Updating the Anti-Money Laundering Policy

Anti-Money Laundering Policy: Updates to Anti-Money Laundering Regulations Based on the 2024 Legislative Changes

Under the 2024 legislative changes, companies and organizations primarily engaged in financial services or various money-handling activities are required to update their anti-money laundering (AML) policies. The following companies and sectors are affected by the update requirement:

Banks and Financial Institutions: Since they process financial transactions, they must update their AML policies, including reassessing risk management and customer identification procedures.
Payment Service Providers: Companies involved in money transfers, remittances, financial transactions, and related services.
Investment Service Providers: Companies offering investment advisory services, portfolio management, or other financial asset-related services.
Stock Exchanges and Cryptocurrency Service Providers: Companies engaged in cryptocurrency trading, as cryptocurrency transactions can also pose a money laundering risk.
Insurance Companies: Life insurance and other insurance companies, as life insurance policies can potentially be used for money laundering purposes.
Legal and Accounting Service Providers: Lawyers and accountants involved in financial transactions, asset management, or financial activities on behalf of their clients.
Real Estate Service Providers: Real estate agencies and companies engaged in buying and selling properties, as money laundering attempts often occur in the real estate sector.
Non-Financial Businesses Engaging in Financial Transactions: Companies that perform financial transactions in relation to their services, such as legal advisory, auditing, and asset management.
Online Platforms and E-Commerce Providers: Online platforms and e-commerce businesses processing online financial transactions, such as digital marketplaces.

Key Focus of the AML Policy Update

The primary goal of the update is to ensure compliance with new regulations aimed at preventing money laundering and identifying illegal activities. The new regulations often impact risk assessment procedures, customer identification, and monitoring and reporting obligations.

Companies must monitor the 2024 legislative changes and update their AML policies as necessary to comply with applicable regulations.

Key Areas for Companies and Financial Institutions to Implement Changes

1. Risk Assessment Procedures

Development of Risk Assessment Procedures: Establishing processes to assess and evaluate money laundering risks. Companies must conduct detailed risk assessments of customers, transactions, countries, and financial instruments to determine potential money laundering risks.
Continuous Risk Review: AML risk assessment procedures must be regularly updated and reviewed to align with the latest regulations and market trends.
Risk-Based Approach: Companies must implement a risk-based approach, allowing them to evaluate the risk levels of individual customers and transactions based on their profile and activities, ensuring enhanced scrutiny of high-risk transactions.
Enhanced Handling of High-Risk Customers and Transactions: Customers and transactions carrying a high money laundering risk (e.g., politically exposed persons – PEPs, offshore companies) must undergo stricter scrutiny and enhanced monitoring.

2. Customer Identification (CDD – Customer Due Diligence)

Customer Identification Requirement: Companies must collect clear and verified information on their customers, including identity, legal status (e.g., corporate ownership structures), and business activities.
Enhanced Customer Due Diligence (EDD): High-risk customers, such as politically exposed persons (PEPs), offshore companies, or businesses registered in high-risk jurisdictions, require more detailed and thorough customer due diligence.
Customer Profiling and Maintenance: A detailed profile must be created for each customer, including their activities, transaction patterns, and associated risk levels. This profile must be continuously updated in response to changes.
Verification Procedures: Information provided by customers must be verified using reliable sources (e.g., government registers, notarial documents, official records).
Identification of Non-Personal Customers (e.g., Corporations): Companies must ensure full transparency regarding corporate ownership structures and ultimate beneficial owners (BO – Beneficial Owner).

3. Monitoring and Reporting Obligations

Reporting Obligations for Suspicious Transactions: If there is any suspicion of money laundering or terrorist financing, it must be reported immediately to the relevant authorities (e.g., AML Authority, financial regulators).
Maintaining Up-to-Date Customer and Transaction Records: Companies must ensure that all customer and transaction data is up to date and readily accessible to regulatory authorities.
Training and Awareness: Companies are required to provide regular AML training to their employees so they can recognize suspicious activities and know how to handle them.
Regular Internal Audits and Compliance Checks: Internal audits must be conducted to verify compliance with AML regulations. This helps ensure that AML measures are effective and appropriate.
Reporting and Documentation Obligations: All measures taken to prevent money laundering, as well as any suspicious transactions and customer interactions, must be documented in detail. Records and reports must be stored in accordance with legal requirements and be available to the relevant authorities.

Companies and financial service providers are required to update and tighten these areas in accordance with the 2024 legislative changes to ensure effective AML protection and regulatory compliance.

Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)

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