Anticipated Anti-Money Laundering Transaction Regulations (2025): Notable Case Studies

Anticipated Anti-Money Laundering Transaction Regulations (2025): Notable Case Studies

In the ever-evolving landscape of Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) regulations, a focus on a risk-based approach (RBA) is becoming increasingly prevalent. This strategy prioritises closer monitoring of higher-risk clients and transactions, as outlined in best practices for AML/CFT regulations.

Financial institutions are encouraged to consider a variety of indicators when establishing transaction monitoring rules. These include geographical risk indicators, transaction behaviour indicators, customer profile indicators, and emerging technology indicators. Modern AML strategies rely on ongoing monitoring and dynamic risk scoring, where customer risk levels can shift in real time based on new behaviours, transaction patterns, or external data.

Transaction monitoring rules are sets of instructions and conditions to be considered during monitoring. These rules flag unusual patterns, such as transactions that exceed a certain threshold or deviate from a customer's normal activity. Effective AML transaction monitoring follows key global standards such as those issued by the Financial Action Task Force (FATF).

The EU's Anti-Money Laundering Authority (AMLA) is set to begin operations in 2025, taking over supervision of high-risk entities and enforcing stricter compliance standards. The European Union adopted a unified AML framework through the Anti-Money Laundering Regulation (AMLR) and the Sixth AML Directive (AMLD6) in 2024. The AMLA will introduce a single AML rulebook and direct supervision of high-risk financial institutions, with draft technical standards for customer due diligence (CDD), a core component of transaction monitoring, under public consultation in 2025.

In the United States, the FinCEN Modernisation Rule, proposed in June 2024 and expected to finalize in 2025, mandates risk-based AML/CFT programs with mandatory risk assessments and alignment with national priorities. This rule shifts towards clearer, outcome-focused obligations, moving away from check-box approaches, thus enabling institutions to innovate in transaction monitoring technologies.

The UK’s Economic Crime & Corporate Transparency Act is updating AML obligations beyond financial institutions, pushing for digital identity verification for company directors and persons with significant control (PSCs) starting autumn 2025. This impacts transaction monitoring by enhancing identity verification processes.

The FATF continues to update Recommendation 15 concerning virtual assets, with targeted updates emphasising decentralised finance (DeFi), unhosted wallets, and stablecoins. Virtual Asset Service Providers (VASPs) must implement the Travel Rule and robust CDD, directly influencing how transactions involving virtual assets are monitored globally.

AML transaction monitoring best practices emphasise the use of advanced technologies like AI and machine learning to detect suspicious patterns in transactions. Regulatory bodies urge continual updates to monitoring processes to keep pace with increasingly sophisticated money laundering tactics.

There is also a global tightening of AML regulations, reflected in significant increases in AML-related fines (42% YoY to $6.6 billion) and new beneficial ownership rules in the U.S. starting January 2025, all reinforcing the importance of effective transaction monitoring.

In summary, global AML frameworks in 2025 are converging towards risk-based, technology-empowered, and harmonized approaches, with enhanced supervision, updated guidance on virtual assets, and expanded identity verification requirements key to effective transaction monitoring.

[1] European Commission. (2024). Regulation (EU) 2024/1620 establishing the European Anti-Money Laundering Authority. https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12528-Regulation-establishing-the-European-Anti-Money-Laundering-Authority

[2] Financial Action Task Force. (2024). FATF Recommendations on AML/CFT. https://www.fatf-gafi.org/topics/virtual-assets/documents/98-fatfrecommendations-vasps.html

[3] European Commission. (2024). Sixth Anti-Money Laundering Directive. https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12480-Sixth-Anti-Money-Laundering-Directive

[4] KPMG. (2024). AML and Financial Crime Regulation: 2024 in Review. https://home.kpmg/xx/en/home/insights/2024/12/aml-financial-crime-regulation-2024-in-review.html

[5] U.S. Department of the Treasury. (2024). FinCEN Modernization Rule. https://www.fincen.gov/regulations/policy/20240621/fin-2024-r001-proposed-rule-financial-crime-enforcement-network-customer-due-diligence-requirements-financial-institutions-identifying-beneficial-owners-legal-entity-customers-including-requirements-for-verifying-identity-and-updating-and-maintaining-information-on-a-beneficial-owner

1. In the realm of business and finance, wealth management firms and financial institutions are increasingly adopting risk-based approaches (RBA) for their investment strategies, mirroring this trend in Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) regulations.
2. To stay compliant, banks and insurance companies are leveraging various indicators in their transaction monitoring rules, such as geographical risk indicators, customer profile indicators, and emerging technology indicators, allowing for dynamic risk scoring and ongoing monitoring.
3. As part of the focus on personal-finance and ensuring a secure ecosystem, industry experts advocate for the integration of advanced technologies, like AI and machine learning, in AML transaction monitoring practices to combat money laundering effectively.

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