AML Predictions: Information Sharing, Increased Sanctions and Regulatory Landscape Prioritized for 2025

Significant changes are coming in 2025 in anti-money laundering regulations and strategies: approaches to information sharing, and a change in focus on sanctions will be among the areas that will be prioritized by the industry in the new year. Aside from high-profile regulatory failings and fines in 2024, recent events which uncovered how criminals operate today around the globe will further our understanding of these threats, helping to find solutions to improve and safeguard compliance while ensuring that we actually make a difference in fighting financial crime in the year ahead.

Notable global developments made major impact this past year. Noteworthy AML regulations were introduced, including recognizing Registered Investment Advisors and Real Estate as obligated entities under US AML law. Australia rolled out its Tranche 2 regulatory package, expanding the scope to include Designated Non-Financial Businesses and Professions (DNFBPs). There was also a significant increase in focus on sanctions with continued increases in parties added to sanctions lists and focus on sanctions evasion and the use of secondary sanctions.

Additionally, with all this in mind, we expect to see a continued focus on corporate transparency with pressure around the world on legislators to continue to uncover the veil of secrecy that often plagues attempts to identify ultimate beneficial owners, . From a technology perspective, generative AI hit the headlines, with the regulated sector increasing adoption of the latest technological developments to improve the efficiency and effectiveness of their compliance programs.

But how does all this impact emerging trends for the coming year?

Sanctions Still High on Agendas

Sanctions continue to be high on the agenda of many organizations and the focus on this by regulators and governments has not dissipated. Significant numbers of parties continue to be added to watchlists. Still, as a policy shift, many jurisdictions that impose sanctions are starting to focus on secondary sanctions, such as the recent sanctioning of gold by the UK government. In addition, sanctions evasion is also getting greater attention, with many recent additions to watchlists being identified as facilitating the evasion of other sanctions parties. Namely the sanctioning of Russia’s shadow fleet of oil tankers moving Russian oil around the world, circumventing current sanctions.

All organizations within a jurisdiction that has imposed sanctions on third parties are subject to enforcing the sanctions policy. 2025 will be the year of change for many organizations, it will be a year where modernization of their screening systems is essential and a year where many start to see sanctions as a compliance issue, making it a requirement to put in place additional resources to perform additional sanctions due diligence checks during KYC and also enhancing transaction monitoring to increase coverage to detect potential sanctions evasion and breaches of secondary sanctions by customers or counterparties.

The EU changes with the introduction of the instant payment regulation will also require a shift in policy and operations, with greater emphasis on frequent list updates and customer screening over payment screening.

Global Information Sharing Legislation Grows

Lauded as the transformative solution to fighting financial crime this decade, information-sharing initiatives and legislation changes are accelerating. Will 2025 be the year we see wide-scale adoption?

Lack of information sharing has been seen as the Achilles heel in tackling financial crime. 2024 saw the introduction of far-reaching legislation changes worldwide to allow information sharing between organizations to tackle financial crime. Canada, Mexico, the UK, and the EU have introduced new legislation, Singapore has strengthened its COSMIC platform, and other countries such as Hong Kong, UAE, and Australia are racing towards new information-sharing legislation.

Virtually all of this enacted legislation is voluntary, which has been the challenge with previous legislation regarding wide-scale adoption—but this time, it seems different. The regulated sector appears ready and willing to participate actively in information-sharing initiatives and with this new legislation, new gateways have opened to allow organizations to do this safely, reducing fear of falling foul of data protection legislation.

2025 will see more organizations signing up and participating in these initiatives, more information being shared, greater intelligence, and hopefully subsequent prosecutions of criminals and asset recovery. 2025 will also introduce new scalable technologies to share relevant information within data protection guardrails and integrate information into core compliance and investigation platforms. The change in legislation and the advancement of technology in this space make this potentially a revolutionary pivot in fighting financial crime.

