the full picture, this week – 20 September 2019

by | Sep 20, 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 lead with a study that concludes that UK banks’ revenue is likely to be disrupted by digital payments.

Elsewhere, Facebook faces a grilling from central banks over the scope and design of its proposed cryptocurrency Libra.

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

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more than $350m of AML fines handed down in the last four months

Between the start of May and the end of August this year, there were 20 Anti-Money Laundering (AML) related penalties handed down globally, totalling fines of over $352.5 million.

This is according to analysis carried out by Encompass, which found that during the same period in 2018, four fines totalling $707 million were handed out.

Dr Henry Balani’s research also revealed that $339.3 million of fines given to banks and $13.1 million to firms in other industries. The largest monetary fine was $336 million and the average was $18.5 million.

sanctions – where we are now

A fast-moving global sanctions regime, coupled with high penalties and press visibility for compliance breaches, means it’s more important than ever that firms are clear on regulatory requirements – and get it right.

In this blog, how the sanctions landscape has evolved and the role of technology within it is examined.

UK bank revenue disrupted by digital payments

Analysis has suggested that £8 billion – 18.1 per cent – of UK banks’ revenue is likely to be displaced by digital payments in the next six years.

Accenture conducted an online survey of 240 retail and corporate payments executives globally from some of the largest banks around the world.

It found that payments is set to become a £41 billion market in the UK, but British banks could lose out unless they do more to offer customers payment services that are instant, invisible and free.

The study showed that payments volumes around the world are increasing and will continue to grow at 5.5 per cent a year. This is driven by a combination of demographic factors, such as the growing number of middle-class consumers in India and China, increasing globalisation of trade and finance, and the rapid development of digital banking and mobile wallets.

Sulabh Agarwal, Accenture UK’s payments lead, said:

In order to avoid being pushed aside, banks need to both continue to develop scale – becoming big, efficient machines – at the same time as differentiating themselves in the minds of their customers.

Read more.

the Encompass view

Given the developments that we have witnessed over recent years, the industry and its key players have had to expand and adapt to what customers need at a point in time, which is currently a wide array of different payment solutions.

From face-to-face cash transactions to online virtual currency transactions, there has been a significant shift in the payments landscape, and a raft of non-bank payment providers have sprung up to capitalise on the opportunities presented.

The pace of innovation these companies can offer is now putting pressure on banks to review their payments operations in order to meet today’s customer expectations, which centre around faster, more efficient transactions.

A key challenge for banks, however, is the time taken to conduct Know Your Customer (KYC). There is a pressure on them to meet the standard of new players, who, with technology as a second nature, have this speed of turnaround and efficiency built into many of their processes.

Until banks can show the same, they are not going to be able to meet the level of innovation of their newer and more nimble counterparts and will lag behind as a result.

the Encompass view

Given the developments that we have witnessed over recent years, the industry and its key players have had to expand and adapt to what customers need at a point in time, which is currently a wide array of different payment solutions.

From face-to-face cash transactions to online virtual currency transactions, there has been a significant shift in the payments landscape, and a raft of non-bank payment providers have sprung up to capitalise on the opportunities presented.

The pace of innovation these companies can offer is now putting pressure on banks to review their payments operations in order to meet today’s customer expectations, which centre around faster, more efficient transactions.

A key challenge for banks, however, is the time taken to conduct Know Your Customer (KYC). There is a pressure on them to meet the standard of new players, who, with technology as a second nature, have this speed of turnaround and efficiency built into many of their processes.

Until banks can show the same, they are not going to be able to meet the level of innovation of their newer and more nimble counterparts and will lag behind as a result.

Max Worrall | Business Development Manager, Encompass

central banks grill Facebook over Libra

the full picture, this week - 20 September 2019 | Benoit Coeure, European Central Bank | encompass blogFacebook has faced a grilling from 26 central banks over the scope and design of its proposed cryptocurrency Libra, amid mounting concern over the threat posed to financial stability and monetary sovereignty.

Facebook executives representing Libra were questioned by the Bank for International Settlements’ powerful Committee on Payments and Market Infrastructure, a forum comprising central bank chiefs from the world’s biggest economies.

The meeting was chaired by European Central Bank executive board member Benoit Coeure. The group will produce a final report on its work by mid-October.

crypto firms assess how to comply with AML standards

The cryptocurrency industry is moving to comply with new AML standards that require exchanges and other firms to share information about their customers.

The standards, adopted in June by the Financial Action Task Force (FATF), require cryptocurrency exchanges, some digital wallet providers and other firms to send customer data – including names and account numbers – to institutions receiving transfers of digital funds, similar to a wire transfer at a bank. The goal of the so-called travel rule is to help law enforcement track suspicious activity. The FATF is the global standard-setter for AML.

But figuring out how to comply with the standards has been something of a puzzle, according to the Wall Street Journal [subscription required]. Crypto firms don’t have the infrastructure in place to send customer data to each other, industry executives say.

“Is it solvable? Yes,” said Jeff Horowitz, chief compliance officer at the digital currency exchange Coinbase. “But is there a method that exists today to share this data? No.”

news in brief

Three-quarters of Canadians say money laundering is an issue within their own province, while even more say it is a challenge that the country needs to address on a national level. While the 2019 federal budget proposed several initiatives, with investments of approximately $200 million over five years as well as additional funding, nearly half of Canadians are dissatisfied with federal government efforts to combat money laundering. Read more.

A regulatory environment that supports the safe and robust development of Big Data technology will be essential if banks are to meet the challenge of FinTech players, BigTech firms and crypto assets, according to Deutsche Bank. A white paper published by the investment bank outlined the need for regulators and financial institutions to adopt a flexible approach to emerging technologies and warned that artificial intelligence (AI), Application Programming Interfaces (APIs), cloud and blockchain will not be to their full potential without rich and relevant data sets.

The cloud has been a catalyst for accelerated development in capital markets. Find out more in this article from Finextra.

High Street banks including Barclays, BNP Paribas and Standard Chartered have teamed up with the University of Cambridge’s Institute for Sustainability Leadership (CISL) to pilot the use of blockchain to enhance the sustainability and efficiency of global supply chains. Read more.

in the spotlight Magalie Pimentel, Head of Marketing

Magalie Pimentel | encompass staffWhen Magalie Pimentel joined Encompass, she was looking for a new challenge in a fast-paced and interesting environment. And, she says, that is what she found.

As Head of Marketing, her role is as busy as it’s varied, requiring her to work with colleagues across the company and stay on top of industry developments and changes.

Here, she tells us what parts of a wide remit she enjoys most, what it’s like working for a scale up organisation in comparison to a multinational, and why she thinks it’s the people that make all the difference at Encompass.

meet the Encompass team

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

 

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.