Market changes perspective in a view of the increasing compliance obligations

The implementation of AML Directive V, i.e. an update of the act on the prevention of money laundering and terrorist financing, has contributed to the next wave of tightening of compliance-type procedures. Generally these procedures relate to the application of financial security measures by obligated institutions, including in particular, the degree of detail of Know Your Client(KYC) procedures. Clients of financial institutions will be required to meet the information and documentation requirements, and even the operational efficiency of the company may depend on efficiency in this respect. It seems therefore, that the best response from the market to the expansion of regulatory obligations will have to be appropriate and quick, and in certain situations it may even determine a competitive advantage or the success of the transaction. What seems to be natural in such a situation is entrusting the implementation of obligations in this area to specialised entities that know the procedures of financial institutions and have the tools to efficiently respond to the need. Especially in international relationships, in which KYC procedures are particularly complicated, having specialist knowledge on local conditions, formal documents and direct access to offices or institutions may determine the speed and efficiency of the implementation of AML compliance procedures. One may rightly assume that the tightening of formal requirements creates a market niche for outsourcing of procedures of financial institutions and the need for consultancy services. This may be necessary to manage the potential negative impact and challenges of these requirements, as well as to make the procedures and processes as efficient as possible. Undoubtedly, a series of operations that will take place with the participation of banks will require analysis and planning in the scope of compliance procedures and taking into account the related risk, as well as searching for measures to minimise such risk.

Author:

Krzysztof Wójcik, Head of Legal and Corporate Secretarial Services, Vistra Poland

Last Updated on June 28, 2021 by Karolina Ampulska