As an eventful year in the anti-money laundering (AML) industry approaches an end, a few trends have the potential to shape the coming years. As major global events and new regulations continue to pose new challenges for compliance teams, there will be an increased need for both public data access and adept AML professionals to conduct investigations.
Below, we highlight the trends that have impacted–and will likely continue to impact–the anti-money laundering industry.
Tougher regulations for real estate
Real estate continues to function as an attractive money laundering vehicle for illicit actors, due to the high value of properties, the ability to transact in cash, and subjective pricing. According to a report by Global Financial Integrity, at least $2.3 billion was laundered through U.S. real estate between 2015 and 2020, 82 percent of which involved the use of legal entities to mask ownership.
Until recently, there were few anti-money laundering (AML) regulations targeted at the real estate industry. However, in recent years, much of the world has taken aim at strengthening AML enforcement and regulations. In the U.S. alone, regulators have taken several steps to curb this flow of dirty money, including:
- FinCEN’s Advance Notice of Proposed Rulemaking, issued in 2021 to address money laundering vulnerabilities in the American real estate market
- The KLEPTO Act, introduced in the Senate in August 2022 and aimed at helping law enforcement track down the luxury assets of Russian oligarchs
- FinCEN’s renewal and expansion of its Geographic Targeting Orders this year
- The Treasury Department’s National Strategy for Combating Terrorist and Other Illicit Financing, which repeatedly includes real estate as a key vulnerability
For those working in the real estate sector, these new regulations have the potential to transform how AML compliance is handled.
Sanctions that galvanize AML efforts
With the start of the war in Ukraine, and the countless sanctions that followed, AML has skyrocketed to the top of the priorities list for business leaders. Financial crime is now being widely discussed in boardrooms as organizations face the growing need to comply with regulations and avoid penalties. Recently, MarketsandMarkets estimated that the global AML market is expected to grow nearly 16% to $5.8 billion by 2027.
The reality is, the flood of sanctions, export controls, and prohibitions against Russian entities have posed major challenges for global banks and businesses. You can’t cut ties with sanctioned Russian or other high risk entities if you don’t know those links are there. Banks and businesses have already needed to audit their clients and vendors against these lists. But as the war in Ukraine continues and sanctions lists change, this will increasingly be a challenge.
Carefully consulting the lists upon lists of sanctions regulations is just the first step to mitigating the associated legal, commercial, and reputational risks of not complying. More compliance professionals, updated technology, and up-to-date data are crucial investments for business leaders across the board to consider.
Greater investments in technology
Financial institutions and government agencies are increasingly investing in technology to scale their AML efforts, while enhancing efficiency and effectiveness. Technology solutions, such as Sayari Graph, that can aggregate and synthesize public data, weed out false positives, and allow investigators to see patterns and collaborate will play an important role in financial institutions’ AML efforts.
At Sayari, we’ve found that our platform reduced analysts’ need for manual data gathering and entity resolution by 76 percent. Sayari Graph uses global public records and graph technology to map complex, cross-border corporate networks and instantly provide a clear picture of illicit financial actors. The data within Sayari Graph is updated regularly and automatically flags potential risks to help compliance professionals make quick decisions, with up-to-date information.
To learn more about future-proofing compliance frameworks and growing investments in AML investigations, watch on-demand our full panel discussion, “Emerging Strategies for Conducting FIU Investigations in a Rapid-Fire Russian Sanctions Regime.”