To meet compliance obligations in the complex environment of anti-money laundering (AML), it’s essential financial institutions keep up with the changes in the global landscape.
No matter where you are doing business, the AML compliance process means dealing with the regulators of the financial industry and understanding the laws and regulations that apply at the national and international levels.
To help you stay compliant, we cover the most important AML compliance regulations worldwide, as well as the organizations that enforce those regulations.
If you want to jump directly to the region you are concerned about, click one of the links below to learn about the specific regulations in that area:
If you’re ready to jump in with all the information you need to know, we will begin by looking at the main compliance regulations in different regions. We'll also discuss ways to stay compliant in your financial organization.
AML regulations are a set of guidelines that govern the responsibilities of financial institutions when it comes to anti-money laundering procedures. They set out obligations for FIs to follow for combating financial crime and terrorism financing.
AML regulations are specific to different jurisdictions, but they generally employ similar regulations for FIs to follow.
Compliance with anti-money laundering laws involves screening potential customers' backgrounds and monitoring them on an ongoing basis in order to detect and prevent money laundering.
As a part of the screening process, customers' names are checked on global watchlists, sanction lists, and PEP lists. In some industries, such as the banking industry, Fintech, the stock market, the real estate industry, art and precious metals, cryptocurrency dealers, and gaming platforms, AML screening is a mandatory part of KYC verification.
Besides the fact that AML regulations are required by law, they help keep organizations safe from money laundering efforts. Failing to adhere to anti-money laundering regulations results in fines and penalties, which can be rather hefty. Depending on the extent of the violation, they can even result in criminal charges.
Since AML regulations are implemented and enforced by governments, organizations can be subject to various regulations depending on the jurisdiction they are operating in. Each country imposes its own regulations to follow, and each of these countries is constantly updating its own rules, so it can be quite a daunting task to stay abreast of all applicable regulations.
Regulations are intended to keep pace with the volume and variety of threats facing the industry, as such, it’s critical for organizations to stay on top of current regulations.
There are no universal laws and regulations for anti-money laundering and counter-terrorist financing. Countries and jurisdictions are responsible for enacting and enforcing their own laws, legislation, and regulations.
With no clear international standards, it’s difficult for various nations and jurisdictions to work together to prevent money laundering efforts. Fortunately, several nations have worked together, attempting to provide universal standards for establishing anti-money laundering and counter-terrorist financing policies, laws, and regulations.
The Financial Action Task Force (FATF) is an international money laundering and terrorism financing watchdog that was established to prevent these financial crimes. While they don’t actually enact laws that nations are responsible to follow, they establish best practices to help nations develop their own policies, legislation, and regulations that help countries establish adequate AML and counter-terrorism financing policies and procedures.
The FATF was established in 1989 through a Group of Seven (G-7) Summit in Paris, and is sometimes referred to by its French name: Groupe d'action financière (GAFI).
Its mandate was expanded in 2001 to include terrorist funding. While member nations aren’t technically bound to any legal requirements, FATF members participate in the agreement in an attempt to set international standards for AML regulations.
Ultimately, the FATF helps member nations establish adequate AML and counter-terrorism financing laws, regulations, and policies to ensure they adequately protect against these threats. This also makes it easier for member nations to assess international transactions and perform adequate due diligence.
While the FATF helps set universal standards for addressing AML and counter-terrorism financing, each nation and jurisdiction sets its own laws and rules. They have their own specific regulations and regulatory bodies, which we’ll dig into below.
Different jurisdictions have their own regulations - and regulations. Organizations operating in different regions need to be apprised of the regulations that apply to them and ensure they follow them properly.
Generally, these laws provide consumer protection and outline how regulatory and supervisory activities will be carried out. Different regulatory bodies then regulate specific legal areas.
In this section, we’ll focus specifically on the different financial services regulators and regulations applicable to financial institutions based on the country or region in which FIs are operating.
To help you ensure you’re following all applicable AML regulations, we break them down by region below. If you’re interested in a particular region, jump to it here:
As one of the largest growing Fintech markets, the United States has had to keep pace with regulating the Financial Organizations. New regulations are in place, as well as traditional financial services regulations, which are now applicable.
Main AML Regulators in the United States (US)
In some cases, Financial Organizations are quasi-regulated by the traditional banking system, as they work so closely with each other.
Below, we cover the main regulators responsible for managing the Fintech market in the United States:
Following your knowledge of which regulatory bodies to contact, let's look at some of the most common regulations, acts, or directives that apply to Fintech companies.
