the full picture, this week – 22 June 2018
In our weekly roundups, the encompass team take you through all the breaking news on Know Your Customer (KYC), compliance and financial crime, keeping you informed at all times. This week, we look at Presidents and the homeless being accused of laundering money, Trump upping-the-ante in his proposed trade war with China and the EU, and we bring you, Crypto, the movie.
anti-money laundering and financial crime
We’ve criss-crossed the globe and this week bringing you articles from Panama to Australia, India to Ireland, and Belgium to the UAE. Anyone can potentially launder money, and this week we bring you the full range, from ex-Presidents, to the homeless.
The Government of New Zealand has issued a discussion document with a view to passing legislation to stymie the efforts of foreign criminals looking to use New Zealand companies to launder illicit funds. Interested parties can comment on the document until the end of the summer. Consumer Affairs Minister Kris Faafoi said that $1.35 billion of money gained from fraud and illegal drugs was laundered through New Zealand based entities.
A report from PwC has highlighted that half of Irish companies have been victims of cybercrime. The Irish Economic Crime & Fraud Report notes that the figure has risen from 34% in 2016.
Irish politicians have welcomed the changes to money laundering procedure that will be brought forth in the 5th Money Laundering Directive (5 MLD). They have noted that a key part of the new Directive will be unfettered communications between different agencies and member states.
An ex-President of El Salvador has been accused of siphoning of vast amounts of money for his personal benefit. Mauricio Funes was President of the South American country from 2009 to 2014. Prosecutors allege that he had government officials drive to banks and “fill up trash bags with money”. The money was used by the President and his family for holidays, and the purchase of lavish properties.
In a June 8 press conference, El Salvador’s Attorney General Douglas Meléndez accused Funes and his network of embezzling $351 million, an amount equivalent to nearly 1.5 percent of the country’s gross domestic product (GDP) in 2017, or about seven percent of the government’s 2017 budget. The Attorney General’s Office has dubbed the case “Public Looting.”
Anurag Jain, Head of Risk Business at Thomson Reuters has written an oped in the India Times explaining that companies in India face the same level of threat as western companies. Jain states that fintech and regtech firms have the capacity to help banks and financial services firms in their fight against criminality.
65 senior officials from the Thai Department of Social Development and Welfare (DSDW) have been suspended after corruption allegations were made against them. The officials, who come from across the country are accused of stealing hundreds of millions of baht.
To facilitate investigation into the alleged involvement of lower-level officials in these corruption cases, Napa Sethakorn, director-general of DSDW, said the chiefs of 65 local centres responsible for protection of poor and helpless people, have been moved out of their areas of responsibility.
The European Parliament’s co-rapporteur on anti-money laundering Judith Sargentini has written in Parliament Magazine that public scrutiny, affected by the creation of publicly available lists of Ultimate Beneficial Ownership (UBO) for each member state, has helped to curb the efforts of money launderers and reduced the chance of another “Panama Papers” or “Paradise Papers” scandal happening again.
“Police forces across Europe have made over 95 arrests of criminals who set up fake Web shops offering too-good-to-be-true product prices as a front for stealing card details” write Finextra. The suspects arrested are alleged to have been behind around 20,000 fraudulent transactions.
In his mansion House speech, the Chancellor has stated that the UK will look to sign a number of partnership agreements post-Brexit in order to ensure the City of London retains its place as a leading financial centre. Reporting can be found in the Guardian, Financial News London, Telegraph and City AM.
An oped in the Asian Nikkei Review states that following problems Australian banks had in the 1990s, they have become cumbersome and conservative. As a result, the ongoing Royal Commission has unearthed allegations of mis-selling, failures in anti-money laundering rules and poor governance, with overall “poor mismanagement, emphasis on short-term interests of managers and shareholders, ignorance of fiduciary duties and a cavalier disregard of regulations.”
US treasury officials are investigating cases of money laundering, involving Singaporean banks. They believe that money siphoned off by Indonesian officials was laundered through Singaporean banks.
Carsten Rosenkrantz, CAMS, Head of Market Development Risk, ASEAN, Thomson Reuters, has given his views on the new policy papers put forward by the Singaporean Government. Talking exclusively to encompass, Rosenkrantz states:
The level of understanding of anti-money laundering and counter terrorism threat is increasing but needs to accelerate, and so do the tools that these firms use in complying with their anti-money laundering obligations. Singapore is putting in significant efforts to address these challenges, so significant improvements can be expected in time to come. Other countries have only just begun this journey which means the Designated Non-Financial Businesses and Professions (DNFBP) sector is still at risk of being exploited by criminals.
