the full picture, this week – 01 June 2018
In our weekly roundups, the encompass team take you through all the breaking news on Know Your Customer (KYC), compliance and financial crime, keeping you informed at all times. This week, we look at the fate of three individuals with very different attitudes towards the Kremlin, inspiring AI developments in Ethiopia, and using blockchain to cancel carbon emissions in ice-cream production…
anti-money laundering and financial crime
It’s been a hectic week for any Russia-watchers with a spate of news concerning Moscow. We kick off this week with news of three high profile individuals, one friendly with the Kremlin, and two, absolutely not…
We wrote last week how Roman Abramovich was reportedly having issues with his UK visa renewal and was considering taking out an Israeli visa. Following this, multiple reports in the UK are stating that he has shelved a £1 billion plan to update and add to Chelsea FC’s stadium, Stamford Bridge. The news come amid confirmation from Downing Street that the Russian would not be allowed to work in the UK should he travel to the UK on an Israeli visa. It is believed that his UK visa was not renewed after demands that he reveal his sources of wealth. Further reporting in the in the Independent, Politico, BBC, and The Telegraph.
On to those decidedly less friendly towards the Russian regime now…
Vladimir Putin’s number one critic, Bill Browder was briefly incarcerated in Madrid on an Interpol “red-notice” before being released. The American born UK national has been a vocal critic of the Kremlin for a decade following the death of his lawyer Sergei Magnitsky in Russian detention. It is reputedly the sixth time that the Russian Government has tried to have Mr Browder arrested. Full reporting can be found in the Guardian, Financial News London, BBC, Forbes, ABC and Fortune.
In what is surely the strangest story to have adorned these pages, it’s clear that someone in the Ukrainian Government is a fan of the Bond movies…
After being informed by the Ukrainian security services that Moscow was seeking to assassinate him, journalist Arkady Babchenko staged his own death, fooling everyone, including his wife… only to reveal at a press conference some hours later that it was an act. The police staged a shooting in which Mr Babchenko “was shot three times in the back”, before taking pictures of him prostate on the ground covered in blood – later revealed to be pigs blood. Mr Babchenko revealed at the press conference that he watched rolling coverage of his own death at a local morgue.
The Ukrainian police later arrested one man who was believed to have intentions against Mr Babchenko.
The Russian-born journalist has been a long-standing critic of Vladimir Putin, and at the press conference, stated that he would like to “dance on Putin’s grave”. He is now in hiding.
Separately, the Guardian has reported on a group of Russian investors who have put money into apartment blocks, only to see the blocks never completed and their money disappear. Between 40,000 to 120,000 investors are demanding action from the Government. Russian President Vladimir Putin, has announced shared ownership schemes will end within three years.
In Hong Kong, Hubbis have revealed that cyber-crime generally and “phishing” scams specifically, are having massive negative effects on financial institutions in the region. They recommend that as well as training for employees, that technology is increasingly used to weed out the attempts of cyber criminals and fraudulent emails.
On Wednesday, the Government of Hong Kong stated that following a public consultation, it was updating its guidelines on virtual banks, with a view to authorising licenses.
Mr Norman Chan, Chief Executive of the HKMA, said
We are pleased to have broad support received during the public consultation for the development of virtual banking. We hope to be in a position to start granting licences to virtual banks towards the end of this year or in the first quarter of next year.
Reuters have offered two exclusives from the Baltic state this week. The first concerns Meridian Trade Bank, which has been fined for breaching anti-money laundering rules. Latvia has been keen to clean up its image since one of its banks shut down earlier in the year following sanctions from the United States. Meridian has been fined 456,000 EUR for lacking internal controls.
On a wider scale, authorities are probing whether Russian criminal money was laundered through Latvian banks before being moved to other EU states. There are concerns the money was moved with the purpose of manipulating Governments with Latvian officials probing involvement in a coup in Montenegro in 2016.
Montenegro’s Special Prosecutor later accused Moscow of involvement in the plot, which he said was aimed at halting the integration of the former Yugoslav republic into NATO. The Kremlin has dismissed such claims as absurd.
Money and drugs are never far from the surface in Mexico, but there was a chink of light for Mexican authorities after the wife of “El Mencho” was arrested on charges of organised crime and money laundering. Rosalinda González Valencia was arrested on Tuesday. Nemesio Oseguera Cervantes, alias “El Mencho”, is one of the foremost players in the Mexican drug scene.
Next Wednesday a court in Vietnam will make a ruling on the country’s biggest ever fraud case. $215m was stolen from state controlled VietinBank CTG.HM, and the ruling will decide whether the money will be repaid by the bank or the individual involved in the theft.
