What is an Anti-Money Laundering (AML) compliance framework?

An AML compliance framework is a set of regulations and procedures that financial institutions follow to prevent and detect money laundering or terrorist financing activities.<br/><br/>

AML compliance programs are an ongoing process. The EU released its fifth anti-money laundering Directive (AMLD5) on 19 June 2018, (Directive (EU) 2018/843). EU member states had to implement this Directive by 10 January 2020. Although this deadline has come and gone, most EU countries still haven’t met its requirements due to the complex nature of AMLD5 and the regulatory challenges it presents. <br/><br/>

The EU subsequently introduced a sixth anti-money laundering Directive (AMLD6) in October 2018 (Directive (EU) 2018/1673). EU member states have until 3rd December 2020 to implement this upcoming Directive into national law and regulated entities have a deadline of 3rd June 2021. Brexit aside, it is worth noting that the UK has already decided to opt out of introducing AMLD6 into domestic legislation as the UK Government assesses that UK legislation is already largely compliant with the Directive’s measures, and in many cases, “goes much further”.

Meanwhile, the United States' Bank Secrecy Act (BSA) has been regularly amended by subsequent legislation, including the US Patriot Act.<br/><br/>

All financial institutions require a clear understanding of what their AML compliance program needs to achieve and how it can work for them.