Main AML Regulations to Follow in the United States (US)
Below, we cover the top regulations FIs should be aware of in the United States:
- Bank Secrecy Act (BSA): Known also as the Currency and Foreign Transactions Reporting Act, the BSA was passed into law in 1970. This law requires financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laundering crimes in the United States.
- Anti-Money Laundering Act (AMLA): Under this act, the Treasury Department is required to develop policies and regulations that are designed to protect against the laundering of money and the financing of terrorism. It stipulates that all financial organizations are required to create and adhere to AML compliance programs that are risk-based.
- USA PATRIOT Act: One of the most commonly known laws in the world is the Patriot Act, and it had been put into place as a reaction to the terror attacks of September 11th, with the objective of tightening and strengthening national security through an enhanced monitoring of foreign terrorism. The goal of Fintech compliance is to monitor and prevent terrorism financing.
- Electronic Fund Transfer Act (EFTA): Developed in 1978, this act defines what consumers are entitled to and responsible for when funds are transferred electronically, including control of ATM and debit card use, as well as automatic bank withdrawals.
- Electronic Signatures in Global and National Commerce Act (ESIGN): This law set out guidelines on how electronic signatures and records can be used in interstate commerce. It also defined regulations for the use of electronic signatures.
- Red Flag Rule: Developed by the FTC and NCUA, it aims to prevent identity theft in the financial industry, improve credit information access for consumers, and educate consumers about financial matters.
- Truth in Savings Act (TISA): It mandates financial institutions to disclose terms and conditions about savings account interest rates and fees under the Federal Deposit Insurance Corporation Improvement Act of 1991 - ensuring that consumers are informed about all costs.
- Truth in Lending Act (TILA): The law promotes consumer education regarding credit usage, ensuring consumers are well informed about the costs associated with borrowing and using credit.
- Fair Credit Reporting Act (FCRA): Since 1970, this law has been ensuring accuracy, fairness, and privacy in the reporting of consumer information, protecting consumers from unfairly affecting their credit scores.
- Equal Credit Opportunity Act (ECOA): Established in 1974, it prohibits discrimination against potential credit applicants based on race, color, religion, national origin, gender, marital status, or age.
- National Automated Clearing House Association (NACHA): Responsible for managing the ACH Network, which facilitates payments between consumers, businesses, and governments. In the U.S., it plays a crucial role in the electronic transfer of money and data.
- Securities Act of 1933: This law is also known as the Truth in Securities Act or the Federal Securities Act, and is designed to ensure that investors are informed about securities on the market before purchasing them, and to protect consumers against loss from fraud.
- Jumpstart Our Business Startups Act (JOBS): This law, also called the Crowdfund Act, made it easier for companies to issue securities via crowdfunding.
- Gramm-Leach-Bliley Act (GLBA): Gramm-Leach-Bliley Act is also known as the Financial Services Modernization Act of 1999, and it is a repeal of a part of the Glass-Steagall Act of 1933. GLBA paved the way for commercial banks, investment banks, securities firms, and insurance companies to merge.
The threat of money laundering to Canada's financial system and security is significant. There are many aspects to money laundering, including its complexity and confidentiality. Throughout the history of Canada's anti-money laundering regimes, it has been committed to preventing financial crimes.
Main AML Regulators in Canada (CAD)
In the fight against money laundering, several organizations have been established in Canada. These organizations are centered around FINTRAC, which is the federal agency responsible for analyzing financial transactions and reports.
At the federal level, FINTRAC assesses compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and enforces it.
Main AML Regulations to Follow in Canada (CAD)
In terms of anti-money laundering and terrorist financing legislation, Canada has two main statutes that govern this matter:
- Criminal Code: All individuals and businesses are subject to the Criminal Code. The Criminal Code criminalizes knowingly dealing with property or providing or facilitating financial or related services for terrorist activities, terrorist groups, or “listed persons” (i.e., a person or entity listed by the government or another organization).
- Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTA): The PCMLTA applies to “reporting entities”. They include banks, credit unions, life insurance companies, loan companies, securities dealers, foreign exchange dealers, money services businesses, casinos, and real estate brokers.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are the two main regulatory bodies in the United Kingdom for risk and compliance operations. This section covers those two major authorities, as well as several sub-branches, each of which focuses on a specific task.
Main AML Regulators in the United Kingdom (UK)
Below, we cover the main regulators responsible for regulating the financial organizations in the United Kingdom:
These are the main bodies that monitor Fintech regulatory compliance in the United Kingdom, along with some of the most closely related groups.
