the full picture, this week – 01 November 2019

by | Nov 1, 2019 | All Blog Posts, the full picture this week, Featured

Let us put you in the picture this week, as we round-up and react to the latest news from the financial crime compliance and technology sectors.
This time, we give our reaction as it’s found that one in five UK law firms are failing to maintain adequate systems to prevent money laundering.

Elsewhere, there’s the latest as the European Banking Authority (EBA) comments that cross-border banking and payment services in the EU are being held back by a lack of regulatory clarity and harmonisation.

These issues, and more from around the globe, give us plenty to dive into for your Full Picture, This Week…

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one in five UK law firms fails to comply with money laundering rules

One in five UK law firms are failing to maintain adequate systems to prevent money laundering, according to the industry watchdog.

the full picture, this week - 01 November 2019 | Paul Philip, SRA Chief Executive | Encompass blogThe Solicitors Regulation Authority (SRA) contacted 400 law firms to check they were complying with 2017 Anti-Money Laundering (AML) rules, but found 21 per cent were not.

The findings [subscription required] come as fears over an increase in dirty money entering the UK and a lack of reporting of suspicious activity by lawyers and accountants increase.

The SRA opened 172 investigations linked to AML compliance in the first three quarters of 2019, according to new data released – down from more than 300 in the same period last year. The drop is, in large, due to a difference in the way such reports are categorised, rather than a shift regarding the issue.

In the past five years, the regulator has passed 60 such cases to the Solicitors Disciplinary Tribunal, resulting in more than 40 solicitors being struck off or suspended.

Paul Philip, SRA chief executive, said:

The damage money laundering does to society means that every solicitor must be fully committed to preventing it. The vast majority would never intend to get involved in criminal activities, but poor processes open the door to money launderers.

the Encompass view

Given the negative socio-economic repercussions of money laundering on wider society, it’s crucial that law firms have adequate controls in place, however, as this recent study by the SRA revealed, a significant number do not.

AML compliance is not optional and firms must remain vigilant and not become complacent.

There are a number of technological solutions available that are both effective and cost-efficient, and at Encompass, we would encourage all firms to that advantage of these to ensure they have tight AML procedures and systems in place.

While progress is being made, the continued focus on this area demonstrates that there is more to be done, especially as the regulatory environment becomes more stringent.

the Encompass view

Given the negative socio-economic repercussions of money laundering on wider society, it’s crucial that law firms have adequate controls in place, however, as this recent study by the SRA revealed, a significant number do not.

AML compliance is not optional and firms must remain vigilant and not become complacent.

There are a number of technological solutions available that are both effective and cost-efficient, and at Encompass, we would encourage all firms to that advantage of these to ensure they have tight AML procedures and systems in place.

While progress is being made, the continued focus on this area demonstrates that there is more to be done, especially as the regulatory environment becomes more stringent.

Max Worrall | Sales Manager General Markets, Encompass

EBA calls for action on cross-border banking and payments

the full picture, this week - 01 November 2019 | EBA calls for action on cross-border banking and payments | Encompass blogCross-border banking and payment services in the EU are being held back by a lack of regulatory clarity and harmonisation, says the EBA.

The rise of digital services should help established and newcomer providers reach more people, including across borders, concludes the body in a report developed under its Fintech Roadmap.

However, the report states that the promise is not being fully realised within the EU. A significant problem for firms is the lack of clear guidance on how to even classify cross-border activity under the freedom to provide services or right of establishment.

The EBA is calling for further harmonisation of rules and for it to be made easier to identify cross-border services taking account of the digitisation of the financial services industry.

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retail banks struggle to meet demands for more comprehensive and personalised banking

Retail banks are struggling to meet customer demands for more comprehensive and personalised banking, according to the World Retail Banking Report (WRBR), published by Capgemini and Efma.

This year’s edition featured data from a global survey of more than 7,900 retail banking customers in 20 countries, along with an executive survey conducted among more than 50 senior banking executives across 30 markets.

It found that three quarters of customers currently use at least one financial product from a BigTech, with the top three reasons they turn to financial products from non-traditional players being lower costs (70 per cent), ease of use (68 per cent) and faster service (54 per cent).

Of customers likely to switch their primary bank in the next 12 months, more than 80 per cent are currently using payments, cards, or bank account products from BigTechs and challenger banks, or are likely to do so in three years.

Delve into more of the findings.

news in brief

Security executives have a bigger seat at the table when making product decisions in the world of faster payments and online account origination. At Money 20/20, industry experts discussed how technical knowledge and business issues need to be married to truly meet the realities of digital transformation and prevent fraud. Here’s what they had to say.

A new bill has been introduced in Australia in an attempt to ease the Customer Due Diligence (CDD) compliance burden. The bill allows reporting entities to rely on CDD procedures performed by a third party. Read more [subscription required].

The Treasury Committee has published a report warning that regulators must act to reduce the “unacceptable number” of IT failures in the financial services sector. Customers are increasingly expected to rely on online banking services but these services have been significantly disrupted due to IT failures, resulting in customers being left without access to their financial services, stated the group of MPs. FStech has more.

Tracking Bitcoin’s ‘highs and lows,’ Finextra published this article looking at recent developments.

Gambling operators in Sweden will be required to report suspicious financial transactions through a new AML system, which is due to go live in January. Find out more.

The Government of British Columbia has announced new rules to curb hidden ownership of private companies. Finance Minister Carole James said businesses operating in B.C. must “keep and maintain transparency records of beneficial owners, including individuals who have direct or indirect control of the company or its shares.”

profitability, efficiency and reputation: how Encompass delivers for CEOs

Much is said about machine learning, blockchain, optical character recognition – clearly as a future direction of the industry.

But it’s important to not lose sight of what needs to be done today.

Encompass’ Paul Joseph and St John Potter outline the practical steps that must be taken to elevate existing KYC, CDD and AML processes – essential for keeping the proceeds of financial crime away.

digital transformation of the KYC operating model

According to McKinsey & Company, a “well-executed, end-to-end risk-function transformation can decrease costs by up to 20 percent while improving transparency, accountability, and employee and customer experience”.

In this article, we examine the pre-digital KYC operating model and how digital innovation increases efficiency and effectiveness, looking at the role people have to play in the policies, processes and information systems used in modern compliance.

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maximising the benefits of KYC automation

The world of Know Your Customer (KYC), compliance and financial crime never sleeps, and if your challenges are keeping you up at night let us help. Encompass intelligently automates information and news discovery for KYC requirements for onboarding ongoing monitoring.

Driven by your internal policies, our platform automatically constructs corporate ownership structures, discovers beneficial owners, and in minutes screens all relevant entities and persons for regulatory, reputational and financial risk.