the full picture, this week – 15 February 2019

by | Feb 15, 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.

Cryptocurrencies are on the agenda this time around, with Forbes exploring the background around this growing issue, as well as looking at calls for enhanced regulations. And, after it was revealed that UK FinTech investment reached a record high in 2018, we give our view on just what this could mean for the future.

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

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financial crime and technology

cryptocurrenices | the full picture, this week – 15 February 2019 | encompass blogThe market valuation of cryptocurrencies has dropped by 75 per cent in recent months – but just how are they empowering cybercriminals and what can be done to prevent it?

With billions of pounds being laundered through cryptocurrencies in Europe and America last year, there are increased calls for anti-money laundering (AML) regulations dedicated specifically to tackling the issue.

Delving into the topic, an article from Forbes details what can be learned from traditional finance regulation, as well as exploring why money launderers use cryptocurrencies in the first instance.

Take a look at the article here.

the encompass view

At present, there is an ongoing debate in the crypto sector over regulation. Some are against its introduction as they believe the very fact that crypto was founded on anonymity means it would go against the principles of the industry, whereas there are those who believe regulation – if thought out and implemented in the right way – would bring benefits.

If the correct environment was established, there could be many advantages to businesses, such as regulation that supports (rather than stifles) growth, more scope to work and cooperate with mainstream financial services, and the chance to secure a wider customer base.

By engaging with both the government and regulators, forward-thinking crypto businesses are ensuring they have influence and have their voices heard as regulations are drafted, resulting in legislation that helps the industry – and those within it – to thrive.

the encompass view

At present, there is an ongoing debate in the crypto sector over regulation. Some are against its introduction as they believe the very fact that crypto was founded on anonymity means it would go against the principles of the industry, whereas there are those who believe regulation – if thought out and implemented in the right way – would bring benefits.

If the correct environment was established, there could be many advantages to businesses, such as regulation that supports (rather than stifles) growth, more scope to work and cooperate with mainstream financial services, and the chance to secure a wider customer base.

By engaging with both the government and regulators, forward-thinking crypto businesses are ensuring they have influence and have their voices heard as regulations are drafted, resulting in legislation that helps the industry – and those within it – to thrive.

Max Worrall | Business Development Manager, encompass

It was revealed this week that investment in UK fintech reached a record high in 2018.

According to a report by Innovate Finance, with investment in the sector rising by 18%, peaking at $3.3 billion, and growth private equity investment increasing by 57% to $1.6 billion last year, the signs are positive for the industry in this country.

Innovate Finance’s research, titled 2018 Fintech VC Investment Landscape, concludes that the UK remains a global leader and ranking third, when comparing venture capital invested, behind China and the US.

Other findings of the report include:

  • global VC investment in fintech in 2018 reached a record $36.6 billion across 2,304 deals, a 148% or 2.5x increase year-on-year
  • challenger banks took the lion’s share of VC investment at 27% of the total, followed by personal finance and wealth management
  • just 6% of deals had a female founder, representing only 3% of the total capital invested in 2018

Read more here.

the encompass view

By embracing purely digital onboarding processes, the fintech sector has addressed an urgent need in the market for customer-friendly financial services. This effort to truly put the customer first has paid off, with firms enjoying real success as a result.

We believe that the sector will continue to flourish and expand into broader services, including growing their customer bases beyond consumers to businesses. This will undoubtedly bring some compliance challenges that will mean that, in order to remain competitive, firms will need to adopt technology-led solutions to manage regulatory risk effectively while continuing to meet the evolving needs and expectations of their customers.

To future proof their success, those operating within the new world of Financial Services, particularly firms in the crypto sector, virtual banking providers and the challenger banks, can utilise automation to stake their claim on the market share and deliver a unique experience for their customers when it comes to the onboarding process.

the encompass view

By embracing purely digital onboarding processes, the fintech sector has addressed an urgent need in the market for customer-friendly financial services. This effort to truly put the customer first has paid off, with firms enjoying real success as a result.

We believe that the sector will continue to flourish and expand into broader services, including growing their customer bases beyond consumers to businesses. This will undoubtedly bring some compliance challenges that will mean that, in order to remain competitive, firms will need to adopt technology-led solutions to manage regulatory risk effectively while continuing to meet the evolving needs and expectations of their customers.

To future proof their success, those operating within the new world of Financial Services, particularly firms in the crypto sector, virtual banking providers and the challenger banks, can utilise automation to stake their claim on the market share and deliver a unique experience for their customers when it comes to the onboarding process.

Roger Carson | Co-Founder & Global Financial Sales Director, encompass

Combating money laundering has been high on the agenda in the Czech Republic, after a report found that, although progress has been made, the national authorities still need to do more if they are to really see a change.

In their findings, The Council of Europe’s anti-money laundering body MONEYVAL acknowledges the efforts made to eradicate money laundering and terrorist financing, but recommends a more proactive approach when it comes to carrying out related investigations.

The report assesses the effectiveness of the current systems in place, as well as looking at their level of compliance with the Financial Action Task Force (FATF) Recommendations.

The comprehensive conclusions can be read here.

news in brief

Has increased levels of regulation created challenges or opportunities for the fintech sector? This is a topic that is pondered for Who’s Who Legal by industry experts here.

Money laundering has become a top priority for the federal and provincial governments in British Columbia, with federal Finance Minister Bill Morneau vowing a “crackdown” and a public inquiry being considered.

The European Commission this week adopted its new list of 23 countries with weak anti-money laundering and terrorist financing regimes. Read more here.

A panel at the Global WealthTech Summit 2018 discussed striking the right balance between bringing in new ideas and satisfying the needs of regulators, finding that regulations, if created correctly, can help innovation. Find out more here.

Activist group Repubblika has submitted a formal complaint to the European Commission over believed failings of Malta’s institutions to implement anti-money laundering law after the Panama Papers uncovered names of key politicians connected with corruption.

In Malaysia, former premier Najib Razak has been charged with three counts of money laundering, totalling S$16 million. The charges are related to three AmPrivate Banking accounts.

the latest from encompass

In our first webinar of the year, CAMS-certified solutions consultant Ruby Schembri will be discussing the role of automation in KYC, looking to separate the tangible benefits from the promises made for this technology. The complimentary session will cover:

  • commonly-held perceptions of automation in banking and finance – guiding truths or impediments to progress?
  • robotic processing and artificial intelligence – vendor hype or foundations for new digital processes?
  • what does the future hold for KYC analysts and for emerging technologies?

Book your place 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, event-driven refresh and remediation.

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.

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