Anti-Money Laundering and Counter-Terrorism Financing: A Comprehensive Analysis of Global Frameworks, Challenges, and Technological Impacts

July 10, 2025 Research Reports 0

An In-Depth Examination of Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Frameworks: Evolution, Components, and Contemporary Challenges

Many thanks to our sponsor Panxora who helped us prepare this research report.

Abstract

This research report presents a comprehensive and in-depth examination of Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) frameworks, traversing their intricate historical evolution, fundamental structural components, and the indispensable role played by key international bodies, most notably the Financial Action Task Force (FATF). The analysis extends to the persistent and escalating challenges confronted by financial institutions, designated non-financial businesses and professions (DNFBPs), and regulatory authorities in their continuous battle against these pervasive global financial crimes. Particular emphasis is placed on the transformative impact of emerging technologies, such as virtual assets and sophisticated digital payment systems, which introduce both unprecedented opportunities and significant vulnerabilities. By meticulously tracing the development of AML/CTF measures from their nascent stages to their current complex manifestations, and by scrutinizing their implementation across diverse jurisdictions, including a detailed focus on New Zealand’s robust framework, this report endeavors to furnish a nuanced and exhaustive understanding of the multifaceted complexities inherent in the global endeavor to combat illicit financial flows.

Many thanks to our sponsor Panxora who helped us prepare this research report.

1. Introduction

Money laundering (ML) and the financing of terrorism (TF) represent profound and multifaceted threats that transcend national borders, imperiling the very bedrock of the global financial system. These illicit activities are not merely abstract financial transgressions; they are instrumental in sustaining organized crime syndicates, enabling pervasive corruption, fostering human trafficking, supporting drug proliferation, and facilitating the proliferation of weapons of mass destruction. By obfuscating the origins of illegally obtained wealth, money laundering injects ‘dirty’ money into legitimate economies, thereby distorting markets, undermining fair competition, and eroding public trust in financial institutions. The financing of terrorism, conversely, provides the critical lifeblood for extremist organizations to plan, prepare, and execute acts of violence, directly jeopardizing national security, regional stability, and international peace. The insidious nature of these crimes necessitates a robust, adaptive, and globally coordinated response.

In recognition of these escalating threats, nations worldwide have collectively developed and progressively refined comprehensive AML and CTF frameworks. These frameworks are designed with the overarching objectives of detecting suspicious financial activities, deterring criminal and terrorist elements from exploiting financial systems, and ultimately disrupting their financial networks. This report undertakes a rigorous exploration of the foundational principles underpinning AML and CTF, tracing their critical historical evolution from fragmented national efforts to a globally harmonized system of standards and regulations. It will meticulously detail the essential components that constitute a resilient AML/CTF framework, illuminate the pivotal functions of international standard-setting bodies and cooperative groups, and dissect the formidable challenges that persist for both obligated entities and supervisory authorities, particularly in an era characterized by rapid technological innovation and the increasingly sophisticated methodologies employed by illicit actors. Through this detailed examination, the report seeks to contribute to a deeper appreciation of the complexities and imperatives driving the global fight against financial crime.

Many thanks to our sponsor Panxora who helped us prepare this research report.

2. Historical Development of AML and CTF Frameworks

The global architecture for Anti-Money Laundering and Counter-Terrorism Financing is the culmination of decades of evolving awareness, increasing international cooperation, and a reactionary response to significant geopolitical events and the escalating sophistication of financial crime. Its origins are rooted in a growing understanding of the economic and social damage wrought by illicit financial flows.

2.1 Emergence of Money Laundering Concerns

The concept of ‘money laundering’, while relatively modern in its terminology, has historical parallels in attempts to obscure the origins of ill-gotten gains, dating back centuries to pirates and racketeers seeking to legitimize their spoils. However, the term gained prominent usage in the late 20th century, particularly within the context of the burgeoning drug trade and the organized crime syndicates that sought to integrate vast amounts of illicit cash into the legitimate financial system. The scale of drug-related profits in the 1970s and 1980s brought the issue into sharp focus, exposing how criminal organizations were effectively undermining economic stability through sophisticated financial maneuvers.

Early national legislative responses were fragmented and largely reactive. The United States, grappling with significant drug trafficking revenues, was among the first to enact specific anti-money laundering legislation, with the Money Laundering Control Act of 1986 being a landmark development. This act criminalized money laundering and introduced requirements for financial institutions to report suspicious transactions. Concurrently, a growing international consensus began to form around the necessity for multilateral cooperation. The 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, commonly known as the Vienna Convention, marked a pivotal moment. It was the first international treaty to call for the criminalization of money laundering related to drug offenses, urging signatory states to adopt measures for the identification, tracing, freezing, seizure, and confiscation of proceeds derived from drug trafficking. This Convention laid essential groundwork by establishing a broad definition of money laundering and promoting international cooperation in investigations and prosecutions, signalling a nascent global commitment to tackling the issue.

The inadequacy of unilateral national efforts to combat a transnational problem became increasingly apparent. The recognition that ‘dirty’ money could simply flow to jurisdictions with weaker controls underscored the need for a globally coordinated strategy. It was against this backdrop that the Financial Action Task Force (FATF) was established in 1989 by the G7 countries at their Paris Summit. The FATF’s initial mandate was explicit: to examine money laundering techniques and trends, to review the actions already taken, and to propose counter-measures. Its foundational 40 Recommendations, first issued in 1990, provided a comprehensive blueprint for nations to develop and implement effective anti-money laundering policies, covering legal systems, financial sector regulation, and international cooperation. This marked the true inception of a harmonized global effort against financial crime, setting the stage for standardized responses to an increasingly sophisticated and borderless threat.

2.2 Expansion to Counter-Terrorism Financing

While money laundering had been a concern for decades, the tragic events of September 11, 2001, fundamentally altered the global security landscape and propelled the issue of combating the financing of terrorism (CTF) to the forefront of international priorities. The meticulous investigations following the attacks revealed how relatively small sums of money, transferred through seemingly legitimate channels or informal value transfer systems, could facilitate devastating acts of terrorism. This exposed a critical gap in existing financial crime frameworks, which, while focused on the proceeds of crime, had not adequately addressed funds used to fund crime, regardless of their origin.

