As regulatory authorities worldwide continue to crack down on financial crime, multinational companies face growing obligations to implement robust Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance frameworks. What was once considered a banking sector issue is now a legal and commercial necessity for companies across industries—particularly those operating across borders or engaging in international transactions.

Failure to meet AML/KYC requirements doesn’t just result in regulatory penalties. It can restrict access to banking services, delay deals, damage reputation, and expose directors to personal liability. For global businesses, AML/KYC is not a box-ticking exercise—it is a strategic component of legal risk management and operational efficiency.

This article explores the legal challenges of AML/KYC compliance for multinational companies and provides practical recommendations for building effective, jurisdictionally aligned programs.

The Expanding Scope of Global AML/KYC Regulation

Historically, AML/KYC obligations applied primarily to banks and financial institutions. However, global standards—driven by the Financial Action Task Force (FATF) and implemented through national legislation—now extend to a wide range of businesses, including:

✔ Payment service providers and fintech companies

✔ Real estate and legal services firms

✔ Investment funds and asset managers

✔ Crypto-asset service providers

✔ Certain trading, import/export, and high-risk commercial operations

For multinational groups, this creates layered, jurisdiction-specific AML/KYC obligations, often with extraterritorial application.

In recent years, we have seen:

• Heightened enforcement of AML rules in Europe, the U.S., and Asia

• New regulations targeting beneficial ownership transparency

• Increased scrutiny of cross-border transactions and correspondent banking relationships

• Expansion of AML obligations to crypto-assets and virtual asset service providers

• Tighter requirements for politically exposed persons (PEPs) and high-risk jurisdictions

As a result, global businesses must adapt their compliance frameworks to meet evolving legal expectations in all markets where they operate.

Legal Challenges for Multinational Companies

Operating across borders introduces several key AML/KYC compliance challenges:

✔ Jurisdictional Divergence

AML legislation and enforcement intensity vary significantly between countries. For example:

• The EU applies strict, harmonized AML rules through successive Anti-Money Laundering Directives (AMLDs), including beneficial ownership registers.

• The U.S. enforces AML obligations under the Bank Secrecy Act (BSA) and Patriot Act, with aggressive extraterritorial enforcement by regulators like FinCEN.

• Emerging markets may have weaker or inconsistently enforced AML regimes, increasing commercial risk.

✔ Complex Ownership Structures

Multinationals often use layered corporate structures or offshore entities for tax efficiency or legal reasons. Without careful transparency measures, these structures can trigger enhanced scrutiny from banks, regulators, or counterparties.

✔ Cross-Border Data Privacy Restrictions

Collecting and verifying customer data globally is complicated by strict privacy laws, notably under the EU General Data Protection Regulation (GDPR), which restricts certain cross-border data transfers.

✔ Banking and Transactional Delays

Weak or incomplete AML/KYC processes often result in:

• Delayed account openings

• Frozen transactions

• Rejected payments or wire transfers

• Loss of access to essential financial services

✔ Reputational and Commercial Risk

Regulatory breaches, AML scandals, or failure to meet counterparties' compliance expectations can damage reputation, deter investors, and undermine strategic deals.

Best Practices for Global AML/KYC Compliance

Multinational companies can manage legal and commercial risks by implementing proactive, scalable compliance frameworks:

✔Global AML Policy Framework

Establish a group-wide AML/KYC policy aligned with FATF standards and the strictest applicable legal requirements across jurisdictions.

✔Tailored Local Compliance

Adapt policies to reflect country-specific laws, licensing obligations, and regulatory expectations, especially in high-risk markets.

✔Robust Beneficial Ownership Transparency

Maintain clear, accurate records of ultimate beneficial owners (UBOs) across all entities, ready for disclosure to banks, regulators, and counterparties.

✔Enhanced Due Diligence (EDD)

Apply EDD for:

• High-risk industries or jurisdictions

• PEPs and sanctioned persons

• Complex ownership structures

✔Technology and Automation

Leverage secure digital tools for:

• Identity verification

• Sanctions screening

• Transaction monitoring

• Data management compliant with privacy laws

✔Third-Party and Counterparty Risk Management

Conduct AML due diligence on suppliers, business partners, and counterparties, particularly in cross-border transactions or joint ventures.

✔Training and Awareness

Regularly train employees and management on AML/KYC obligations, red flags, and escalation procedures.

✔Legal Oversight and Documentation

Engage legal counsel to:

• Conduct compliance gap assessments

• Monitor regulatory developments

• Document policies and controls to demonstrate regulatory alignment

Practical Example: AML/KYC in Cross-Border Operations

A multinational commodity trading company establishes subsidiaries in Singapore, Switzerland, and West Africa. To avoid banking delays and regulatory penalties, the company:

• Implements a global AML/KYC program meeting FATF and local standards

• Conducts EDD on suppliers in high-risk jurisdictions

• Maintains clear UBO documentation for all subsidiaries

• Uses automated screening tools for transactions and counterparties

• Engages legal counsel to ensure compliance with EU, U.S., and local AML laws

This approach enables smooth banking relationships, transaction efficiency, and reduced legal risk.

Conclusion: AML/KYC as a Strategic Business Imperative

For multinational companies, AML/KYC compliance is no longer optional—it is central to legal risk management, operational efficiency, and commercial success.

Failing to meet global standards can disrupt banking access, delay deals, trigger regulatory action, and damage reputation. Conversely, a robust, legally sound compliance framework builds trust with banks, regulators, investors, and counterparties.

At Lampião & Sokolovich Attorneys, we assist businesses in designing, implementing, and auditing AML/KYC frameworks that meet global standards and local legal requirements.

If your operations span multiple jurisdictions, speak to our legal team to ensure your AML/KYC systems protect your business, facilitate smooth operations, and support sustainable international growth.‍