“I’d love to help you, but I simply can’t… or can I?” Anti-Money Laundering legislation and regulatory challenges concerning customer due diligence obligations in the platform era

The Anti-Money Laundering (AML) regulatory framework is undergoing fundamental institutional and substantive changes to adequately account for the new challenges brought up by financial innovation. With the advent and increasing use of platforms and portals, in fact, digital onboarding and remote customer due diligence are prompting regulators and supervisors to rethink the paradigms underpinning the AML regulatory framework. On the one hand, in fact, the growing use of portals exacerbates the risks associated with remote customer identification and due diligence, and on the other hand, innovative technological solutions (eg based on artificial intelligence) offer attractive opportunities to support «obliged entities» in fulfilling anti-money laundering obligations. In this context, a timely topic relates to whether and how obliged entities may outsource the set of tasks underpinning the customer due diligence obligation to external service providers. In fact, the current regulatory framework based on Directive 2015/849 creates a very strict regime that allows obliged entities to outsource certain tasks of the CDD obligations to other obliged entities only. In this respect, thus, the regime seems to grant exclusive rights to qualified parties only (those parties who are subject to AML legislation), eventually creating foreclosure. This article aims to advance the scholarly debate on AML’s regulatory approaches and reforms, by addressing the legal uncertainties surrounding the customer due diligence outsourcing. In doing so, it will aid scholars and practitioners navigate the intricated existing regulatory framework as well as explore the upcoming trends stemming from the AML package reform. The main finding of this analysis points to a paradigm shift in the ambit of CDD outsourcing, from a strict regulatory approach that confines CDD outsourcing to other obliged entities only to a new scenario that rather allows for a remarkable opening towards external service providers.