š¹ Definition
Cross-Border refers to any activity, transaction, or movement that involves two or more different jurisdictions or countries. In the context of compliance, finance, and anti-money laundering (AML), the term typically describes the international transfer of funds, assets, data, or individuals across national boundaries.
Cross-border activities carry increased regulatory, legal, and operational risks, especially in financial crime prevention, due to varying legal systems, enforcement capabilities, and levels of transparency across jurisdictions.
š¹ Frequently Asked Questions (FAQs)
Q1: What are common examples of cross-border activities?
- International wire transfers between banks in different countries
- Movement of physical currency or valuables across borders
- Cross-border e-commerce or investment flows
- Offshore company formations and trust structures
- Cross-border exchange of customer data or financial reporting (e.g., CRS)
Q2: Why is ācross-borderā important in AML compliance?
Because it increases exposure to:
- Jurisdictions with weak AML/CFT controls
- Complex ownership structures that obscure beneficial ownership
- Trade-based money laundering (TBML) schemes
- Cross-border regulatory mismatches and challenges in information sharing
Q3: How do regulators mitigate cross-border risks?
- Through international standards like FATF Recommendations
- Agreements such as Common Reporting Standard (CRS) or FATCA
- Enhanced due diligence (EDD) for cross-border clients or transactions
- Requiring reporting of cross-border wire transfers above certain thresholds (e.g., USD 1,000)
Q4: What are ācross-border restrictionsā in compliance?
These are controls that limit or regulate certain activities across jurisdictions, such as:
- Restrictions on data sharing under privacy laws (e.g., GDPR)
- Sanctions and embargoes blocking payments to specific countries
- Licensing requirements for foreign service providers (e.g., CASPs operating in the EU)