Ever wanted a full rundown of how Russian criminal money is laundered in the UK? The Guardian has obliged, courtesy of Russia watcher, Oliver Bullough.
RUSI has made its usual entrance on these pages, noting that for British crime enforcers, it should be all about the money. They write that following the money was how the Mafia was brought down, and should be the same route to conviction in the UK in 2018.
A political scientist from New Zealand has written a report stating that globally, only 0.2% of global criminal funds are ever recovered. In New Zealand the figure is only marginally better at 1%. Academic, Ron Paul has published his findings in the Journal of Financial Crime.
fintech and regtech
It’s a slimmed down look at the fintech and regtech scene this week, with only one major story reaching our ears. The Scotsman newspaper has published a look at how Scotland can become one of the major players in the fintech scene, examining the thoughts of some of the major players in the market, including Louise Smith, from RBS, and fintech envoy to the UK Government, Stephen Ingledew of FinTech Scotland and Andrew Smith of Nucleus Financial.
Could tech firms one day present a direct threat to financial service firms? In Finextra there have been grumblings that companies such as Amazon and Google could begin to directly challenge the sector. They write:
Some of the top bankers in Europe have been calling on EU rulemakers to take a stand on tech firms offering financial services, particularly in the open banking era, where banks are being forced to open up their data to third parties but without any reciprocity.
Uganda has passed a controversial “WhatsApp tax”, by applying a £0.04 daily charge on those using the social network. “State Minister for Finance David Bahati told parliament that the tax increases were needed to help Uganda pay off its growing national debt” write the BBC.
The New York Times has a long read on Google’s entry into weaponising AI through “Project Maven”. Following a contract win with the Pentagon, Google has been careful on how it positions the contract win, though there have been internal wrangles within the company itself on the legality and morality of the project.
Uses and considerations on blockchain technology continue to baffle and excite in equal measures. This week Cointelegraph reports on a new report from Deloitte that states that those that are not using digital currencies face the risk of falling behind. The Chinese Government may very well have been reading the report, as they begin to upscale research and development in the technology, write Finance Magnates.
To build a regional equity market in Guangdong, according to the opening up of the capital market, timely introduction of Hong Kong, Macao and international investment institutions to participate in transactions. We will vigorously develop financial technology and accelerate the research and application of blockchain and big data technologies under the premise of legal compliance.
And if you thought that blockchain was all about banking and finance, nobody told ice-cream manufacturer Ben & Jerry’s, who according to Forbes have brought in a partner to help them use blockchain to cancel out the carbon emitted during the production of their dairy products.
We’ve all seen the Terminator films (the good ones anyways), and feared that it’s portent of an AI gone rogue and launching a nuclear apocalypse may one day be our future. But just how likely is it that AI will impact the probability of nuclear war occurring? SingularityHub have pondered this very question, and here’s their answer.
In a similar vein, academics in Israel have forecasted that to fight cybercrime in the future, companies will require the use of robots, to combat… other robots. Or in the case of Japanese researchers, using robots to stop criminality happening… before it has taken place. They should make a film about that.
Forbes has been examining what factors are required for AI to take off and have concluded that there are three – next-generation computing architecture; access to historical datasets; and advances in deep neural networks.
In our article pick of the week, Undark has examined how AI could the be the key for development in Ethiopia. In their lengthy examination, they illustrate how traditional manufacturing techniques have already been saturated, and the future to developing the country’s economy lies in next generation technology, such as AI.
Nothing stands still on the cryptocurrency front, and this week is no exception as we report on a Korean currency banning trade in eleven countries and German millennials considering cryptocurrencies in their investment portfolios.
Commentator Rosemary Fanelli has given us her four predictions to watch out for in the world of crypto in Forbes magazine. It should be an intriguing year…
Nearly a third of German millennials would consider investing in Bitcoin write Finance Magnates.
The poll of 3,100 Germans, across a broad demographic, also found despite a growing sense that cryptocurrency regulation is now inevitable, 60 percent of women and 51 percent of men are citing “independence from established financial systems” as an important factor.
The big news this week centres around the Trump administration’s announcement to levy further import taxes on goods from some of its main allies, Mexico, Canada and the EU. The US has placed tariffs of 25% on steel and 10% on aluminium. There have been protests from many state Capitals including the UK, Canada and France, with French president Emmanuel Macron calling the move “illegal”.
Canadian Prime Minister Justin Trudeau said:
These tariffs are an affront to the long standing security partnership between Canada and the United States, and in particular, an affront to the thousands of Canadians who have fought and died alongside their American brothers in arms.
The US is also reportedly still considering upping the ante in its continued war of words with China, which has predictably not gone down well in Asia.
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