Financial Crime Prevention Acts Globally

The Financial Crime Prevention Act represents a critical legislative measure aimed at combating various forms of financial crime, such as money laundering, fraud, bribery, corruption, tax evasion, embezzlement, and terrorism financing.

To gain a thorough understanding of how these Acts tackle various financial crimes, read our previous blog on the topic “Financial Crime Prevention Act in the US”.

Financial Crime Prevention Acts in the United Kingdom

1. UK Bribery Act - United Kingdom

The UK Bribery Act took effect in 2010 and is one of the farthest-reaching anti-bribery legislation globally, both in the public and private sectors. The most unusual characteristics of the act involve its wide reach from person to business entities engaged in business, in and out of the United Kingdom.

It prohibits the offering, promising of, or giving of a bribe as against the requesting, agreeing to receive, or accepting a bribe in both the public and private sectors. This Act also brings out two main features: the introduction of the offense of failure to prevent bribery. This approach will encourage an organization to adopt strong anti-bribery measures and to align practice toward full compliance.

It is under the UK Bribery Act that the trial and administration of justice are handled by the Serious Fraud Office and the Crown Prosecution Service. They further investigate and prosecute legal misdemeanors in bribery to guard against the provisions of the act, which is judiciously exercised.

2. Proceeds of Crime Act (POCA) - United Kingdom

The Proceeds of Crime Act 2002 was an act to recover from criminal activities and deal with money laundering within the UK; hence, the act provides a legislative arm for depriving criminals of such ill-gotten gains and disrupting financial networks that facilitate illegal activities.

Assets purchased through criminal activities like money laundering can also be forfeited by an order through specific provisions of the POCA. Focusing on the instances of money laundering, it criminalizes activities that convert, disguise, transfer or remove advantages related to criminal activities. The Act, therefore, obliges financial institutions to report some suspicious activities to ensure money laundering and other financial crimes are detected and prevented.

POCA enforcement is managed through the National Crime Agency and other law enforcement agencies. These are carried out jointly with other agencies for the recovery of criminal proceeds and to prevent money laundering to prevent the benefits of criminals derived from illegal activities.

Financial Crime Prevention Acts in Europe

1. European Union's 5th Anti-Money Laundering Directive (5AMLD) - European Union,

The 5th Anti-Money Laundering Directive reinforces the European Union's drive to counter money laundering and financing of terrorism, which entered into force in 2020. It indicates that these risks are dynamic and, therefore, the measures to tackle them have to be updated as a continuous process rather than sequentially.

One of the main aspects of 5AMLD is the requirement that EU member states establish central registers, which will later hold information on the real owners of companies. This development improves transparency and makes it hard to use companies for money laundering purposes. It extends anti-money laundering rules to virtual currencies and prepaid cards commonly used by financiers of financial crimes.

5AMLD works together with the already existing customer due diligence and reporting obligations of financial institutions and businesses, leaving no leniency in fighting financial crimes within the borders of the EU. The rules under the 5AMLD shall be applied cohesively throughout the Union by national supervisory authorities in every country of the EU.

2. General Data Protection Regulation (GDPR) - European Union

The General Data Protection Regulation, enacted in 2018, indirectly espouses the prevention of financial crimes by protecting sensitive information. Its measures are strict to ensure that people's privacy is shielded.

The processing of personal data is further regulated by the GDPR in efforts to reduce unauthorized access and misuse of personal information—a critical factor in which financial crimes such as identity theft and fraud are committed. Stringent measures placed on data protection and privacy by the regulation automatically contribute to the general framework of averting financial crime. Financial Crime Prevention Act in Other Countries

3. Singapore's Corruption, Drug Trafficking, and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) - Singapore

The CDSA defines the proceeds of corruption, drug trafficking, and other serious crimes specifically in Singapore. It provides wide provisions on asset confiscation, including insisting that financial institutions have anti-money laundering obligations.

The CDSA also mandates financial institutions to put AML measures in place and to make reports of suspicious transactions. It also foresees the forfeiture of benefits derived from criminal activities to dismantle financial structures supporting the crimes.

The relevant body will entail the Corrupt Practices Investigation Bureau, among others. Their role will be to investigate any kind of financial crime regarding the course of the provisions as spelled by the act.

4. Hong Kong's Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) - Hong Kong

The Anti-Money Laundering and Counter-Terrorist Financing Ordinance was enacted in 2012 to provide for strong anti-money laundering and counter-terrorist financing measures that every financial institution and certain businesses have to adopt in Hong Kong. This law surely will help this area in detecting and preventing financial crimes.

Under AMLO, obligated entities must develop formal policies that include customers' verification through extensive checks and detailed record-keeping, among other measures, for a clearer understanding of them and spotting suspicious activity that may be related to financial crime.

The enforcement of AMLO is enforced by the Financial Services and the Treasury Bureau, along with other regulatory bodies, to make sure the financial institutions comply with all requirements laid down by the law that will further fortify Hong Kong against financial crime.

5. Australian Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) - Australia

The Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 is the law implemented to prevent and eliminate money laundering and the financing of terrorism within Australia, especially within the financial sector. The law works towards the protection of the integrity of the financial system of Australia.

The AML/CTF Act requires businesses within its jurisdiction to set up programs that prevent money laundering and terrorism financing. Such programs are normally known to constitute proper checks in the identification of customers, reporting of any kind of suspicious activity, and proper keeping of records.

With regards to the AML/CTF Act, the policing unit is the Australian Transaction Reports and Analysis Centre, AUSTRAC, which ensures that banks, insurance companies, and other financial institutions operate within this law and, in a broader perspective, help in tracing and detection of financial crime.

6. Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) - Canada

The Proceeds of Crime [Money Laundering] and Terrorist Financing Act was passed in the year 2000 and established a range of measures to combat money laundering and associated activities financing terrorism in the country. Broadly speaking, the act sets down the AML and anti-terrorism-financing measures for financial institutions, making it mandatory to take measures to prevent financial crimes.

After the PCMLTFA, financial intermediaries should practice AML and counter-terrorism financings. This will be through ways provided by the act, including breaching customer due diligence and reporting suspicious transactions. The act also calls for setting up full compliance professional companies. This will help them identify and manage risks that may arise from a financial crime.

Summing Up

The Financial Crime Prevention Act and its global counterparts are essential legislative measures designed to combat a wide range of financial crimes, including money laundering, fraud, bribery, corruption, and terrorism financing. These laws set forth stringent compliance requirements, enhance transparency, and empower regulatory bodies to enforce measures that protect the integrity of financial systems worldwide.

A sanctions screening software can assist in complying with these laws by detecting restricted or denied parties involved in transactions, ensuring financial institutions adhere to global regulations, and preventing illegal activities.

A crucial aspect of these legislative measures is the emphasis on reporting financial crimes. Timely and accurate reporting not only aids in detecting and preventing illegal activities but also ensures accountability and strengthens the overall effectiveness of financial crime prevention strategies