Main AML Regulations to Follow in the United Kingdom (UK)
Below, we outline the main regulations that apply to risk and compliance professionals in the UK:
- Financial Services and Markets Act 2000 (FSMA): Designed to improve financial industry regulation, this act created the Financial Services Authority (FSA), the predecessor to the PRA and FCA. Instead of going to court, it resolves disagreements for free.
- Proceeds of Crime Act 2002 (POCA): Implements a system for confiscating and recovering proceeds of crime, including the core money laundering legislation.
- Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017): The MLRs were updated in 2017 and established risk-based standards for financial institutions to follow.
- Final Guidance on Cryptoassets: The Guidance is intended to assist firms in determining whether their crypto asset activity is subject to FCA regulation and, in particular, which types of tokens need to be regulated (and how).
With so many member states, it can be difficult for the European Union to manage AML and fraud laws so that they work effectively across national borders. In order to manage this effectively, financial services are regulated by a few centralized organizations.
Listed below are the main financial regulatory bodies in the EU that oversee compliance and risk management:
Main AML Regulators in the European Union (EU)
Below, we cover the main regulators responsible for regulating the financial organizations in the European Union:
Main AML Regulations to Follow in the European Union (EU)
Below, we cover the most important regulations in the EU that apply to AML compliance efforts.
- General Data Protection Regulation (GDPR): The GDPR establishes the rules for data protection, privacy, and how users' personal data is stored, transferred, and used.
- EU Anti-Money Laundering Directives (AMLDs): These directives are periodically updated, and are currently in their sixth iteration (6 AMLD). They include regulations that governments must follow, ensuring the EU follows adequate AML guidelines. As a result of the 5th Directive, cryptocurrency regulation has undergone significant updates, and in the 6th Directive, both regulatory scope and criminal liability have been expanded.
- Revised Payment Services Directive (PSD2): Essentially, PSD2 is the successor to the original Payment Services Directive (PSD) and aims to increase competition, improve consumer protections, and expand the availability of payment services to individuals and businesses alike.
A diverse community of FinTech providers operates in Australia, which has one of the largest economies in Asia Pacific. As part of its commitment to protecting its diverse financial system, Australia enacted a number of anti-money laundering and counter-terrorism laws, which include strict penalties for firms that don't comply.
Main AML Regulators in Australia
As a part of its anti-money laundering control program, Australia is setting up regulators to detect and stop money laundering activities.
AML/CFT laws in Australia are continually evolving, requiring firms to understand how their risk exposure might change as a result.
Main AML Regulations to Follow in Australia
Laws and regulations in Australia outline a firm's key obligations, including what is required in its AML/CTF program.
- Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act): Under this legislation, private sector organizations and individuals must comply with certain compliance obligations, including reporting suspicious activities to AUSTRAC.
- Financial Transaction Reports Act (FTR Act): This legislation also pertains to AUSTRAC. Despite the AML/CTF Act replacing the FTR Act in most areas, some businesses, such as motor vehicle dealers who act as insurers and insurance intermediaries, still fall under the FTR Act.
- The AML/CTF (Prescribed Foreign Countries) Regulations 2018: In accordance with the Regulations, Iran and the Democratic People's Republic of Korea (DPRK) continue to be declared to be prescribed foreign countries for the purposes of the Act. Also included in the Regulations is a repeal of the Anti-Money Laundering and Counter-Terrorism Financing (Prescribed Foreign Countries) Regulation 2016, which is due to come to an end on 1 April 2018.
Since 2000, Mexico has been an active member of the Financial Action Task Force, which is responsible for establishing international standards to prevent money laundering and the financing of terrorism. The Mexican State has taken a variety of measures to protect the national economy and financial system since then.
Main AML Regulators in Mexico
AML programs are being implemented by the Government of Mexico (GOM) as part of its efforts to combat money laundering by establishing regulators.
Main AML Regulations to Follow in Mexico
On Oct. 17, 2012, Mexico enacted its anti-money laundering law (which came into force on July 17, 2013) in response to directives from the Financial Action Task Force (FATF) and European Union. Compliance and risk professionals should be familiar with and adhere to the following Mexico regulations:
- Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (the Anti-Money Laundering Law): This federal law is designed to ensure that financial institutions are able to help detect and prevent the laundering of money within the jurisdiction of Mexico.
In accordance with FATF standards, Brazil has worked relentlessly to minimize money laundering. Anti-Money Laundering (AML) regulations have been strengthened by the Brazilian government in order to achieve these goals.