In immediate response, the international community acted decisively. The United Nations Security Council (UNSC) Resolution 1373, adopted unanimously on September 28, 2001, imposed wide-ranging obligations on all UN member states to suppress the financing of terrorism. This resolution required states to criminalize the provision or collection of funds for terrorist acts, freeze terrorist assets, and deny safe haven to those who finance, plan, facilitate, or commit terrorist acts. It underscored the urgent need for international cooperation, including information sharing and mutual legal assistance, to prevent and combat terrorism financing.

The FATF, recognized as the premier global standard-setter in financial crime, rapidly expanded its mandate to include CTF. In October 2001, it issued Eight Special Recommendations on Terrorist Financing, which were later integrated into the comprehensive 40 Recommendations in 2004, and further refined into the current unified set of Recommendations in 2012. These Special Recommendations addressed critical areas such as the criminalization of terrorist financing, the freezing of terrorist assets, reporting suspicious transactions related to terrorism, international cooperation, and alternative remittance systems. The FATF’s expanded focus acknowledged the profound interconnectedness between money laundering and terrorism financing, recognizing that while the origins of funds might differ (illicit for ML, potentially legitimate for TF), the methods of movement and concealment often overlap. This pivotal shift ensured that the global financial system was not only protected from the infiltration of criminal proceeds but also from its exploitation by terrorist organizations, thereby reinforcing the integrity and security of legitimate financial channels.

2.3 International Legal Instruments

The evolution of AML/CTF frameworks has been significantly shaped by a series of international legal instruments that provide the normative basis for national legislation and foster cross-border cooperation. These treaties and conventions serve to criminalize specific acts, establish obligations for states, and facilitate mechanisms for mutual legal assistance.

Beyond the Vienna Convention (1988) and UNSC Resolution 1373 (2001), several other critical instruments have cemented the global commitment to combating financial crime:

  • The United Nations International Convention for the Suppression of the Financing of Terrorism (1999): Adopted prior to 9/11 but gaining immense prominence thereafter, this convention is a cornerstone of international CTF efforts. It obliges State Parties to criminalize the provision or collection of funds with the intention that they be used, or in the knowledge that they are to be used, to carry out terrorist acts. Importantly, it emphasizes that the origin of the funds (whether legitimate or illicit) is irrelevant for the purposes of criminalization. The Convention also promotes extensive international cooperation in preventing and prosecuting such offenses, including through extradition and mutual legal assistance, and mandates measures for the identification, freezing, and seizure of funds used or allocated for the financing of terrorism. It has been instrumental in harmonizing CTF legislation globally and ensuring that a lack of direct involvement in a terrorist act does not preclude prosecution for financial support.

  • The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (Warsaw Convention, 2005): Building upon earlier European efforts (such as the 1990 Strasbourg Convention), the Warsaw Convention significantly broadened the scope of money laundering offenses. It adopts an ‘all crimes’ approach, meaning that money laundering is criminalized regardless of the type of underlying predicate offense that generated the illicit proceeds, extending beyond drug trafficking to include offenses such as corruption, fraud, and environmental crimes. Furthermore, it explicitly incorporates the financing of terrorism. The Convention’s primary objectives are to facilitate international cooperation in investigating and prosecuting financial crimes, enhance asset recovery, and strengthen measures for confiscation of criminal proceeds and instruments. It provides detailed provisions for mutual legal assistance, provisional measures (such as freezing and seizure), and final confiscation orders, thereby bolstering the legal framework for effective cross-border enforcement against both money laundering and terrorist financing.

  • The Palermo Convention (2000) – United Nations Convention Against Transnational Organized Crime and its Protocols: While not solely focused on financial crime, the Palermo Convention and its protocols (especially the Protocol against the Smuggling of Migrants by Land, Sea and Air, and the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children) are highly relevant. The Convention calls on States Parties to criminalize money laundering relating to ‘serious crime’ and to establish a broad range of measures to combat transnational organized crime, including provisions on extradition, mutual legal assistance, and confiscation. It reinforces the understanding that money laundering is the financial engine that fuels various forms of organized criminal activity, necessitating a holistic approach.

These international instruments, alongside the FATF’s evolving Recommendations, form a robust legal and policy framework that has compelled nations to progressively strengthen their domestic AML/CTF regimes, fostering a more interconnected and resilient global defense against illicit financial flows.

Many thanks to our sponsor Panxora who helped us prepare this research report.

3. Key Components of Robust AML/CTF Frameworks

Effective AML/CTF frameworks are built upon several interconnected pillars, each designed to collectively deter, detect, and disrupt illicit financial activities. These components are not merely regulatory requirements but represent best practices refined over decades of combating sophisticated financial crime.

3.1 Know Your Customer (KYC) Protocols and Customer Due Diligence (CDD)

At the core of any effective AML/CTF framework lies the principle of Know Your Customer (KYC), which is intrinsically linked to the broader concept of Customer Due Diligence (CDD). KYC protocols demand that financial institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs), such as real estate agents, lawyers, and accountants, not only verify the identity of their clients but also understand the nature of their business relationships. This proactive approach is fundamental to preventing the financial system from being exploited by criminals and terrorists.

CDD is not a one-off event but a continuous process that involves several critical elements:

  • Identity Verification: This is the initial step, requiring the collection and verification of reliable, independent source documents, data, or information to establish the true identity of individual customers (e.g., passports, national ID cards) and legal entities (e.g., company registration documents, beneficial ownership registers). For legal entities, particular attention is paid to identifying the beneficial owner(s) – the natural person(s) who ultimately own or control the customer, regardless of how many layers of ownership there are. Obscuring beneficial ownership is a common tactic for money launderers and terrorists, making this a critical area of focus.

  • Understanding the Purpose and Intended Nature of the Business Relationship: Institutions must gather information on the customer’s anticipated activity, expected transaction volumes, and the source of funds/wealth. This understanding helps to establish a baseline against which future transactions can be monitored for deviations.

  • Ongoing Monitoring: CDD is not static. Once a customer relationship is established, FIs must continuously monitor transactions and customer activity to ensure consistency with their understanding of the customer’s business and risk profile. Any significant changes in a customer’s behaviour, transaction patterns, or financial situation should trigger a review of their CDD information.

