A guide to Anti Money Laundering and Counter-Terrorist Financing Rules

If you are in the process of setting up a business, you might be wondering what all the fuss is about money laundering and counter-terrorist financing is. Financial crime is increasing at an exponential rate and as such, regulators and governments are constantly seeking ways to combat it. Every business that works with money and customers is obliged to do their bit. This involves following both country and industry-specific guidelines while implementing applicable AML/CTF controls. Failure to comply can result in significant problems such as fines, criminal charges, and reputational harm.

So what do business owners need to know?

bullet What are Anti-Money Laundering and Counter-Terrorist Financing controls?

Anti-Money Laundering and Counter-Terrorist Financing control (AML/CTF) refers to a set of standards, rules, and regulations for combating financial crime. Money laundering and terrorist financing are criminal offenses where large sums of money are used for illicit purposes

AML/ CTF measures are there to mitigate the impact of these crimes and to prevent the exploitation of businesses and individuals. They also aim to increase stability in financial markets and to keep money legitimate.

bullet Which industries have mandatory AML and CTF requirements?

Most businesses are required to be alert to the threats posed by money launderers and terrorism financers. Some industries are legally required to put measures in place to prevent such activity. These include those who deal with large sums of money, many transactions, customers from high-risk jurisdictions, and sectors that can be considered ‘high-risk’.

Anti Money Laundering

Examples of sectors where AML/CTF is required include:

  • Trading and investments
  • Online gambling and betting
  • Property sales and purchasing
  • Cryptocurrency trading, buying and transacting
  • Banking and saving
  • Payment service providers
  • Legal, accounting, and corporate services

Other kinds of business can be included in anti-money laundering legislation. This varies on a jurisdiction-by-jurisdiction basis. If in doubt, consult with your corporate service provider to be sure you’re inline with obligations.   

bullet Anti Money Laundering and CTF in different jurisdictions

Anti-money laundering legislation varies depending on your sector and where you’re based.

European Union

The European Union, comprising 27 Member States has in place a robust frameworkto prevent money laundering and terrorist financing. Called the 5AML, this set of laws outlines all the processes businesses must follow to prevent AML and CTF. It’s updated periodically and then must be transposed into national law.

The EU provides standards and guidelines on KYC, transactions, onboarding, monitoring, nationalities, sanctions and restrictions, personal data, financial information, and more. The rules are strict and the scope is wide- compliance is not optional.

In 2018, the EU issued $903 million in fines for non-compliance. Regulators at a bloc-level and national level come down hard on violations to close loopholes and stop dirty money from entering the EU market. 

United States

In the United States, the Financial Crimes Enforcement Network (FinCEN) is responsible for creating, supervising, and updating the rules. Various laws including the Patriot Act, the Espionage Act, several Money Laundering Acts, and two anti-terrorism laws create the AML framework.

Businesses must apply the internal AML policies that match the risk profile of their sector and clients. This includes due diligence, knowing your customer, PEP screening, adverse media searches, transaction screening, and sanctions screening. They must also conduct reporting, record keeping, regular training, and have a compliance officer.

The consequences of non-compliance are severe. Fines start at $10,000 per day, per failure, to $100,000 per day for failures in DD. Additional civil ramifications also apply and in some cases, criminal charges.


APAC doesn’t have any region-wide rules or regulations. ML is illegal in most countries, but they tend to focus on drug trafficking rather than other financial crimes. To date, they do not provide robust legislation to mitigate all the risks. 

Penalties are high and violations can have global implications in terms of criminal, civil, and reputational liability.

Latin America

Money laundering has historically been a big issue in the LATAM region. That said, significant efforts are underway to improve things. The Financial Action Task Force of Latin America (GAFILAT) works to create stronger rules and safeguards and to help countries implement them. Rules vary between jurisdictions but fines and criminal charges are happening more often.

bullet How can I be money laundering and CTF compliant?

Compliance is really important but it’s difficult to achieve. First and foremost, you need to be aware of what obligations apply to you and what risk your clients and sector pose. Based on that, you will be required to create comprehensive policies for various aspects of your operations. 

Your staff needs to be trained and be aware of their obligations. Some jurisdictions require you to appoint a money laundering and compliance officer. Their job is to monitor compliance and deal with any issues that may arise.

How you go about being compliant hinges on a variety of factors. Working with a corporate service provider like Fast Offshore is the most cost and time-efficient way to implement AML/CTF measures in your company or startup. We can assist you in figuring out what applies to you, drafting policies, and ensuring ongoing compliance. With large fines and significant reputational damage at stake, compliance is not something you want to get wrong, or avoid.

bullet Fast Offshore

For 23 years (and counting) Fast Offshore has been helping entrepreneurs just like you. Let us guide you through the AML/CTF compliance process and help you stay on the right side of the law. To get inline with your obligations, contact us for an informal chat and learn about all the ways we can work with you towards your business goals.

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