Main AML Regulators in Brazil
A significant portion of Brazilian money laundering seems to be associated with domestic crime, such as the smuggling of contraband goods, corruption, drug trafficking, and organized crime, which generates funds for laundering through banks, real estate, or financial asset markets.
In response to this, the Brazilian Government (GOB) has developed a comprehensive regulatory framework for Anti-Money Laundering (AML).
Main AML Regulations to Follow in Brazil
The Brazilian anti-money laundering regulations are continuously being updated, so it's important for companies operating there to stay updated. Because of this, we’ve prepared a guide to help you comply with Brazil's anti-money laundering laws.
- Brazilian Central Bank Circular 3,798/20: The Circular stresses the importance of financial institutions implementing policies to prevent the laundering of money and the financing of terrorism. Many guidelines have been developed to establish rules for identifying and verifying customers and establishing a risk-based approach whereby financial institutions must conduct checks according to the specific risks associated with their customers, transactions, operations, products, and services. A proper internal risk assessment of customers and operations should therefore be conducted by companies, according to the Circular.
- Law 9,613/98: In 1998, law 9,613/98 was enacted. It outlined regulations regarding AML that must be followed by entities, as well as steps they should take to comply. As part of the law, there is also a description of how the identification, reporting, and record-keeping processes are to be administered. A Council for Financial Activities Control (COAF) was also established to monitor regulated entities' activities.
- Law 12,683/12: In response to earlier recommendations from the FATF, Law 12,683/12 was enacted in 2012. Money laundering activities were tightened by Law 12,683/12, amending Law 9,613/98. A list of specific criminal activities that fall under the category of money laundering was also revoked, broadening the scope of money laundering activities.
The regulatory environment in South America is transforming into one that is more controlled and tightened. The government intends to enact a law requiring non-financial sectors to comply with anti-money laundering laws as well, broadening the scope of AML protections.
Emerging economies are prevalent in many Latin American countries. As a result, there aren't as many regulations and government oversights as in other countries. To better combat financial crimes, larger and more developed economies such as Brazil have implemented successful laws and regulations. Nevertheless, countries with smaller, less developed economies, such as Bolivia, have inadequate laws and regulations for dealing with financial crimes.
Main AML Regulators in South America
To combat money laundering, South American countries are establishing regulators as part of AML programs.
Main AML Regulations to Follow in South America
Although every country’s context is unique, there are shared challenges throughout the region. While many countries in the region have improved their AML laws in recent years, implementation remains patchy. Regulatory authorities are often under-resourced, and political will varies between countries.
- The Money Laundering Prevention Act of 1996 (Antigua and Barbuda): This law, passed in July 1996, called on FIs to adopt adequate KYC procedures. It forces FIs to monitor, report, and escalate suspicious activity and transactions. The MLPA then escalates cases to the FIU for investigation.
- Law 26.683 (Argentina): Argentina passed Law 26.683 in June 2011 due to its FATF evaluation in 2010. Among the goals of this law was to provide AML with a separate criminal status in the Argentine Criminal Code. Additionally, law 26.683 made UIF an independent institution and confirmed its supervisory, inspection, and sanctioning powers. Additionally, the law extended the reporting period for suspicious transactions from 30 to 150 days and expanded the list of businesses that must comply with AML legislation in Argentina.
- Proceeds of Crime Act (Bahamas): It is under this act that it becomes illegal in the Bahamas to launder, search, seize, and confiscate money obtained from crime. Business and individual money laundering transactions that are suspicious must be reported to the authorities. Additionally, money obtained from criminal activity can be confiscated.
- Law n. 1121 of 2006, Art. 27 (Colombia): A company must carry out a full identification of all natural and legal entities who enter into a contract for a business relationship, as well as the origin of the funds that they use to conduct a business.
- Law No. 19,913 (Chile): This is Chile's primary legislation that addresses money laundering (the "AML Act"). It is an offense under the AML Act to conceal or disguise, in any fashion, the illegal origin of certain goods, knowing that they are related directly or indirectly to certain criminal offenses listed in a closed list of criminal provisions.
The Nigerian government is working towards improving its anti-money laundering framework and laws as part of its commitment to implement the Financial Action Task Force (FATF) recommendations.
Main AML Regulators in Nigeria
Nigeria is establishing regulators to fight money laundering by implementing AML programs.
Main AML Regulations to Follow in Nigeria
In Nigeria, there have been efforts to increase the scope of the existing Anti-Money Laundering/Combating Terrorism Financing (AML/CFT) regulations by including non-financial institutions within the scope of the regulations. The government of Nigeria recognizes that lawyers and accountants have significant financial activities, especially those who move money on behalf of their clients, and are making efforts to ensure financial protections are in place.
