2024 AML highlights and the priorities for 2025

As we approach the end of 2024, it is clear that anti-money laundering (AML) regulations have undergone significant changes globally.

The United States, United Kingdom, European Union, and Financial Action Task Force (FATF) have all made substantial moves to strengthen their AML frameworks. In addition, we are at the end of the 2024 electoral cycle around the world, with many selecting their governments.

Let’s examine the key developments and look ahead to potential challenges in 2025 AML regulations.

United States: Beneficial ownership takes center stage

The U.S. made a historic leap forward in AML efforts with the operationalization of the Beneficial Ownership Information E-Filing System on January 1, 2024. This long-awaited reform aims to enhance corporate transparency and prevent the misuse of legal entities by criminals and illicit actors. The impact of this change cannot be overstated.  Particularly as it represents one of the most significant AML initiatives in the U.S. in the past two decades. FinCEN, responsible for maintaining the beneficial ownership information register has, and will continue to, educate corporations on the need to file.

Additionally, the Treasury Department has been working diligently to close key AML coverage gaps related to residential real estate transactions and investment advisers. These efforts, combined with the ongoing modernization of AML program requirements, demonstrate the U.S.’s commitment to creating a more robust and effective AML regime.

The impact of a Republican majority on 2025 AML regulations

With the Republican Party the majority in all three seats of government (Executive, Senate, Congress), the expectation will be towards a return to a more deregulatory approach, including AML regulations.

These would include a significant rollback of Biden administration rules. Especially those finalized towards the end of Biden’s term, using the Congressional Review Act. The Trump administration will likely pursue a broader deregulatory agenda over the next few years. Potentially including the easing of AML requirements for banks with under $250 billion in assets.

We could also see new Trump appointees alter the direction of agencies’ supervisory practices and examination priorities related to AML. These could be a ‘lighter touch’ and more business friendly approach going forward. The implications of these shifts are still unclear, but may signal to the financial services market to adopt greater business risks for potentially higher rewards.

United Kingdom: Economic Crime Plan 2 in action

The UK’s Economic Crime Plan 2 (ECP2), published in 2023, has been in full swing throughout 2024. This comprehensive plan aims to decrease money laundering and increase asset recovery. Additionally to tackle kleptocracy, combat sanctions evasion, reduce fraud, and lower the threat of international illicit finance to the UK.

A key focus has been on increasing resources for law enforcement and expanding the National Crime Agency’s capacity to fight corruption. Furthermore, supporting the introduction of beneficial ownership registries in Crown Dependencies and British Overseas Territories. The allocation of £400m in additional funding until  financial year end 2025 underscores the UK’s serious commitment to these efforts.

As we move into 2025 banks will now look to review the government plan to prioritize compliance resources as appropriate. AML processes will also need to be examined over 2025 as elements of the plan are enforced.

European Union: Progress for 2025 AML regulations

The EU has made significant strides with its latest AML package, which was officially announced June, 2024. This package, consisting of four separate instruments, aims to harmonize AML/CFT measures across the EU. Additionally, establishing a new AML Authority (AMLA) in Frankfurt that will be operational in July 2025.

One of the most notable developments has been the adoption of updated Transfer of Funds Regulations in June 2023. These regulations clarify requirements for information accompanying crypto asset transfers. This move reflects the EU’s recognition of the growing importance of digital assets in the financial landscape.

FATF: Continued focus on high-risk jurisdictions

We have seen a change in executive leadership in FATF, with Elisa de Anda Madrazo taking over the presidency from T Raja Kumar. Under the Mexican Presidency, “FATF’s work on governance, standards and engagement will be guided by the principles of inclusiveness, diversity and transparency”. These principles will be demonstrated going forward in 2025.

FATF continues to maintain its crucial role in identifying jurisdictions with strategic deficiencies in their AML/CFT regimes. Throughout 2024, the FATF has continued to update its lists of high-risk and monitored jurisdictions, with the most recent changes coming into force on October 25, 2024.

These updates have significant implications for financial institutions and other obliged entities. Subsequently, they must now apply enhanced due diligence measures in transactions or business relationships with persons established in these high-risk third countries.

Challenges for 2025 AML regulations

As we look towards 2025, several challenges loom on the horizon that banks need to consider and plan for:

1. Artificial Intelligence (AI) regulation: The increasing use of AI in AML processes will likely necessitate more codified regulatory requirements. Data elements used in AML processes will need to be standardized. Including the use of corporate digital identity (CDI) entities, to maximize the capabilities of AI. Banks will also need to balance the benefits of AI with the lack of transparency, privacy concerns and potential biases.
2. Beneficial Ownership implementation: While beneficial ownership registries are being established in many jurisdictions, ensuring their effectiveness and accuracy will be an ongoing challenge. Data standards will enhance cross-border information sharing. While CDI will enhance the verification and effectiveness of beneficial ownership data.
3. Harmonization of global standards: As jurisdictions implement new AML measures, the risk of regulatory fragmentation increases. Technology, particularly through automation, plays a pivotal role in ensuring a cohesive global approach while accommodating regional variations. Standardized data models, supported by advanced data platforms and interoperability frameworks, allow financial institutions to map and align diverse regulatory requirements into a unified data structure.
4. Resource allocation: As AML obligations expand, both regulators and financial institutions must optimize resources and expertise to meet growing demands. Automation plays a pivotal role by streamlining repetitive tasks, reducing errors, and enabling scalability. As a result, allowing human resources to focus on strategic activities like risk analysis and policy development. Automation accelerates decision-making and improves operational efficiency while lowering compliance costs.

What is next?

In conclusion, 2024 has marked significant progress in AML regulations globally. However, as we move into 2025, banks will face an increasing volume of changes to action. Particularly, as the focus shifts from implementation to refinement, harmonization, and adaptation to emerging threats.

Technology and automation will play a central role in enabling these transitions, but maintaining the momentum of reforms will remain a significant challenge. Financial institutions must also navigate evolving political priorities and values while ensuring compliance with newly introduced AML regulations. Staying vigilant, proactive, and agile will be essential as banks work to combat money laundering and financial crime in an ever-changing landscape.