the full picture, this week – 06 September 2019

by | Sep 6, 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 week, we give our reaction to research that says Know Your Customer (KYC) is costing banks €50m a year as sanctions related to non-compliance increase.

Elsewhere, there’s the news that mobile payment firms are joining together to form the European Mobile Payment Systems Association (EMPSA).

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

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KYC costing banks €50m a year as sanctions soar

A typical European bank serving 10 million customers could save up to €10 million annually and avoid growing regulatory fines by implementing technology-focused KYC processes, according to new research.

Mitek and Consult Hyperion found that, following new EU Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) rules extending the scope of KYC requirements, the annual cost of non-compliance fines has risen to €3.5 million.

In some cases, these fines can move into tens or even hundreds of millions, the report adds.

The risk of reputational loss, losing license to operate and even personal liability are also increasingly significant and could be among the consequences of non-compliance.

Inefficient onboarding is a key contributor to a 56 per cent abandonment rate for banking customers – up from 40 per cent two years ago – with customers often leaving the process as soon as they’re asked to visit a branch face-to-face with their passport and utility bills.

“It’s no longer good enough for banks to simply accept the costs associated with inefficient processes – the consequences are now much more serious,” said Steve Pannifer, report author and chief operating officer at Consult Hyperion.

the Encompass view

We know that 2019 is set to be a record year when it comes to AML fines, and the writing has been on the wall for some time

Up until now, there’s a belief that some banks have taken the view that fines are a cost of doing business, but this simply cannot be the case any longer. Automation and demonstrating compliance go hand-in-hand, and this is something that is becoming both more evident and important.

The capabilities offered by platforms such as Encompass have a vital role to play and can help firms consolidate steps in their KYC processes and vastly improve the onboarding experience, which is crucial and has been found by this research to be lacking for a considerable percentage of customers.

By using technology to gather all the required data rather than leaving it to humans, this allows onboarding teams to work more efficiently, as well as boost productivity while demonstrating commitment to regulators and auditors without added costs.

the Encompass view

We know that 2019 is set to be a record year when it comes to AML fines, and the writing has been on the wall for some time

Up until now, there’s a belief that some banks have taken the view that fines are a cost of doing business, but this simply cannot be the case any longer. Automation and demonstrating compliance go hand-in-hand, and this is something that is becoming both more evident and important.

The capabilities offered by platforms such as Encompass have a vital role to play and can help firms consolidate steps in their KYC processes and vastly improve the onboarding experience, which is crucial and has been found by this research to be lacking for a considerable percentage of customers.

By using technology to gather all the required data rather than leaving it to humans, this allows onboarding teams to work more efficiently, as well as boost productivity while demonstrating commitment to regulators and auditors without added costs.

Dr Henry Balani | Head of Solution Consulting, Encompass

mobile payment firms form Euro association

the full picture, this week - 06 September 2019 | mobile payments | encompass blogSeveral mobile payment firms, covering more than 25 million registered users, are joining together to form the European Mobile Payment Systems Association (EMPSA), which members say will foster collaboration and facilitate international payments.

The association will be based in Zurich and its seven members cover nine European countries – Belgium, Germany, Austria, Denmark, Finland, Norway, Portugal, Switzerland and Sweden – as well as more than one million merchant acceptance points and 350 associated banks.

It will be chaired by Søren Mose, who is the chairman of the board of directors of Swiss firm TWINT, and will be vice-chaired by Anna-Lena Wretman, CEO of Sweden’s Swish.

“With this cross-border cooperation we want to meet the wish of our users to be able to use their local mobile payment system internationally,” said Mose when discussing objectives.

Finextra has the latest.

Dutch central bank to regulate cryptocurrencies

the full picture, this week - 06 September 2019 | De Nederlandsche Bank | encompass blogThe Dutch central bank will begin regulating cryptocurrency services from 10 January 2020.

De Nederlandsche Bank said:

In concrete terms, firms offering services for the exchange between cryptos and regular money, and crypto wallet providers, must register with De Nederlandsche Bank.

It added that failure to register would result in firms no longer remaining in business.

From the start of next year, firms offering services for the exchange between virtual money and regular money, along with crypto wallets, are expected to become subject to its integrity supervision regime.

The bank is required to supervise crypto product businesses under the fifth European Anti-Money Laundering Directive (5MLD).

