KYC INSIDER – September 2024
On June 19, 2024, the first European Anti-Money Laundering Regulation (AMLR), its accompanying Directive – AML Directive 6 (AMLD 6), and the Regulation establishing the AML Authority (AMLA), were published in the Official Journal of the European Union.
As Part of the Union’s goal to harmonize and strengthen Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), the EU proposed its AML Package in 2021. As a reminder, these new laws include:
To enhance the EU’s response to money laundering and countering the financing of terrorism, a package consisting of three focus measures was decided upon:
NIS2 (The Network and Information Security Directive) is a legislative act with new requirements for financial entities and other stakeholders required to reach higher levels of cybersecurity and resilience across the EU.
Affected stakeholders include:
EU member states must adopt and publish the measures necessary to comply with the NIS2 Directive by October 2024. For example, it was not until July 2024 that the German government was able to pass the “Act on the Implementation of EU NIS2 and to Strengthen Cybersecurity”. In France, the ANSSI organized a series of consultations related to the implementation of NIS2. A draft law was submitted to the legislative authorities in May 2024, accompanied by about twenty implementing decrees. The final version of the security requirements should be specified in one of these decrees.
In April 2024, the German ministries of Finance and the Interior (BMF/BMI) published a draft to change remote identification procedures in Germany from the BaFin Video Ident Circular to a new regulation. The draft contained innovative ideas introducing semi-automated and fully-automated means for KYC applications in the German GwG/AML sector.
Following the paper’s publication, industry stakeholders had the chance to submit feedback during a call for public contributions. These contributions have since been published and are under evaluation. One of their main concerns? The stricter measures that were introduced would limit a significant number of admissible ID documents for remote KYC processes. Currently, there is no concrete timeline for further legislative procedures or next steps.
HM Treasury published a consultation on improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the ‘MLRs’), which place requirements onto a range of businesses to identify and prevent money laundering and
terrorist financing. This consultation ran from 11 March 2024 to 9 June 2024. The industry is now eagerly awaiting the results of the consultation.
From October 7, UK payment service providers will have to compensate victims of Authorized Push Payment (APP) fraud under new rules from the government’s payments regulator up to a limit of £415,000. The new rules, first published by the Payment Services Regulator (PSR) on June 7, 2023, will require all British banks, fintechs, and payment companies to refund all in-scope customers who fall victim to APP fraud, with limited exceptions.
Essentially, the new regulations will have two major outcomes for the UK finance and payments sector:
The new requirements have seen major pushback from UK payment providers and associations, criticizing the timeline of these requirements and the content of the regulation. While the limit of the reimbursement has recently come under review, the deadline for the introduction stands.
The EU shared updates on the implementation of the European Digital Identity Wallet (EUDI W) and its associated standards, which is expected to take effect by May 2025. The implementing acts will define the reference standards and procedures for critical components of eID and the EUDI W. This first set includes:
Verification of QEAAs:
Cross-border identity matching:
List of certified wallets:
Security breaches:
Registration of relying parties:
The specific technical requirements and standards for these components should further ensure interoperability and security requirements for the rollout of the Digital Identity Wallets. Further acts will also specify privacy-preserving techniques and standards for user onboarding, including remote identity verification procedures that must meet high assurance levels of security. These updates support future standardized digital identity interactions and their management in and across the EU.
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IDnow is a leading identity verification platform provider in Europe with a vision to make the connected world a safer place. The IDnow platform provides a broad portfolio of identity verification solutions, ranging from automated to human-assisted from purely online to point-of-sale, each of them optimized for user conversion rates and security.
In order to make the complex world of regulation more accessible, IDnow presents KYC Insider, a free information service on regulatory changes related to Know Your Customer and Digital Identities in Europe. The lead author is Rayissa Armata, Director Global Regulatory & Government Affairs at IDnow, and a long-standing expert in the field of regulatory affairs.
Rayissa Manning Armata, a native of the San Francisco Bay Area, has more than 15 years experience driving business and regulatory initiatives in a global context. She has represented companies up to Fortune 125 as well as the United Nations. She helped companies drive significant revenue growth – in diverse areas such as fintech, telecommunications, defense, airlines and real estate.
In her role as Director Global Regulatory & Government Affairs with identity verification provider IDnow, Rayissa is in close touch with regulators throughout Europe. On KYC Insider she shares this first-hand knowledge with an exclusive network of professionals, who need to stay on top of things in the complex world of regulatory.
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