  • Risk-Based Approach to CDD: FATF’s recommendations strongly advocate for a risk-based approach (RBA) to CDD. This means that the intensity and type of CDD measures applied should be commensurate with the ML/TF risks identified. For lower-risk customers or products, Simplified Due Diligence (SDD) may be applied. For higher-risk customers, products, services, or geographies, Enhanced Due Diligence (EDD) is mandatory. EDD involves more stringent measures, such as obtaining additional information on the customer and source of funds, conducting enhanced ongoing monitoring, and obtaining senior management approval for establishing or continuing the business relationship. Politically Exposed Persons (PEPs), for instance, typically require EDD due to the inherent corruption risk.

Effective KYC/CDD measures are essential because they provide the foundational intelligence necessary for detecting and preventing illicit financial activities. Without a clear understanding of who is transacting and why, financial institutions operate blindly, leaving themselves vulnerable to exploitation.

3.2 Suspicious Activity Reporting (SAR) / Suspicious Transaction Reporting (STR)

The reporting of suspicious activities or transactions (SARs/STRs) constitutes a critical operational pillar of AML/CTF frameworks, acting as the primary conduit for information flow from the private sector to national authorities. Financial institutions and DNFBPs are legally obligated to report any transaction or attempted transaction, regardless of its amount, that they suspect is related to money laundering, terrorist financing, or other predicate offenses. The core principle is ‘suspicion’ rather than ‘proof’; institutions are not required to definitively prove an illicit act but merely to have a reasonable suspicion.

Key aspects of SAR/STR regimes include:

  • Obligation to Report: The legal requirement to report, often enshrined in national legislation, is paramount. This obligation extends to unusual patterns of transactions, unusual account activity, or any behaviour that deviates from the expected norm for a given customer.

  • Financial Intelligence Units (FIUs): SARs/STRs are typically submitted to a national Financial Intelligence Unit (FIU). FIUs are specialized agencies responsible for receiving, analyzing, and disseminating financial intelligence to law enforcement agencies, tax authorities, and other relevant bodies for further investigation and prosecution. They act as a critical bridge between the obligated entities and the investigative arms of the state.

  • Protection for Reporting Entities (‘Safe Harbour’): To encourage reporting, national laws typically provide ‘safe harbour’ provisions, protecting institutions and their employees from civil or criminal liability for breach of confidentiality or contract, provided the report was made in good faith.

  • Prohibition on ‘Tipping Off’: A crucial element of SAR/STR regimes is the strict prohibition on ‘tipping off’. This prevents the reporting institution or its employees from informing the customer or any third party that a SAR/STR has been or will be submitted. This measure is vital to prevent criminals from becoming aware of investigations and destroying evidence or fleeing jurisdiction.

  • Quality of Reports: The effectiveness of SAR/STR regimes heavily relies on the quality and timeliness of the reports submitted. Comprehensive and well-reasoned reports, providing detailed factual information and the grounds for suspicion, enable FIUs to perform effective analysis and generate actionable intelligence for law enforcement.

SARs/STRs are indispensable for authorities to identify emerging money laundering and terrorist financing typologies, initiate investigations, freeze assets, and ultimately bring perpetrators to justice. They represent the point at which financial institutions’ vigilance translates into direct support for law enforcement efforts.

3.3 Transaction Monitoring

Transaction monitoring is the continuous process by which financial institutions scrutinize customer transactions to detect patterns and anomalies indicative of potential money laundering or terrorist financing. It is a dynamic and proactive component of an AML/CTF framework, going beyond initial CDD to identify suspicious activities as they occur over the lifecycle of a customer relationship.

The practice of transaction monitoring involves:

  • Baseline Establishment: Based on the information gathered during CDD, a baseline of expected transactional behaviour is established for each customer. This includes expected transaction volumes, types of transactions, geographical reach, and counter-parties.

  • Rule-Based Systems: Historically, transaction monitoring systems relied on pre-defined rules to flag suspicious activity. These rules might identify transactions exceeding certain monetary thresholds, a high volume of cash transactions, unusual international transfers, or transactions involving high-risk jurisdictions. While foundational, rule-based systems can generate numerous ‘false positives’ (alerting on legitimate activity) and can be circumvented by sophisticated criminals who understand the rules.

  • Advanced Analytics and Artificial Intelligence (AI): Modern transaction monitoring increasingly leverages advanced analytical tools, including machine learning and artificial intelligence. These technologies can process vast datasets, identify complex patterns and correlations that human analysts might miss, and adapt to evolving typologies. They can detect subtle deviations from a customer’s normal behaviour, identify relationships between seemingly unrelated transactions, and reduce false positives, thereby improving the efficiency and effectiveness of the monitoring process.

  • Real-time vs. Batch Monitoring: Depending on the financial product or service, transaction monitoring can occur in real-time (e.g., for payments or transfers) or in batch processing (e.g., for daily or weekly account activity reviews). Real-time monitoring is crucial for stopping illicit transactions before they are completed.

  • Alert Generation and Investigation: When a transaction or pattern triggers an alert, it is escalated to an AML analyst for investigation. This involves reviewing the customer’s profile, transaction history, and any other relevant information to determine if the activity is legitimate or if it warrants further escalation, potentially leading to a SAR/STR submission.

Effective transaction monitoring is vital for the early detection and prevention of financial crimes. It helps institutions to identify the ‘layering’ and ‘integration’ stages of money laundering, where illicit funds are moved and disguised through complex transactions, and to disrupt terrorist financing networks by identifying unusual payment flows.

3.4 Internal Controls and AML/CTF Compliance Programs

Beyond the specific operational requirements, a robust AML/CTF framework necessitates comprehensive internal controls and a well-structured compliance program within each obligated entity. These internal measures are crucial for ensuring that the institution can effectively meet its regulatory obligations and manage its ML/TF risks proactively.

Key elements of internal controls and compliance programs include:

  • Designated AML/CTF Compliance Officer: Organizations are typically required to appoint a senior individual, often reporting directly to the board or senior management, who is responsible for overseeing the development, implementation, and maintenance of the AML/CTF program. This individual acts as a central point of contact for regulatory bodies and internal stakeholders.

  • Written Policies and Procedures: A clear set of documented policies, procedures, and controls must be in place. These documents detail the institution’s approach to CDD, transaction monitoring, SAR/STR reporting, record-keeping, and risk assessment. They provide guidance to employees on how to perform their AML/CTF responsibilities consistently.

  • Employee Training: All relevant employees, from frontline staff to senior management, must receive regular and comprehensive training on AML/CTF risks, regulatory obligations, internal policies, and how to identify and report suspicious activities. Training needs to be tailored to the specific roles and responsibilities of the employees.

