With 2019 firmly underway, the compliance field is getting ready for change.
Preparation for the EU’s Fifth Money Laundering Directive (5MLD) is ongoing, and the sanctions regime has already seen significant developments. But what else does 2019 have in store for compliance professionals? Our team of senior leaders, customers, and industry advisors give their take on what to expect next.
As the burden of Know Your Customer (KYC) requirements grows, the need to drive operational efficiencies throughout this process is imperative. Consortiums of banks, governments and vendors have been exploring the cost-saving efficiencies that could be gained from a shared-service approach to KYC, known as a KYC Utility. Following an attempt in Singapore to establish a regional Utility that was scrapped due to escalating costs, 2019 will see the Nordics take the baton to be the first region over the finish line. This is an encouraging step forward in the fight against financial crime and follows many significant money laundering cases in this region.
There is a lot to be learned from the Singapore KYC Utility experience. The design of the Utility needs to be flexible to meet the varying needs of different participants and highly configurable technology must underpin its structure. By approaching the project with a thorough and detailed understanding of stakeholder needs and deploying best-in-class technology, strong foundations will be laid. Let’s hope we’ll be celebrating the success of the Nordics Utility in 2019.
Read more from Wayne about how to plan for success in a KYC Utility here.
Criminals continue to find and exploit gaps in the financial systems resulting in the growth of money laundering and financial crime risks. Both public and private sectors are at risk from criminal activity as the the lack of data sharing is exploited. In a recent research study by the Centre for Financial Professionals (CeFPro), this lack of cooperation between the sectors was highlighted as a significant weakness by participants alongside the need for innovative technology. Collaboration and communication should, and will, play a more pivotal role in 2019, as financial firms and government agencies find successful ways to share intelligence.
Find out more about the study and compliance in 2019 by CeFPro here.
Law firms will continue to see their KYC and client onboarding programmes under increasing scrutiny in 2019. The extended regulatory requirements defined under 5MLD, as well as those set out by the UK’s Solicitors Regulation Authority (SRA), have changed the compliance landscape of the legal sector.
Many law firms are exploring how to redesign their compliance processes to be more efficient while improving the customer experience. Making the most of technology innovation and KYC automation will give firms a strategic advantage in 2019.
Read more from encompass customer, Cliff Morris at Paris Smith.
Virtual currencies are in global policymakers’ sights for Anti-Money Laundering (AML) in 2019. It’s estimated that $1.2 billion was laundered via cryptocurrencies between 2017 and 2018. Taking the lead from the G20, who have requested ‘vigilant monitoring of cryptocurrencies, 2019 will witness a number of countries take the next steps in regulating this fast-paced sector.
The new year saw Malaysia be the first country in 2019 to bring cryptocurrency policy into effect. The new legislation targets unauthorized cryptocurrency exchanges or initial coin offerings and would result in a 10-year jail sentence and fines of up to $2.4 million. The UK’s FCA launched a consultation in January that has been welcomed by firms who want to see a clear regulatory framework established. Canada is also developing regulation to manage the risk from virtual currencies as part of an overhaul of its AML policies.