which highlights GDPR.
– Audit trails and record-keeping
– Identification of customers which includes identity verification and authentication through various official documents and personal screening, this is also known as customer due diligence.
Moving forward, we have seen continuous anti-money laundering directives put in place from 1991, all the way to 2021 where the new 6AMLD which aims to ‘harmonise’ the definition of money laundering across the EU even further. This is to amount to the penalties included which such acts, which aim to become harsher if caught and also expending its regulatory scope on the number of offences that fall under the definition of ‘money laundering’.
The changes from 5AMLD are the following.
Aiding and bedding – which attempts to commit an offence of money laundering are now considered as the act itself which brings a similar penalty to an individual or group. This is generally aimed at complex money laundering schemes where multiple parties may be involved.
Extension of criminal liability which allows further prosecution and punishment of an individual or person, company, or partnership. This will also affect AML/CFT responsibility upon employees and employees acting separately.
Extension of the minimum prison sentence of 4 years for laundering offences which is an increase of 1 year from the previous year.
To promote the ongoing drive of greater EU member state cooperation which includes sharing requirements between jurisdictions so criminal prosecution for connected offences can take place is more than one EU member state.
What does this mean for the UK?
Well, the British government has opted out of any further anti-money laundering regulations and the EU’s AMLD measures for that matter. This is due to Brexit movements away from the EU and instead choosing to follow the Sanction Act 2018 which proves to be a better fit for the UK’s regimes.
This act is largely compliant to the current AMLD measures which gives a maximum penalty of fourteen years if caught money laundering which exceeds the 4 year minimum of 6AMLD.
Support MRZ, OCR and Liveness checks for compliance in today’s digital environment
With more extreme measures and implications, financial and related institutions which are adhering to 6AMLD must be complying with the latest AML and KYC technologies. Such technologies will safeguard any potential downfall or cracks within a company’s system on how they onboard customers and act towards the whole customer due to the diligence factor.
Plain and simple, having these solutions in place with ensuring your organisation is complying with these new measures set.
The first is using Digital ID & Document Scanning which uses machine-readable (MRZ) and optical character recognition (OCR) functionality.
Ideally, this works by the customer being able to take a photo of their selected document which then MRZ technology will lift the needed information like date of birth, name, nationality etc to prove that the id is genuine and validated in real-time. The next step is when a user is asked to take a selfie, which optical character recognition is triggered to combine all the relevant information taken from the person photo and verify that it is the actual person. This combined process has proven to be an effective identity verification solution and is already being widely used amongst many institutions.
Liveness checks, such as eye movement and facial feature detection proves to be a crucial element when verifying your customers, this is due to fraudsters getting creative and using methods like 2D images and video playback to slip through facial recognition technology and show they are the person they are impersonating. This can have an impact on organisations having to comply with KYC and AML measures as it affects their overall customer due diligence and demonstrating their compliance with regulatory checks.
Successful AML / KYC screening involves access to clean global consumer data.
Physical ID and biometric presence are one aspect of identity verification but screening their name against global sanction and watchlist are also necessary as AMLD measures become tighter.
This involves having access to government agency, credit agency, politically exposed persons (PEP) and sanction checks which have billions of records worldwide and reputable data streams. This can ensure that a person is not wanted for any crimes related to AMLD and to give the 2 + 2 and proof of address check, a key part to any KYC and AML screening process as this is also done in real-time.
With 6AMLD demonstrating further crackdown on cybercrime and money laundering acts, being able to stay consistent with new compliance measures means implementing the right data quality and identity verification solutions. This includes the mentioned MRZ, optical character recognition, biometrics and gaining access to billions of consumer records worldwide for screening purposes, not only will this future proof your organisation but ensure protection against the growing threat of cybercrime and fraudulent activity.