Steve Marshall is Director of Advisory Services at FinScan.
What were the key theme(s) for your business in 2024?
2024 was marked by increasing geo-political tensions, regulatory developments, and technological advances. Geo-political turmoil often translates to new and additional sanctions regimes. This last year, we saw the
U.S. Departments of State and Treasury announce a new package of measures to disrupt Russia, new sanctions introduced against Iran following drone attacks on Israel and the reinstatement of oil sanctions against Venezuela. Keeping pace with the changing sanctions landscape is imperative, but it can also be challenging, as evidenced by the high-profile fines of banks in 2024 for not having sufficiently robust AML compliance and sanctions screening systems.
In the regulatory realm, there was a significant focus on ultimate beneficial ownership reporting. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) opened its beneficial ownership registry under the U.S. Corporate Treasury Act in January, while the EU updated its best practices for effectively implementing restrictive measures which now more closely aligns with the Office of Foreign Assets Control (OFAC) 50 Percent rule in defining ownership. Beneficial ownership reporting is also a key focus of the EU’s updated Sixth Money Anti-Laundering Directive (6AMLD), announced as part of the EU’s AML package of reforms in May 2024.
In the technology arena, the creation of AI frameworks from the G7 and various governments indicates a more structured approach to how AI can be deployed for compliance purposes, including AML and KYC processes. The EU’s Artificial Intelligence Act, published in July 2024, is a key example. Data quality has been consistently highlighted as an essential component of a robust AML compliance programme as technology capabilities advance. The EU’s AML Package included several data collection and management requirements. Additionally, The Comptroller of the Currency in the US and the Switzerland-based Wolfsberg Group cited data quality in releases throughout the year.
What surprised you in 2024?
Stripe’s landmark acquisition of stablecoin platform Bridge for $1.1bn in October made the industry sit up, signalling the growing adoption of blockchain. The acquisition will facilitate faster, safer, and cheaper domestic and cross-border payments. Stablecoins are pegged to fiat currencies, reducing volatility and minimising the need for traditional banking intermediaries. The move could also see greater adoption for stablecoins and blockchain technology, as Stripe is a major merchant acquirer.
As digital currencies gain traction, regulators will implement stricter AML and KYC requirements for entities providing service and access to digital assets and cryptocurrencies. This includes enhanced scrutiny of digital asset exchanges and applying traditional compliance measures to the crypto space.
What are your expectations for 2025?
In 2025, we expect to see an increased focus on compliance and implementation of new regulations, such as those introduced by the EU’s AML package. The new EU Anti-Money Laundering Authority (AMLA) will also start work in mid-year.
There will be increased international cooperation between countries to harmonise AML regulations, close regulatory gaps, and enhance information-sharing agreements. G7’s first-ever joint guidance on preventing evasion of export controls and sanctions imposed on Russia issued in September 2024 exemplifies this approach.
Best practices will continue to evolve in line with technological advances. There is an ongoing shift towards more dynamic and ongoing customer due diligence (CDD) processes, which aim to identify and mitigate risks as they arise rather than rely solely on periodic reviews. Compliance programmes will increasingly incorporate ESG considerations, assessing clients’ environmental, social and governance impact as part of the process, reflecting a broader trend towards responsible banking and investment.