Read more.

on demand webinar

understanding 5MLD

practical implications and anticipating future regulatory changes

news in brief

In an article titled ‘Financial crime: Can Europe’s banks wash themselves clean?, EuroMoney examines how institutions in the continent are trying to bolster their efforts following high profile money laundering scandals.

Costa Rica is preparing an action plan for the evaluation of its AML system in 2020, in line with the international standards issued by the Financial Action Task (FATF). Find out more.

Digital challenger banks are on track to treble customer numbers to 35 million in the next year as they catch up with incumbents’ market share, according to recent figures analysed by FStech.

Finance Minister Edward Scicluna has appeared to dismiss Malta’s money laundering woes by implying that it was less of an issue because it happened everywhere else. “I sometimes joke,” he said, “that we have more regulators these days than practitioners, but still we get a lot of criticism. I do not know of any jurisdiction that can put its hand on its heart and say we don’t have any money laundering here.”

Australia’s capital markets regulator has vowed to expand its use of new technology and behavioural data as part of a strategic plan to strengthen its enforcement. Read about the new four year corporate plan for the Australian Securities and Investment Commission (ASIC), which is expected to cost AU$270 million.

how Encompass helps to manage the balance between regulatory obligations and fee earner demands

The ever-changing landscape of regulatory compliance, with its increasing obligations, creates a challenge for law firms that centres on how they balance thorough Know Your Customer (KYC) checks with meeting fee earner demands to onboard clients efficiently.

In an effort to meet this challenge, many firms have increased headcount within their compliance teams. In some respects, this can be successful in navigating the associated obstacles, but at what cost and what other challenges exist between the two functions?

This is the question that Encompass Business Development Manager Richard Beattie examines here, as he looks at how our platform can help to assist businesses in implementing a fast and effective onboarding process that improves client satisfaction while also ensuring compliance.

in the spotlight Kate McAleavey, Product Owner

Kate McAleavey | encompass staffOur Product team is a crucial part of our business. At the heart of delivering the best we can for our customers, each member is central to our ongoing growth – and none more so than Kate McAleavey.

Since joining Encompass, Kate’s Product Owner role has expanded, as she has gone from primarily dealing with one client to many globally.

She tells us how this has helped her to develop, what benefits working for a smaller organisation has brought her, and why she thinks everyone in the company works so well together.

seminar

augmenting customer due diligence

the importance of a connected approach to data and technology

meet the Encompass team

The Encompass team will be out and about across the globe, participating in key industry events.

Digital Financial Crime 2019 | Thu 12 September | The Shard, London

We will be joining with Evaluserve and Regtech Associates to explore digital financial crime and joining the FinCrime dots on the customer journey. With over 150 Financial Crime products in our market map, how do buyers, such as heads of financial crime evaluate which ones really solve their problems. Based upon pre-event research, during this roundtable we’ll explore;

  • common pain points in the industry
  • pros/cons of point solutions versus platforms
  • rules-based versus AI driven claims

This industry roundtable is by invitation only for senior members of financial institutions. If you are a head of financial crime or a senior professional in the industry working for a regulated institution – please get in touch with RegTech Associates if you would like to attend and we’ll get back to you.

Augmenting Customer Due Diligence | Thu 19 September | 1 Lombard Street, London

Presented by Encompass, Dun & Bradstreet and Dow Jones, this breakfast seminar will explore how connected processes can accelerate progress towards the common objectives of reducing costs while streamlining customer due diligence (CDD). During the seminar, we will discuss top common challenges and priorities in CDD and the benefits of intelligent automation for customer due diligence.

Book your place.

Sibos 2019 | Mon 23 – Thu 26 September | ExCel, London

Sibos 2019 will explore the impact of new technologies on infrastructures, value propositions and business models and identify the culture, skills and working practices that organisations need to maximise the potential of both human and machine capabilities. encompass will be attending the event and welcomes meetings throughout the week. If you’d like to speak with our team, please book a time here.

Money 20/20 | Sun 27 – Wed 30 October | The Venetian, Las Vegas

Money20/20 is the doorway to the epicenter of the Payments, Banking, Fintech and Financial Services ecosystem. This global event brings together visionaries and innovators from across the spectrum who are inventing new ways to spend, manage, save, borrow, share and protect money. We will be attending Money 20/20 this coming October and would love to see you there.

View all our upcoming events here.

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.