  • Independent Audit Function: The AML/CTF compliance program must be subject to independent audit or review on a regular basis. This independent assessment evaluates the effectiveness of the internal controls, identifies any weaknesses or gaps, and ensures adherence to regulatory requirements. The findings of these audits typically lead to corrective actions and program enhancements.

  • Risk Assessment: Institutions are mandated to conduct regular, comprehensive ML/TF risk assessments of their business activities, products, services, customers, and geographical exposure. This assessment identifies inherent risks and evaluates the effectiveness of existing controls in mitigating those risks. The findings of the risk assessment should inform the design and implementation of the entire AML/CTF program, enabling a genuinely risk-based approach.

3.5 Record-Keeping

Accurate and comprehensive record-keeping is a foundational element that underpins all other AML/CTF controls. Financial institutions and DNFBPs are obligated to retain records of customer identification data, transaction details, and any reports filed (e.g., SARs/STRs) for a prescribed period, typically five to ten years after the termination of a customer relationship or the date of a transaction. This retention period ensures that authorities have access to crucial information for investigations and prosecutions.

The importance of robust record-keeping lies in its ability to:

  • Support Investigations: Law enforcement and intelligence agencies frequently require access to historical customer and transaction data to trace illicit funds, establish financial trails, and build cases against criminals and terrorists.
  • Facilitate Audits and Reviews: Regulators and internal auditors rely on these records to assess an institution’s compliance with AML/CTF obligations and the effectiveness of its controls.
  • Enable Retrospective Analysis: Retained data allows institutions to conduct retrospective analysis to identify previously undetected patterns or links to new typologies.

3.6 Sanctions Compliance

Compliance with financial sanctions regimes is an integral and often distinct component of AML/CTF efforts, though closely intertwined. Sanctions are restrictive measures imposed by national governments (e.g., OFAC in the US, HMT in the UK) or international bodies (e.g., United Nations Security Council) against countries, entities, or individuals to achieve specific foreign policy or national security objectives. These can include asset freezes, arms embargoes, and restrictions on trade or financial services.

Financial institutions must implement robust systems to:

  • Screen Customers and Transactions: All customers (individuals, entities, beneficial owners) and transactions must be screened against relevant sanctions lists (e.g., UN, national, regional). This typically involves automated screening tools that check names, addresses, and other identifiers.
  • Block or Reject Transactions: If a match is found, the institution is generally required to immediately freeze any assets of the sanctioned party and/or reject the transaction, and report the hit to the relevant authorities.
  • Prohibit Facilitation: Institutions must also ensure they are not directly or indirectly facilitating transactions or activities that violate sanctions.

Non-compliance with sanctions can result in severe penalties, including substantial fines and reputational damage, underscoring the critical need for robust controls in this area.

Together, these components form a multi-layered defense mechanism, designed to create a hostile environment for illicit financial activity within the legitimate financial system, thereby protecting economic integrity and national security.

Many thanks to our sponsor Panxora who helped us prepare this research report.

4. Role of International Bodies in AML and CTF

The transnational nature of money laundering and terrorist financing necessitates a globally coordinated response. International bodies play an indispensable role in establishing common standards, facilitating cooperation, and promoting effective implementation of AML/CTF measures worldwide.

4.1 Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) stands as the preeminent inter-governmental body setting international standards to combat money laundering, terrorist financing, and the proliferation financing of weapons of mass destruction. Established in 1989, its influence extends globally, shaping legislative and regulatory frameworks across over 200 jurisdictions. The FATF’s core mission is to develop and promote policies to protect the global financial system from these threats.

Key aspects of the FATF’s pivotal role include:

  • The FATF 40 Recommendations: This is the cornerstone of the FATF’s work. The Recommendations provide a comprehensive and consistent framework that countries should implement to combat ML, TF, and proliferation financing. They are universally recognized as the authoritative international standard. The Recommendations cover a broad spectrum of measures, typically categorized into:

    • Legal Systems and Institutional Framework: Criminalization of ML/TF, asset freezing and confiscation, powers of competent authorities (FIUs, law enforcement, supervisors).
    • Preventive Measures for the Financial Sector and DNFBPs: Requirements for customer due diligence, record-keeping, suspicious transaction reporting, internal controls, and sanctions compliance for banks, casinos, real estate agents, lawyers, accountants, trust and company service providers, and dealers in precious metals/stones.
    • Transparency and Beneficial Ownership: Measures to prevent the misuse of legal persons (companies) and legal arrangements (trusts) for illicit purposes by ensuring transparency of beneficial ownership information.
    • International Cooperation: Mechanisms for mutual legal assistance, extradition, and information sharing among national authorities.
    • Targeted Financial Sanctions: Implementation of UN Security Council resolutions related to terrorism and proliferation financing.

  • Mutual Evaluations: A critical mechanism by which the FATF assesses the compliance of its member countries and a growing number of non-members with its Recommendations. This peer-review process evaluates both the technical compliance (whether the laws, regulations, and institutional structures are in place) and, more importantly, the effectiveness (how well these measures are actually working in practice to achieve the desired outcomes of detecting, deterring, and prosecuting financial crime). The comprehensive reports generated from these evaluations highlight strengths, weaknesses, and provide recommendations for improvement. Countries are subject to follow-up processes, and those demonstrating strategic deficiencies in their AML/CTF regimes may be placed on public lists (the ‘grey list’ or ‘black list’), leading to increased scrutiny and potential adverse financial consequences.

  • Typologies and Best Practices: The FATF continuously conducts research and publishes reports on emerging money laundering and terrorist financing typologies, methods, and trends. These reports are invaluable for financial institutions and authorities in understanding evolving risks and adapting their controls. Examples include typologies on the misuse of virtual assets, trade-based money laundering, and the financing of ISIS/Da’esh.

  • Global Network of Regional Bodies: The FATF works closely with a network of nine FATF-Style Regional Bodies (FSRBs) that have similar mandates and operate in different geographical regions. These FSRBs (e.g., APG, MONEYVAL, GAFILAT) conduct mutual evaluations of their members, provide technical assistance, and promote the FATF Recommendations tailored to regional contexts. This decentralization significantly enhances the global reach and consistent application of the standards.

The FATF’s leadership and standard-setting role are paramount in driving a harmonized and effective global response to financial crime, ensuring that jurisdictions are held accountable for implementing robust measures.