Regulatory Focus on Non-Financial Businesses

There continues to be accelerating interest and focus in targeting Designated Non-Financial Businesses and Professions (DNFBPs). America, Australia, South Africa, and Europe have all introduced or enhanced regulation of DNFBPs. Real Estate, the art market, and precious metals are high-risk areas utilized extensively by organized crime to move and hide illicit wealth. Other DNFBP professions, such as accountants and lawyers, are well publicized for helping facilitate criminal activity and legitimizing their business interests or wealth.

Most of these businesses have more direct relationships with their customers than banks. These businesses place their customers’ money into banks (often in the name of the DNFBP business) and, in some cases, have more intimate knowledge of the customer’s history, behavior, and source of wealth, especially for higher net worth individuals. They might have regular face-to-face meetings with customers and help them with day-to-day activities, such as dealing with assets, businesses, tax affairs, and legal matters. If anyone is going to understand whether an individual is legitimate, it will be these businesses.

We cannot fight financial crime without effectively regulating DNFBPs or taking effective enforcement action against DNFBPs which don’t comply or which knowingly support criminals. In Recommendations 22 and 23, FATF clearly outlines the requirement to regulate DNFBPs, ensuring they conduct CDD and report suspicious activity. While several countries have introduced regulations, there is still a global disparity in regulation of this sector, which offers a clear opportunity for criminals to exploit. 2025 will see increasing pressure and enforcement for non-compliance of DNFBPs.

Political Leaning Impacts AML

The world has not been more fractured with a clear East vs. West divide in recent memory. Russia was suspended from the FATF in February 2023, and the BRICS group of countries has expanded. On the other side are the NATO member countries, who have also strengthened their resolve. The fractured geopolitical environment could not be clearer when looking at world views on key global events and the sanctions landscape.

Then, there was a rise in right-wing politics in the West, most notably in the recent US election. Even in Europe, there has been a notable move to the right by many countries.

Why is this political movement important to track? 2025 will likely see an overall stalling of global progress in implementing AML legislation and see the regulated sector pause investment in compliance, adopting a wait-and-see approach. The exception here is Europe, which is introducing a new AML regulatory package and moving forward with the AML Authority, and potentially Australia with its Tranche 2. The current global situation needs us, more than ever, to be resolute in progressing standards and taking action to stop criminal gangs from taking advantage of any disconnect between jurisdictions and standards.

Modernized AML Technology

Financial crime compliance is costly, with some estimates stating that it cost the industry nearly 210 billion dollars in 2024. A significant portion of this cost is people, coupled with the fact that many programs have significant inefficiencies, including repetitive tasks, data gaps, siloed teams and systems, and extensive manual effort with tasks such as investigations, tuning, risk assessment, and gap analysis.

Talk of technology use is not new, but we have seen an acceleration of technology implementations and inquiries to modernize AML programs. We are in a technology revolution, and technologies such as generative AI, network analytics, and information-sharing technology are in their infancy with much more potential. 2025 will be the year of cost-sensitive buying, with many regulated sector organizations looking for technology solutions with a notable return on investment.

One of the major drivers for modernization will be to ensure regulatory compliance; there were some large and notable fines in 2024 around the world for compliance failings. Many regulated firms would have assessed their programs against the regulatory findings to identify gaps, looking to technology to fill this gap.

The other driver we will see from organizations in 2025 is the continuing push to reduce headcount to cut costs. An enabler of this is the increased use of technology to reduce manual and repetitive tasks. However, there is still a balancing act, as cutting too many risks exposes organizations and cannot effectively cover their operational requirements, especially during peak periods.

There is a rapid increase in outsourcing services to address these possibilities, providing elasticity during peak periods or covering periods of audit or operational change. We will see an exponential increase in regulated sector organizations using outsourced services to cover gaps in their permanent teams or to use these services ad hoc to manage costs but provide a compliant solution during peak demand.

These issues will be the key drivers as we kick off 2025.