Panama needs to do more to catch up with other nations in their efforts against money launderers, write Insight Crime. Although pressure brought to bear from the Organisation for Economic Development (OECD) and Financial Action Task Force (FATF) has led to legislation being passed, more needs to be done to address some of the most important policy holes exploited by criminals.
Iran has “no need to join” global agreements on areas such as terrorism and money laundering, the country’s supreme leader Ayatollah Ali Khamenei said Wednesday. Khamenei said that he did not want Iran to sign up for obligations that were not clear in their objectives. Iran is currently struggling to access international markets as a result of US led sanctions.
Further information on US sanctions, OFAC, and the EU 50 percent rule, can be found in this on-demand webinar from encompass.
A homeless couple who discovered EUR 300,000 stuffed into a singer sewing machine in an abandoned home, then gave away some of their windfall to friends and family have been charged with money laundering offences, write the Guardian. The nine recipients of the money have also been charged.
The public prosecutor told the court: “They shared the money as well-wishers. But of course you cannot hand out money that is not yours. And the people who took the money should have known that Joey and Kimberley could not have come by such sums of money in a normal way.
United Arab Emirates
The United Arab Emirates has significant volumes of terrorists, money launderers and criminals buying vast swathes of property, without fear of prosecution, a report from the Center for Advanced Defense Studies has said. The think-tank discovered 59 properties valued at $22 million that were linked to criminal organisations.
fintech and regtech
We reported last week on London Tech Week which saw statements given by both the Prime Minister and Home Secretary. In further late news, International Trade Secretary Dr Liam Fox has said that he is keen to attract further investment in the fintech sector, and will set up a steering board to help match companies with global investors.
From Google strengthening links in Asia to IBM winning debating matches, we cover everything that’s hot in the world of tech.
Writer James Bridle gives us a flavour of his book New Dark Age: Technology and the End of the Future in the Guardian, asking at what point will we lose control in the evolution of technology? He looks at recent developments in technology such as Google’s Brain, and the advancements that have been made in the very recent past.
From Google to IBM, where the BBC reports on IBM’s Project Debator, which is a machine that has the ability to debate, convincingly, with humans. Further reporting can be found in Fortune and the Guardian.
DBS Bank has developed technology to review CVs and screen applicants prior to passing them to a human recruiter. James Loo, head of talent acquisition group, group human resources, DBS Bank, says:
Our candidates are often busy during the day, and many of our recruiters end up working long hours to cater to their schedules. A virtual recruiter, such as Jim, would lighten our employees’ workload. Previously manual processes – such as posting screening questions, conducting psychometric assessments and tests – have now been fully automated. This frees up our recruiters’ time so they can take on higher value work.
Google is to invest $550m in Chinese company JD.com in an attempt to further its reach in Asia.
Amazon has come under pressure to stop selling its facial recognition features to US police forces from its own employees.
Business Insider report on the story that malware company Symantec have revealed that Chinese hackers have infected computers that control satellites in the US and Asia.
Blockchain could be pivotal to corporate growth, writes Irish Tech News.
Europe’s first blockchain accelerator has been launched. Based in Paris, Chain Accelerator has thirty industry experts involved who can help blockchain startups grow.
A coalition of Spanish banks are pressing forward with a digital identity platform based on blockchain technology.
An Indian government report has stated they should collaborate with industry leaders such as the UK, Japan, Germany, Israel and Singapore in order to bring the benefits of AI to the country.
Are we moving towards a dystopian future as portrayed in the film Minority Report? With the advances being made in AI, the changes to our everyday lives could be immense.
Moneyball AI is here and is working for some ice hockey teams. Clubs in sports such as ice hockey and basketball can use AI to decide on which players would be most suited to the team, and to write individual training programmes.
AI remains a key priority for the European Union. A meeting this week confirmed that the EU would continue to develop the technology, assuming it matches European values such as being safe and unbiased.
We might be worried about what the future of AI is, but we should probably be more worried about the AI that is already here.
Finally, Morningstar covers how AI will change the face of investing. Machines can already decide on what word patterns may lead analysts to upgrade or downgrade, and the technology is growing at an exponential rate.