4.2 Egmont Group of Financial Intelligence Units

The Egmont Group of Financial Intelligence Units (FIUs) is an international forum that facilitates secure cooperation and information exchange among its member FIUs. Established in 1995, it currently comprises over 170 FIUs from around the world. Recognizing that money laundering and terrorist financing are transnational crimes, the ability for national FIUs to quickly and securely share information is absolutely critical for effective investigations.

The primary objectives and functions of the Egmont Group include:

  • Facilitating Secure Information Exchange: The Egmont Group provides a secure IT platform (Egmont Secure Web – ESW) for FIUs to exchange financial intelligence directly and rapidly, bypassing traditional mutual legal assistance channels that can be slow. This direct communication is invaluable for tracing illicit funds across borders in real-time or near real-time.

  • Enhancing International Cooperation: The Group promotes and supports the development of effective FIUs worldwide, fostering operational cooperation and intelligence sharing among them. It recognizes that each FIU is a national entity but that collective action is essential against global threats.

  • Providing Training and Expertise: The Egmont Group offers training, expertise, and best practices to help FIUs improve their analytical capabilities, operational efficiency, and ability to contribute to national and international AML/CTF efforts.

  • Supporting FIU Development: It assists jurisdictions in establishing new FIUs and strengthening existing ones, providing guidance on legal frameworks, operational models (e.g., administrative, law enforcement, judicial, or hybrid models of FIUs), and technological requirements.

By fostering an environment of trust and providing the necessary infrastructure, the Egmont Group significantly enhances the ability of national authorities to combat money laundering and terrorist financing by ensuring that crucial financial intelligence can flow seamlessly across borders to where it is needed for investigations.

4.3 Asia/Pacific Group on Money Laundering (APG)

The Asia/Pacific Group on Money Laundering (APG) is the largest FATF-Style Regional Body (FSRB) in terms of membership, encompassing 42 member jurisdictions and a number of observers, including international organizations. Established in 1997, the APG is dedicated to assisting its members to effectively implement the FATF Recommendations within the unique contexts of the Asia-Pacific region, which is characterized by diverse economies, legal systems, and cultural nuances.

Key functions and contributions of the APG include:

  • Mutual Evaluations: The APG conducts rigorous peer-review mutual evaluations of its member jurisdictions against the FATF 40 Recommendations. These evaluations assess the technical compliance of a country’s AML/CTF laws and regulations, as well as the effectiveness of their implementation, identifying gaps and providing recommendations for improvement. The APG’s reports feed into the global FATF review process.

  • Technical Assistance and Training: Recognizing the varying levels of development and capacity among its members, the APG plays a crucial role in coordinating and delivering technical assistance and training programs. These programs aim to build the capacity of national authorities (FIUs, law enforcement, prosecutors, supervisors) to combat ML/TF effectively, including assistance with legislative drafting, operational best practices, and the use of financial intelligence.

  • Typologies Research: The APG actively conducts and publishes research on regional money laundering and terrorist financing typologies. This includes analyses of specific methods and trends prevalent in the Asia-Pacific, such as trade-based money laundering, human trafficking, illegal wildlife trade financing, and the use of virtual assets, providing valuable insights for policymakers and obligated entities.

  • Promoting Regional Cooperation: The APG serves as a vital platform for regional dialogue and cooperation among its members, fostering information sharing, joint initiatives, and a harmonized approach to AML/CTF challenges that are often unique to the Asia-Pacific region.

By localizing and promoting the global FATF standards, the APG significantly strengthens the collective defense against financial crime in one of the world’s most economically dynamic and diverse regions, contributing directly to the integrity and stability of the global financial system.

Many thanks to our sponsor Panxora who helped us prepare this research report.

5. New Zealand’s AML/CTF Framework

New Zealand has progressively developed a robust and comprehensive Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) framework, aligning its domestic legislation and regulatory oversight with international best practices, particularly the FATF Recommendations. This framework aims to safeguard the integrity of its financial system and contribute to global efforts against financial crime.

5.1 Legislative Measures

New Zealand’s primary legislative instrument for combating financial crime is the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). This landmark legislation established a comprehensive regulatory framework that imposes significant obligations on a wide range of financial institutions and designated non-financial businesses and professions (DNFBPs). The Act reflects a risk-based approach, requiring entities to assess their ML/TF risks and implement controls proportionate to those risks.

Key aspects and obligations under the AML/CFT Act include:

  • Obligated Entities (Reporting Entities): The Act covers a broad scope of ‘reporting entities’ that are required to comply with its provisions. This implementation has occurred in phases:

    • Phase 1 (2013): Covered financial institutions, including banks, credit unions, building societies, life insurers, fund managers, and non-bank deposit takers.
    • Phase 2 (2017): Extended obligations to lawyers, accountants, real estate agents, and conveyancers.
    • Phase 3 (2018): Further expanded to include high-value goods dealers (e.g., car dealers, jewelers), casinos, and money remitters, among others.
      This phased approach allowed sectors time to prepare and adapt to the rigorous compliance requirements.

  • Core Obligations: The Act mandates that reporting entities must:

    • Conduct Customer Due Diligence (CDD): Verify customer identity, understand the nature and purpose of the business relationship, and identify beneficial owners. This includes simplified CDD for low-risk scenarios and enhanced CDD for higher-risk situations, such as dealing with Politically Exposed Persons (PEPs) or customers from high-risk jurisdictions.
    • Implement an AML/CFT Programme: Develop and maintain a written program that outlines policies, procedures, and controls for managing and mitigating ML/TF risks. This includes a risk assessment, compliance officer appointment, internal training, and an independent audit function.
    • Report Suspicious Activities: Submit Suspicious Activity Reports (SARs) to the New Zealand Police Financial Intelligence Unit (FIU) if there are reasonable grounds to suspect that a transaction or activity is related to money laundering or terrorist financing. The ‘tipping off’ prohibition is strictly enforced.
    • Record Keeping: Maintain comprehensive records of customer identification, transactions, and risk assessments for a minimum of five years.
    • Correspondent Banking: Implement specific due diligence measures for correspondent banking relationships.

  • Penalties for Non-Compliance: The AML/CFT Act carries significant penalties for non-compliance, including substantial civil pecuniary penalties (fines for both entities and individuals involved in management) and criminal offenses for serious breaches, underscoring the serious nature of these obligations.

