🔹 Definition
Guidelines on AML/CFT refer to the formal publications issued by regulatory authorities that provide detailed instructions, expectations, and best practices for preventing money laundering (ML) and terrorism financing (TF). These guidelines interpret the relevant laws and regulations in a practical, industry-specific manner, helping regulated entities such as financial institutions, corporate service providers, real estate agents, and virtual asset service providers (VASPs) implement effective AML/CFT controls.
Though often non-binding in law, these guidelines carry significant regulatory weight, and failure to comply may result in penalties, license revocation, or enforcement action.
🔹 Frequently Asked Questions (FAQs)
Q1: Who issues AML/CFT guidelines?
- International bodies: e.g., Financial Action Task Force (FATF)
- National regulators:
- Monetary Authority of Singapore (MAS) – e.g., MAS Notice 626
- Financial Conduct Authority (FCA, UK)
- AUSTRAC – Australia
- HKMA – Hong Kong
- FinCEN – United States
Q2: What do AML/CFT guidelines typically cover?
- Risk-based approach (RBA) to compliance
- Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD)
- Ongoing monitoring of customer transactions
- Suspicious transaction reporting (STR/SAR)
- Sanctions screening and PEP management
- Record-keeping and internal audit procedures
- Training requirements for staff
- Use of technology (e.g., RegTech, KYC automation)
Q3: Are guidelines legally binding?
Technically, many guidelines are not statutes, but they serve as regulatory expectations. Regulators often assess AML/CFT compliance based on adherence to these guidelines. In practice, non-compliance can trigger:
- Regulatory inspections
- Monetary fines
- Business license suspension
- Reputational damage
Q4: How should organizations implement AML/CFT guidelines?
- Integrate recommendations into internal compliance manuals
- Conduct gap analysis against guideline requirements
- Implement KYC workflows aligned with jurisdictional standards
- Use technology for screening, monitoring, and audit trails
- Regularly train employees on updated expectations
- Document and justify any risk-based deviations
