Compliance Digest—July 2024

Every month, Sumsub’s compliance team prepares a digest with all the latest updates in the world of AML and beyond. We cover multiple industries from AI to crypto.

If you want to get the latest news every month in one place, subscribe to our newsletter.

AML?

Global???

The FATF updated the list of jurisdictions under increased monitoring?

What happened? At the end of June, the Financial Action Task Force (FATF) updated the list of countries that need to work on their AML/CFT measures. The following countries had their progress reviewed by the FATF since February 2024: Bulgaria, Burkina Faso, Cameroon, Croatia, Democratic Republic of Congo, Haiti, Jamaica, Mali, Mozambique, Nigeria, Philippines, Senegal, South Africa, South Sudan, Tanzania, Türkiye, and Vietnam.

However, the FATF has now added Monaco and Venezuela to the “grey list” for not making enough progress to stem illicit financial flows.

Who’s affected? Jurisdictions under increased monitoring

Read more: Jurisdictions under Increased Monitoring – June 2024

Singapore ???? introduces new AML and Other Matters Bill?

What happened?? The ‘Anti-Money Laundering and Other Matters’ Bill was read on July 2 in Singapore. Among other changes, the bill proposes incorporating additional predicate offenses, such as foreign environmental crimes (including illegal mining, waste trafficking, and logging), into its scope. Additionally, the customer due diligence requirements for casino operators are enhanced through the amendments to the Casino Control Act.

Who’s affected? AML-reporting entities in Singapore

Deadline: The next reading dates are not yet clarified

Read more: Anti-Money Laundering and Other Matters Bill , press release

Anti-Money Laundering and Other Matters Bill, Bill #20/2024

iGaming?

The UAE ???? announced awarding a license to operate the country’s first authorized lottery operation?

What happened? The General Commercial Gaming Regulatory Authority (GCGRA ), the federal entity overseeing commercial gaming activities in the United Arab Emirates, announced the award of a license to operate the country’s first authorized lottery operation. The announcement marks a new milestone in the GCGRA’s endeavor to establish a well-regulated commercial gaming sector in the UAE, built on the principles of transparency, accountability, consumer protection, and Responsible Gaming practices.

Read more: First authorized lottery operation in UAE

Cura?ao GCB reopens the portal for license applications

What happened? The Cura?ao Gaming Control Board (GCB) announced the reopening of the GCB Portal on July 15, 2024 at 00:01 Cura?ao time. The portal will once again be accepting applications for B2C, B2B2C, and B2B operators, processing them under the current NOOGH legislation.

Who’s affected? ?B2C, B2B2C and B2B gambling operators in Cura?ao

Read more: REOPENING OF THE GCB ONLINE PORTAL FOR APPLICATIONS

Crypto?

Global???

The FATF published a Targeted Update on the implementation of the FATF Standards by VAs and VASPs

What happened? On July 9, 2024, the FATF published its 5th annual Targeted Update on the implementation of the FATF Standards on VAs and VASPs. According to the FATF’s April 2024 assessment, 97 out of 130 jurisdictions are partially or not compliant, 32 are largely compliant, and one is fully compliant with FATF requirements.

The proportion of partially or non-compliant jurisdictions is the same. Some jurisdictions believe it is easier to prohibit VAs and VASPs than to create and enforce supervisory regimes. However, the FATF noted that successful prohibition is still challenging, citing the experience of some jurisdictions. The FATF reported that 82 out of 94 jurisdictions require VASPs to be licensed or registered, with 69 having done so in practice—showing improvement since 2023. However, identifying and licensing offshore VASPs remains challenging.

Read more: Virtual Assets: Targeted Update on Implementation of the FATF Standards on VAs and VASPs

EU ????

The ESAs published a consultation on Guidelines under MiCA

What happened? The three European Supervisory Authorities European Banking Authority (EBA) , European Insurance and Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA) ) published a consultation paper on Guidelines under Markets in Crypto-assets Regulation (MiCA), establishing templates for explanations and legal opinions regarding the classification of crypto-assets along with a standardized test to foster a common approach to classification.

Who’s affected? Crypto-Asset Service Providers

Deadline: The ESAs will hold a virtual public hearing on the consultation paper on Monday, September 23, 2024 from 10:00 to 12:00 CEST and invites interested stakeholders to register using this link by September 19, 2024 at 16:00 CEST. The deadline for the submission of comments is October 12, 2024.?

Read more: Consultation on Guidelines under MiCA

Suggested read: Crypto Regulations in the European Union—Markets in Crypto-Assets (MiCA)

The Swiss ????Financial Market Supervisory Authority (FINMA) publishes guidance on stablecoins

What happened? Eidgen?ssische Finanzmarktaufsicht FINMA published guidance clarifying the legal classification of stablecoins, AML obligations, and their treatment under banking law for Initial Coin Offerings (ICOs). This guidance explains how the AML and banking law applies to stablecoins under existing regulations.

Who’s affected? Projects seeking to issue stablecoins in Switzerland?

Read more: FINMA Guidance 06/2024

Hong Kong ????

Conclusions of consultations on regulatory regime for stablecoin issuers in Hong Kong released

What happened? The conclusions of a consultation on a proposal to implement regulatory regimes for stablecoin issuers in Hong Kong have been released. The consultation conclusion provides the HKMA’s comments on the consultation responses. In brief, taking into account the wide adoption of FATF-proposed regulations worldwide, the proposed regulatory regime intends to focus on stablecoins as well as representations of value that rest on ledgers operated in a decentralized manner.?

Who’s affected? Stablecoin issuers

Read more: Consultation conclusions for legislative proposal to implement regulatory regime for stablecoin issuers in Hong Kong released

AI?

EU?????

The EU AI Act became law

What’s happened? The European Union’s Artificial Intelligence Act, Regulation (EU) 2024/1689 (“EU AI Act”), was published in the EU’s Official Journal in July, making it law. The Act classifies AI systems and models into different categories of risk, assigning different compliance obligations for different categories. The heaviest obligations fall upon companies providing AI systems classified as “high risk”.

Who’s affected? General Purpose AI (GPAI) model providers.?

Deadline: Obligations under AI Act are enforceable:?

• 6 months for “prohibited systems” rules to be applicable
• 12 months for “general purpose AI model” rules to be applicable
• 24 months for “high risk systems”? rules to be applicable

Read more: Regulation (EU) 2024/1689 (“EU AI Act”)