In addition to the AML/CFT Act, the Terrorism Suppression Act 2002 plays a critical role in New Zealand’s CTF efforts. This Act criminalizes terrorist acts and the financing of terrorism, providing the legal basis for prosecuting individuals and entities involved in funding terrorism. It also enables the designation of terrorist entities and the freezing of their assets, consistent with UN Security Council resolutions, thereby directly implementing international CTF obligations domestically. The interplay between these two Acts creates a comprehensive legal shield against illicit financial activities.

5.2 Supervisory Authorities

New Zealand employs a unique multi-agency supervisory model under the AML/CFT Act, with three primary government agencies serving as supervisors. This distributed approach leverages the existing expertise of each agency to oversee specific sectors within the financial system, ensuring a coordinated and effective regulatory approach.

These agencies are:

  • The Reserve Bank of New Zealand (RBNZ): The RBNZ is responsible for supervising banks, life insurers, and non-bank deposit takers (e.g., credit unions, building societies, finance companies). Its supervisory approach focuses on assessing the effectiveness of these entities’ AML/CFT risk management and compliance frameworks through a combination of on-site inspections, off-site monitoring, and thematic reviews. The RBNZ also provides guidance and issues warnings or directives for non-compliance.

  • The Financial Markets Authority (FMA): The FMA supervises entities operating in the financial markets, including fund managers, brokers, financial advisors, derivatives issuers, and peer-to-peer lending services. The FMA’s role involves ensuring that these entities have robust AML/CFT systems and controls in place, conducting compliance assessments, and taking enforcement action where necessary. Their oversight aims to protect the integrity of New Zealand’s capital markets from financial crime.

  • The Department of Internal Affairs (DIA): The DIA supervises a diverse range of DNFBPs, reflecting the later phases of the AML/CFT Act’s implementation. This includes casinos, money remitters, real estate agents, lawyers, accountants, high-value goods dealers, and other non-bank financial services providers. The DIA’s approach emphasizes education and guidance for these sectors, alongside compliance monitoring and enforcement, recognizing the varying levels of AML/CFT maturity across these diverse industries.

This multi-agency model ensures specialized oversight for different sectors, while regular inter-agency coordination meetings and information-sharing agreements prevent regulatory arbitrage and ensure a consistent application of the AML/CFT Act’s provisions across the board. The collective efforts of these supervisors are crucial for fostering a robust culture of compliance within New Zealand’s regulated sectors.

5.3 National Risk Assessment (NRA)

A cornerstone of New Zealand’s risk-based AML/CFT framework is the conduct of a regular National Risk Assessment (NRA). The NRA is a comprehensive exercise undertaken by national authorities to identify, assess, and understand the money laundering and terrorist financing risks facing the country. This strategic document provides crucial insights that inform policy development, resource allocation, and the supervisory activities of the AML/CFT agencies.

The New Zealand Police’s Financial Intelligence Unit (FIU), as the central body for financial intelligence, plays a lead role in coordinating and publishing the National Risk Assessment. The 2025 National Risk Assessment, for example, would meticulously outline:

  • Threats: An analysis of the types of predicate offenses generating illicit income (e.g., drug trafficking, fraud, cybercrime, organized crime) and the methods used by criminals and terrorists to launder money or finance terrorism in New Zealand. This includes identifying key criminal typologies and emerging methods of illicit finance.
  • Vulnerabilities: An assessment of the country’s susceptibility to these threats, considering factors such as the size and complexity of its financial sector, the effectiveness of its legal and institutional frameworks, and the capacity of its AML/CFT supervisory and enforcement agencies. It also examines vulnerabilities within specific sectors (e.g., real estate, virtual assets).
  • Risk Mitigation: An evaluation of the effectiveness of existing AML/CFT measures in mitigating identified risks and areas where further strengthening is required.

The findings of the NRA are critical for:

  • Informing Policy and Legislation: Guiding the government in making necessary amendments to the AML/CFT Act or introducing new legislation to address identified gaps or emerging risks.
  • Guiding Supervisory Activities: Enabling the RBNZ, FMA, and DIA to focus their supervisory resources on sectors and areas identified as higher risk.
  • Prioritizing Law Enforcement Efforts: Helping the New Zealand Police, Serious Fraud Office (SFO), and other law enforcement agencies to direct their investigative and prosecutorial efforts towards the most significant ML/TF threats.
  • Facilitating Public-Private Partnerships: Providing reporting entities with a clearer understanding of the national risk landscape, allowing them to tailor their internal AML/CFT programs more effectively.

The NRA ensures that New Zealand’s AML/CFT efforts are strategically aligned with the most pressing domestic and international financial crime threats, promoting an adaptive and intelligence-led approach to combating illicit financial flows.

5.4 Enforcement and Prosecution

Beyond legislative and supervisory frameworks, effective enforcement and prosecution are vital to deterring financial crime and ensuring accountability. New Zealand’s enforcement landscape involves several key agencies collaborating to bring perpetrators of money laundering and terrorist financing to justice.

  • New Zealand Police (NZP) Financial Intelligence Unit (FIU): As mentioned, the FIU is the central hub for receiving and analyzing SARs from reporting entities. It then disseminates actionable financial intelligence to domestic and international law enforcement agencies. The FIU also plays a crucial role in international information sharing, particularly through its membership in the Egmont Group.

  • New Zealand Police (NZP) and Serious Fraud Office (SFO): These agencies are primarily responsible for investigating and prosecuting money laundering, terrorist financing, and predicate offenses. The NZP handles a broad range of financial crimes, while the SFO focuses on serious and complex financial crime. Their investigations often rely heavily on the intelligence provided by the FIU and the cooperation of reporting entities.

  • Asset Recovery and Forfeiture: New Zealand has robust legislation, primarily within the Criminal Proceeds (Recovery) Act 2009, which allows for the forfeiture of assets acquired through criminal activity, regardless of whether a criminal conviction has been obtained. This ‘non-conviction-based forfeiture’ is a powerful tool to remove the financial incentive for crime by depriving criminals of their ill-gotten gains and disrupting their ability to fund further illicit activities. Funds recovered through this mechanism are often directed back into crime prevention and rehabilitation efforts.

  • Customs Service: The New Zealand Customs Service plays a critical role at the border, detecting and interdicting the physical cross-border movement of illicit cash or monetary instruments, which is a common method for money laundering (‘cash smuggling’). They also contribute to investigations relating to trade-based money laundering.

