The lending landscape in 2024 is expected to see a focus on several key compliance trends. Let’s review some of the most important.
- Increased Focus on Beneficial Ownership: Authorities are intensifying efforts to identify the true owners (beneficial owners) behind companies and accounts. Expect stricter rules and enhanced Customer Due Diligence (CDD) to uncover beneficial ownership structures.
- Evolving Sanctions Landscape: The geopolitical climate can lead to frequent updates to OFAC’s sanctions lists. Financial Institutions, FinTechs as well as Currency Exchanges should have agile compliance programs that adapt to these changes and ensure robust sanctions screening.
- Leveraging Technology for AML Compliance: Regulatory bodies are encouraging the use of advanced technologies like AI and machine learning to improve transaction monitoring and identify suspicious activity more accurately.
- Cybersecurity Risks Integrated into AML: The growing risk of cyberattacks targeting financial institutions necessitates integrating cybersecurity controls into AML compliance programs to prevent cybercrime and money laundering through these channels.
- Public-Private Partnerships (PPP): Collaboration between government agencies and financial institutions is increasing to enhance information sharing and improve overall AML effectiveness.
- Focus on Emerging Payment Methods: As FinTech and cryptocurrency usage grows, regulators will likely issue guidance on mitigating AML risks associated with these new payment methods.
- Customer Risk Assessments (CRA): Expect a continued emphasis on risk-based approaches. Institutions should tailor their AML programs based on the assessed risk profiles of their customers and products.
- Regulatory Scrutiny: Non-compliance with BSA/AML/OFAC regulations can lead to significant penalties. Expect continued enforcement actions from FinCEN and other regulatory bodies.
- Training and Awareness: Institutions must prioritize ongoing training for employees on BSA/AML/OFAC best practices to reinforce a strong culture of compliance.
- Vendor Management: Third-party vendors involved in financial transactions are facing greater scrutiny, requiring enhanced due diligence and risk management practices.
By staying informed of these trends and implementing effective BSA/AML/OFAC compliance programs, financial institutions can mitigate money laundering risks, protect their reputation, and avoid regulatory sanctions.
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