the full picture, this week – 22 February 2019

by | Feb 22, 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. As the growing problem of money laundering in real estate is explored, we give our take on something that is costing more than US$1 trillion annually.

And, digital challengers are also in focus this time around, as a survey finds that 80 per cent of banking incumbents feel their business is threatened by them.

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

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money laundering and real estate

An issue that has been under the microscope this week is money laundering in real estate, as countries around the globe attempt to find ways to target and stop the culprits.

It is a growing problem, with the cost estimated to have reached US$1.6 trillion a year, according to the United Nations.

During the past 12 months, there have been a number of cases which have alerted regulators to the need for action. A list of suspects ranging from Chinese gambling rings, a Venezuelan television executive and a banking official from Azerbaijan have been accused of using ill-gained financial proceeds to purchase properties at some of the most exclusive spots in the world, such as a C$22 million mansion located in Vancouver and a £11.5 million five-bedroom property in London’s Knightsbridge area.

Brigitte Unger | the full picture, this week – 22 February 2019 | encompass blogBrigitte Unger, a professor at the University of Utrecht in the Netherlands and an international expert on money laundering explained that “real estate has always been a favorite asset for criminals through which they would launder their money.”

Around the world, governments have tried a variety of policies to stem the purchase of luxury properties by criminal enterprises, with the United Kingdom being viewed as a leader in the crackdown after introducing legislation in Parliament in 2018 that requires foreign owners to identify themselves.

Read more here.

The topic is also growing in prevalence in Australia, as revelations that Chinese asset recovery agents have been operating covertly put pressure on the government to introduce law reforms.

It comes after the Australian Federal Police (AFP) Criminal Assets Confiscation Taskforce last year seized more than A$15 million in real estate, jewellery, wine and assets that are suspected to have been purchased with the proceeds of crimes, including investment fraud, perpetrated in China.

Macro Business delve into the case here.

the encompass view

Banks globally have stepped up their defences against financial crime as regulation has become more stringent. Unsurprisingly, criminals have sought out softer targets to facilitate and launder the proceeds of their crimes. Luxury real estate has been a focus for criminals for some time and regulation is increasing in scope to take this into account.

Currently, Australia is lagging behind regulatory expectations but, knowing a change will come, the real estate sector must act now. Without the resources to match those of banks, this sector must harness the power of RegTech, which will allow them to meet new regulatory requirements efficiently and effectively.

David Williams | Sales Director Asia Pacific, encompass

the encompass view

Banks globally have stepped up their defences against financial crime as regulation has become more stringent. Unsurprisingly, criminals have sought out softer targets to facilitate and launder the proceeds of their crimes. Luxury real estate has been a focus for criminals for some time and regulation is increasing in scope to take this into account.

Currently, Australia is lagging behind regulatory expectations but, knowing a change will come, the real estate sector must act now. Without the resources to match those of banks, this sector must harness the power of RegTech, which will allow them to meet new regulatory requirements efficiently and effectively.

David Williams | Sales Director Asia Pacific, encompass

technology

A survey has concluded that 80 percent of banking incumbents feel their business is threatened by digital challengers.

Taking part in the research commissioned by payments software and card firm Fraedom, almost one third of the banking professionals from 50 organisations questioned expected this issue to be the most disruptive force to impact on the industry this year.

More than half (53 percent) of respondents also said that they believe artificial intelligence (AI) and machine learning will be the technologies to have the biggest impact on commercial banking in 2019.

Read more of the findings in an article by FStech here.

the encompass view

Legacy systems are consistently cited as the main reason that established banks are falling behind Challenger banks when it comes to customer experience. Unencumbered by legacy technology, Challenger banks have taken full advantage of advances in technology to build customer-centric offerings that are driving their continued success. When it comes to meeting regulatory compliance, this has been of particular benefit, as Challenger banks have been able to seamlessly integrate solutions that allow them to address AML/KYC requirements into their core offerings.

In this vein, as Challenger banks expand their service offering to include business banking, for example, incumbents must up their technology game – and fast – if they are to remain relevant and competitive.

The good news for incumbents is that making use of innovative technology doesn’t have to mean wholesale changes to a bank’s existing technology stack or established processes. encompass offers an intelligent automation solution that can integrate with existing platforms, data providers and processes seamlessly and quickly, to drive immediate benefits and allow banks to focus resources on examining information and making smarter risk decisions.

Ed Lloyd | Executive Vice President, Global Head of Sales & Marketing, encompass

the encompass view

Legacy systems are consistently cited as the main reason that established banks are falling behind Challenger banks when it comes to customer experience. Unencumbered by legacy technology, Challenger banks have taken full advantage of advances in technology to build customer-centric offerings that are driving their continued success. When it comes to meeting regulatory compliance, this has been of particular benefit, as Challenger banks have been able to seamlessly integrate solutions that allow them to address AML/KYC requirements into their core offerings.

In this vein, as Challenger banks expand their service offering to include business banking, for example, incumbents must up their technology game – and fast – if they are to remain relevant and competitive.

The good news for incumbents is that making use of innovative technology doesn’t have to mean wholesale changes to a bank’s existing technology stack or established processes. encompass offers an intelligent automation solution that can integrate with existing platforms, data providers and processes seamlessly and quickly, to drive immediate benefits and allow banks to focus resources on examining information and making smarter risk decisions.

Ed Lloyd | Executive Vice President, Global Head of Sales & Marketing, encompass

Ireland’s anti-money laundering laws have also been in the news, with key players in the crypto sector giving their take on what the introduction of more stringent rules could mean for them.

Reacting to the regulations, which give effect to the EU’s fifth Anti-Money Laundering (AML) Directive, Peter Nagle, co-founder of Cork-based cryptocurrency exchange Bitcove, said:

There’s a lot more scrutiny on the sector with more stringent requirements and conducting risk assessment, reporting any transactions, the level of due diligence.

It will be more cumbersome. There will be a lot more paperwork involved, we’ll have to have more extensive training to make sure we’re keeping up to date.

Get the latest here.

news in brief

Interbank messaging network Swift is to open its KYC Registry to corporates, providing a central hub for document exchange with multiple banking partners. Finextra has more here.

Several Chinese daigou agents were arrested by French authorities in Paris for a series of offences, including money laundering, that allegedly earned them up to A$5.6 million of illegal income, according to Chinese media outlets.

The European Banking Authority (EBA) has opened a formal investigation into a possible breach of Union law in connection with money laundering activities. The investigation will focus on possible wrongdoings of the Estonian Financial Services Authority (Finantsinspektsioon) and the Danish Financial Services Authority (Finanstilsynet). Read more here.

Moneyval have issued a new report on Slovenia which concludes that the country’s anti-money laundering and counter-terrorist financing measures are up to scratch. Read more on the findings here. Moneyval also assessed Hungary’s efforts, re-rating the country on two recommendations originally rated as “partially compliant” in a previous report.

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.