  • Crown Law Office and Prosecutors: Prosecutors, often from the Crown Law Office or regional Crown Solicitor’s offices, are responsible for bringing cases to court, building on the evidence gathered by investigative agencies. They work to secure convictions for ML/TF offenses and to obtain forfeiture orders.

The success of New Zealand’s AML/CTF framework hinges on the effective collaboration and resource allocation across these enforcement agencies, demonstrating a commitment to not only detecting but also disrupting and prosecuting financial crime networks.

Many thanks to our sponsor Panxora who helped us prepare this research report.

6. Challenges in Combating AML and CTF

The fight against money laundering and terrorist financing is a dynamic and ever-evolving battle, constantly challenged by the ingenuity of illicit actors, the rapid pace of technological change, and the inherent complexities of cross-border enforcement. Several key challenges persistently complicate efforts to effectively combat these crimes.

6.1 Technological Advancements

The relentless march of technological innovation, while offering unprecedented opportunities for legitimate commerce and financial inclusion, simultaneously creates new avenues and challenges for money launderers and terrorist financiers. The speed, anonymity, and global reach afforded by new technologies are particularly attractive to illicit actors.

  • Digital Currencies (Cryptocurrencies) and Virtual Assets: The emergence and proliferation of virtual assets (VAs), such as Bitcoin and Ethereum, pose significant AML/CTF challenges. Their decentralized nature, pseudonymous transactions, global reach, and the rapid pace of innovation within the sector make them attractive for illicit activities. While not inherently anonymous, VAs can be used to obfuscate financial trails through methods like ‘mixers’ or ‘tumblers’ (services that commingle potentially identifiable or tainted cryptocurrency funds with others to obscure the trail), peer-to-peer (P2P) transfers, or through decentralized finance (DeFi) platforms. Regulating Virtual Asset Service Providers (VASPs) and implementing the ‘travel rule’ (requiring VASP to VASP transfers to include originator and beneficiary information) remain significant global challenges, as does dealing with non-hosted wallets and truly decentralized applications (dApps) where no central entity can be made accountable.

  • Online Payment Systems and Fintech: The proliferation of online payment platforms, mobile wallets, and challenger banks has revolutionized financial services, offering instant, low-cost cross-border transactions. However, this convenience can be exploited for rapid layering of funds across jurisdictions, often with lower levels of identity verification compared to traditional banking. The sheer volume and speed of transactions make real-time monitoring and anomaly detection incredibly challenging, generating high volumes of alerts that can overwhelm compliance teams. The use of ‘mule accounts’ facilitated by online recruitment also remains a persistent problem.

  • Artificial Intelligence (AI) and Machine Learning (ML): While AI and ML are increasingly deployed as powerful tools to enhance AML/CTF detection capabilities (e.g., in transaction monitoring to reduce false positives), they also present potential risks. Criminals could theoretically leverage AI to develop more sophisticated laundering typologies or to automate aspects of their illicit operations, making them harder to detect. Furthermore, the ‘explainability’ of AI models (understanding why a particular alert was generated) can be a challenge for regulators and legal proceedings.

  • Darknet Markets and Encrypted Communication: The continued existence of darknet markets, which often rely on virtual assets for payment, provides platforms for illicit trade (drugs, weapons, stolen data). Encrypted communication tools, while essential for privacy, can also be used by criminal groups to coordinate illicit financial activities without detection.

Addressing these technological challenges requires continuous innovation in regulatory approaches (RegTech), greater collaboration between public and private sectors, and the development of sophisticated analytical tools capable of keeping pace with evolving criminal methodologies.

6.2 Regulatory Compliance

Even with clear legislative frameworks, achieving consistent and effective regulatory compliance across a diverse landscape of financial institutions and DNFBPs remains a significant challenge. This is multi-faceted:

  • Complexity and Dynamic Nature of Regulations: AML/CTF regulations are inherently complex, prescriptive, and constantly evolving in response to new risks and FATF guidance. Staying abreast of these changes and correctly interpreting regulatory requirements can be daunting, particularly for smaller entities with limited compliance resources. The nuances between jurisdictions further complicate matters for international businesses.

  • Resource Constraints: Effective AML/CTF compliance demands substantial investment in human capital (trained compliance officers, analysts), technology (transaction monitoring systems, screening tools), and ongoing training. Many financial institutions, especially smaller ones or DNFBPs, struggle with these significant resource demands, impacting their ability to implement robust controls.

  • Data Management and Quality: The effectiveness of CDD and transaction monitoring heavily relies on high-quality data. Institutions often grapple with siloed data systems, inconsistent data capture, and fragmented customer information, which can hinder holistic risk assessment and efficient alert management. Poor data quality leads to higher rates of false positives and potentially missed genuine suspicious activities.

  • Culture of Compliance: Beyond technical adherence, a strong culture of compliance is essential. This means embedding AML/CTF considerations into every aspect of an organization’s operations, from senior leadership down to frontline staff. A lack of awareness, insufficient training, or a perception that compliance is merely a ‘tick-box’ exercise can severely undermine the effectiveness of even well-designed programs.

  • Balancing Effectiveness and Efficiency: Financial institutions face the constant tension between implementing stringent AML/CTF controls and ensuring operational efficiency and customer experience. Overly burdensome compliance processes can lead to customer frustration, and, in some cases, ‘de-risking,’ where institutions withdraw services from entire client segments (e.g., Money Service Businesses, NGOs operating in high-risk areas) due to perceived high AML/CTF risk, regardless of their legitimate needs. This can paradoxically drive legitimate financial activity into less regulated channels.

  • Sanctions Compliance Complexity: Navigating multiple and often overlapping international sanctions regimes (e.g., UN, US, EU, UK) adds another layer of complexity. Discrepancies between lists, the dynamic nature of designations, and the need for immediate action upon updates require sophisticated screening capabilities and real-time responsiveness.

Supervisors continuously strive to ensure that entities not only have programs in place but also that those programs are genuinely effective in mitigating risks, often resorting to enforcement actions to drive compliance where necessary.

6.3 International Cooperation

Given the borderless nature of money laundering and terrorist financing, effective international cooperation is not merely desirable but absolutely essential. However, significant barriers continue to hinder seamless collaboration:

  • Jurisdictional Differences and Legal Systems: Disparities in legal systems (e.g., common law vs. civil law), definitions of predicate offenses, evidence standards, and mutual legal assistance treaty requirements can complicate cross-border investigations and prosecutions. What is a crime in one jurisdiction may not be in another, creating loopholes for criminals.