- The Money Laundering (Prevention and Prohibition) Act, 2022: It replaced the Money Laundering (Prohibition and Prevention) Act, No. 11 of 2011, which prohibits money laundering. This law contains elaborate provisions regarding the legal and institutional framework for preventing and prohibiting money laundering in Nigeria.
- The Terrorism (Prevention) (Amendment) Act, 2013 (TPAA): This act was enacted to amend the TPA, clarify some of its provisions, and provide for the extraterritorial application of the Act as well as strengthen the terrorist financing offenses.
African countries are making commitments on a political level to support AML initiatives in their countries. Several countries in Africa are working together with the Financial Action Task Force (FATF) and the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) in order to strengthen the effectiveness of the anti-money laundering regime they have in place.
Main AML Regulators in Africa
Below, we cover the top regulatory bodies responsible for supervising and regulating the financial sector.
Money laundering is one of the largest challenges African states face regularly. It is for this reason that it is absolutely appropriate to explore AML issues and strategies with regard to all African states, as they are all relevant to one another.
Main AML Regulations to Follow in Africa
There are shared challenges across the region, despite the differences in country contexts. Most countries in the region have still not modernized their anti-money laundering laws in recent years, while others have implemented them in fragmented ways.
- FIC Amendment Act (No. 11 of 2008) (South Africa): The act was issued in August 2008 and took effect in 2010, and clarified the roles and responsibilities of supervisory bodies. By imposing certain duties on institutions and other persons that may be involved in money laundering or financing terrorist activities, the act combats money laundering and terrorist financing.
- Proceeds of Crime and Ant-Money Laundering Act (POCAMLA) (Kenya): An amendment to the existing act was made in 2009, and the act was renamed the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA). There is no other piece of AML legislation in Kenya that is as comprehensive as the AML Act.
- Anti-Money Laundering Act 2020 (Act 1044) (Ghana): This is an act that makes Ghana adhere to international standards and addresses the deficiencies of the old AML Act 2008 (Act 749) with regard to tackling money laundering. Money laundering activities are expanded by Act 1044, accountable institutions are overseen more strictly, and punishment for such activities is harsh.
- Proceeds And Instruments Of Crime (Act 8 of 2018) (Botswana): A law enforcing the deprivation of benefits and rewards for persons convicted of certain crimes. In addition, the act addresses issues such as money laundering, racketeering, and other related and incidental matters, such as the deprivation of property suspected of serving as proceeds or instruments of crime.
Asian countries have been cracking down on money laundering in recent years.
During 2020, authorities in the Asia-Pacific region imposed fines totaling $5.1 billion for violations of AML laws and related misconduct, an increase of more than seven times the fines issued in 2019. For the first time since 2015, the United States has been ranked second in terms of AML enforcement penalties.
Main AML Regulators in Asia
There are a number of different AML regulators across Asian countries, helping implement and enforce anti-money laundering policies.
Main AML Regulations to Follow in Asia
There have been several Asian jurisdictions that have been criticized by the FATF for failing to investigate and take action against those believed to have violated anti-money laundering laws. Asia's governments have stepped up enforcement efforts by strengthening AML regulators and law enforcement agencies.
Below are some of the main regulations in Asian countries:
- Act on Prohibition Against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction (PFOPIA) (South Korea): Under PFOPIA, terrorist financing is criminalized and financial institutions are prohibited from conducting financial transactions with individuals and entities whose permission has not been obtained from the Financial Services Commission.
- Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) (Singapore): This act punishes people who launder bribe money and confiscates benefits that have been obtained through corruption.
- Anti-Money Laundering Act (AMLA) of 2001 (Philippines): This law criminalizes unlawful practices such as graft and corruption, fraud, robbery and extortion, and swindling.
- Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO) (Hong Kong): Specifically, the AMLO mandates the requirements for customer due diligence (CDD) and record-keeping for financial institutions and certain non-financial businesses and professions, including Trust and Company Service Providers (TCSPs).
While there are no universal AML regulations, each jurisdiction has regulations that financial institutions need to follow. It’s important that FIs are aware of the regulations that need to be followed to ensure AML compliance.
Despite no universal rules, there are a number of general guidelines that help organizations stay compliant regardless of where they’re operating. It’s critical to establish an AML compliance program, perform KYC procedures, keep accurate records, hire a competent compliance officer, and adequately train employees.
For more details on anti-money laundering and how to set up an effective system for your organization, see our detailed AML compliance guide.