There’s a Holywood feel to this week’s cryptocurrency roundup…
Ever wondered which celebrities have got themselves into cryptocurrencies? The Telegraph covers them all off, from Floyd Mayweather to Paris Hilton. And if celebrity backed currencies wasn’t enough, how about a movie on the subject? Well, starring Kurt Russell and Luke Hemsworth, Crypto the movie is in the works.
New rules are being laid down for the regulation of digital currencies in Japan, write cointelegraph. The news is also covered by cryptoslate, which says the FATF will collaborate with Japan on making the regulations universal. Financier Worldwide builds on this theme, examining how regulations have been slowly building around digital currencies, but more needs to be done.
The majority of cryptocurrencies have almost no liquidity, meaning that they are not sustainable as a form of currency. Finance Magnates has the full story.
Also in Finance Magnates, they report on a Turkish ponzi scheme, that used the facade of a Turkish “national” digital currency to dupe thousands of investors out of cash before disappearing with the proceeds. 10,000 investors are thought to have been duped out of around $21m.
Claude Brown of law firm Reed Smith asks what the future is for the regulation of digital currencies, and whether they will gain parity with fiat currencies.
President Donald Trump just raised the stakes in the fight with China over trade, threatening the Chinese with a further $200 billion in trade tariffs.
“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States,” Trump said in a statement.
There is extensive coverage in this new salvo from the US administration, including CNN, Independent and Reuters. Time magazine calls the new threats “risky” citing experts who state that this is the wrong way to tackle the problem, while Market Watch proposes other options.. The BBC reports on the slump in the markets following the news. The South China Morning Post considers the Chinese perspective, asking whether this could change where Chinese companies operate? Market Watch also asks in the opinion pieces whether the tariffs could trigger another crisis in the Asian markets.
On Trump’s second front, the EU has said it will launch counter-tariffs against the US from Friday 22nd June. Items such as motorbikes, whisky and jeans will all be subject to additional tariffs. The EU sanctions will be worth in excess of $3 billion. Further reporting can be found in Sky News, Al Jeezara, and The Week.
A Scottish lawyer has claimed that businesses must continue to be vigilant and conduct checks on those they are working with to ensure that modern slavery does not take hold in Scotland. Laura Gillespie of Pinsent Masons, said that more than 200 cases have been reported to a new helpline since it was set up in 2016. Gillespie said:
Companies should not be complacent to the risk in the UK and the statement organisations must make requires consideration of the risks in its business and supply chains, whether they are global or local. Due diligence is therefore key to addressing this risk. The expectation of the public and other stakeholders on corporates to take anti-slavery steps is increasing.
Furthermore, the UK’s leading car wash association has called for more to be done by government to ensure that the industry remains clear of slavery. Brian Madderson, chairman of the Car Wash Association, said:
The government says it wants to wipe out modern slavery but the political will and resources to tackle the scourge appear to be lacking. It is not a challenge that can be met by the churches alone. Nowhere else in Europe has this hand car wash slavery problem been allowed to arise. Wherever else you look — from Germany to Belgium to Scotland — there are binding environmental regulations which hand car washes must follow.
Moldova is to trial a digital identity scheme based on blockchain technology in an attempt to curtail human trafficking in the region. Due to high levels of unemployment, Moldova has one of the highest rates of human trafficking in the world. More than 40,000 Moldovan children have been “left behind” by their parents who have emigrated looking for work, making them easy targets for traffickers.
“European Union foreign ministers on Monday extended economic sanctions intended to punish Russia for the 2014 annexation of Crimea” reports Politico.
In two seperate, but oddly similar stories, two international sportsmen have been in the news for sanctions. Mexican football captain Rafael Marquez, currently in Russia for the World Cup, has been added to a US Treasury sanctions list. It is alleged that Marquez helped drug cartels launder funds in his native Mexico. And confusion reigns this morning over the status of former Wimbledon champion Boris Becker. The ex-tennis star is facing bankruptcy proceedings in London, but has attempted to delay proceedings by claiming “diplomatic immunity”. He is reported to be working on behalf the Central African Republic, promoting sport in the country – a statement that has separately been denied and confirmed by the African nation.
Israeli President, Benjamin Netanyahu’s wife, Sara has been charged with alleged misuse of state funds. It is reported that Sara Netanyahu used public money amounting to £76,000 on hundreds of meals.
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