  • Information Sharing Barriers: While FIUs share information through platforms like the Egmont Secure Web, broader information sharing among law enforcement, intelligence, and regulatory agencies across borders can be hampered by legal restrictions (e.g., data privacy laws), lack of trust, bureaucratic hurdles, or technical incompatibility of systems. The ‘need-to-know’ principle often conflicts with the ‘need-to-share’ imperative in combating financial crime.

  • Political Will and Capacity Building: The level of political commitment and resource allocation to AML/CTF efforts varies significantly across nations. Some jurisdictions may lack the legislative framework, institutional capacity, or financial resources to effectively combat financial crime, becoming weak links in the global chain. This highlights the ongoing need for technical assistance and capacity building initiatives by international bodies.

  • Extradition and Mutual Legal Assistance (MLA): Bringing criminals to justice often requires extradition or robust MLA processes for obtaining evidence and freezing assets located abroad. These processes can be lengthy, complex, and subject to political considerations, allowing criminals to evade justice.

  • Disparities in Enforcement: Even if standards are harmonized, the consistency and intensity of enforcement actions differ between jurisdictions. This can lead to criminals ‘jurisdiction shopping’, seeking out places with weaker enforcement to operate with lower risk.

Overcoming these challenges requires sustained diplomatic efforts, continuous improvements in legal frameworks for cooperation, and technological solutions to facilitate secure and efficient information exchange.

6.4 Evolving Criminal Typologies

Criminal organizations and terrorist groups are highly adaptive, constantly innovating their methods to circumvent AML/CTF controls. This continuous evolution of criminal typologies presents a formidable challenge for authorities and obligated entities.

  • Trade-Based Money Laundering (TBML): TBML involves disguising the proceeds of crime through legitimate trade transactions. This can occur through misinvoicing of goods and services (under- or over-invoicing), multiple invoicing, false declarations of goods, or phantom shipments. TBML is particularly challenging to detect because it blends illicit financial flows with massive volumes of legitimate global trade, requiring sophisticated analysis of trade data and collaboration between customs and financial intelligence agencies.

  • Professional Money Launderers (PMLs): The rise of specialized PML networks offers ‘laundering-as-a-service’ to various criminal groups. These networks employ highly sophisticated techniques, often leveraging shell companies, nominee shareholders, complex offshore structures, and multiple jurisdictions to obscure ownership and origin of funds. They exploit weaknesses in regulatory oversight and legal loopholes across borders, making their detection and dismantling extremely difficult.

  • Misuse of Legal Persons and Arrangements: Corporations, limited liability companies, trusts, and other legal entities can be exploited to create layers of ownership and control, making it difficult to identify the true beneficial owner. Shell companies, often registered in secrecy jurisdictions, are a pervasive tool for obfuscating illicit funds, requiring robust beneficial ownership registries and enhanced CDD measures.

  • Exploitation of High-Value Assets: Real estate, luxury goods (e.g., art, yachts, private jets), and precious metals remain attractive avenues for money laundering due to their high value and potential for appreciation. The lack of comprehensive AML/CTF supervision in some of these sectors (e.g., art markets) presents vulnerabilities.

  • Cybercrime and Financial Crime Nexus: There is an increasing convergence between cybercrime and financial crime. Ransomware attacks, phishing scams, and business email compromise (BEC) schemes generate significant illicit proceeds that then need to be laundered. The speed and anonymity of cyber-enabled crimes make tracing and recovering funds challenging, often requiring collaboration between cybersecurity experts and financial investigators.

To counter these evolving typologies, AML/CTF frameworks must remain agile, incorporating lessons learned from new cases, investing in advanced analytical capabilities, and fostering close public-private partnerships to share intelligence on emerging threats.

Many thanks to our sponsor Panxora who helped us prepare this research report.

7. Conclusion

The enduring battle against money laundering and terrorist financing is an immensely complex and perpetually evolving undertaking, demanding a multi-faceted, dynamic, and globally coordinated approach. The historical trajectory of AML/CTF frameworks, from fragmented national responses to the establishment of harmonized international standards by bodies such as the FATF, underscores a growing global understanding of the profound socio-economic and security threats posed by illicit financial activities. Robust frameworks, characterized by rigorous Know Your Customer protocols, proactive Suspicious Activity Reporting, sophisticated transaction monitoring, comprehensive internal controls, stringent record-keeping, and diligent sanctions compliance, form the foundational pillars of national defenses.

New Zealand’s commitment to these global efforts is evident in its comprehensive AML/CFT Act, its innovative multi-agency supervisory model, its proactive National Risk Assessments, and its effective enforcement mechanisms. The nation’s framework demonstrates a strong alignment with international best practices and a continuous effort to adapt to the changing landscape of financial crime.

However, despite significant progress, the landscape remains fraught with formidable challenges. The rapid pace of technological advancements, particularly the rise of virtual assets and complex online payment systems, presents unprecedented opportunities for illicit actors to exploit vulnerabilities, demanding continuous innovation in regulatory and technological responses. Ensuring consistent and effective regulatory compliance across diverse sectors and jurisdictions remains a persistent hurdle, often constrained by resource limitations and the sheer complexity of the evolving regulatory environment. Furthermore, the transnational nature of financial crime necessitates intensified international cooperation, which is frequently impeded by legal disparities, information-sharing barriers, and varying levels of political will and capacity among nations. The constant evolution of criminal typologies, from sophisticated trade-based money laundering to the pervasive use of professional money launderers and the insidious nexus between cybercrime and financial crime, means that vigilance cannot wane.

Ultimately, the integrity of the global financial system and the security of nations hinge on the collective ability to mitigate the risks associated with illicit financial activities. This imperative calls for sustained investment in regulatory technology (RegTech), continuous enhancement of human expertise, and, crucially, an unwavering commitment to public-private partnerships and international collaboration. The future effectiveness of AML/CTF regimes will depend on their capacity for continuous evaluation, adaptation, and proactive engagement with emerging threats, ensuring that financial systems remain resilient bastions against those who seek to exploit them for nefarious purposes.

Many thanks to our sponsor Panxora who helped us prepare this research report.

References

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