the full picture, this week – 25 October 2019

by | Oct 25, 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 time, we bring the latest as firms are urged to use new technology to fight financial crime.

Elsewhere, the US House of Representatives approves a bill that would expose the owners of shell companies.

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

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FCA urges firms to use new technology to fight financial crime

A key figure at the Financial Conduct Authority (FCA) has encouraged experimenting with new technology to tackle the array of financial crime that we now see.

the full picture, this week - 25 October 2019 | Megan Butler, Financial Conduct Authority | Encompass blogSpeaking at the Royal United Services Institute in London, the FCA’s executive director of supervision for investment, wholesale and specialists, Megan Butler, told organisations:

I’m not going to tell you whether you need to automate all your systems or question why you aren’t using AI in every part of your business.

 

But, we all need to experiment with new technology, and see how we can tackle criminals who want to exploit the financial system. We all have a public duty to explore all opportunities to combat crime; together we need to turn technology against criminals.

It is estimated that serious organised crime facilitated by money laundering costs the UK £37 billion every year, while the estimated annual cost of fraud in the UK stands at £190 billion. Fraud accounts for around one third of all crimes experienced by individuals and in the last year there has been a 17 per cent increase in fraud offences – driven by an increase in bank and credit account fraud.

More than five million people chose to lead an almost cashless lifestyle this year, according to UK Finance, but Ms Butler pointed out they also give criminals sophisticated tools to bend the financial system to their own ends – the anonymity granted by virtual currencies being one example. She added:

With debit cards now the most popular method of payment, the opportunities to exploit weaknesses in the system are evolving – and yet, these same technologies, when used to the right ends, could also be game changers in the fight against financial crime.

the Encompass view

As we know, the pace of technological advancements is something that is becoming increasingly evident – as is the need for organisations to keep up with and utilise what’s on offer, if they want to stay one step ahead.

With capabilities such as automation more valuable to firms in the financial services space than ever, it is no surprise that the FCA have identified technology as a key driver in tackling the issue of financial crime – something that proves costly to both businesses and the industry overall.

In terms of fintech, especially, the UK has consolidated its position as a leader in the space, as well as seeing the funding it attracts increasing, so it is clear that that this is a key area, and it is crucial that firms open themselves up to the benefits of emerging technologies when considering their processes.

At Encompass, we see first-hand the advantages brought by these tools, from getting the full picture on your clients to improving business relationships and efficiencies, and it is only by embracing these that we will move towards a real change.

the Encompass view

As we know, the pace of technological advancements is something that is becoming increasingly evident – as is the need for organisations to keep up with and utilise what’s on offer, if they want to stay one step ahead.

With capabilities such as automation more valuable to firms in the financial services space than ever, it is no surprise that the FCA have identified technology as a key driver in tackling the issue of financial crime – something that proves costly to both businesses and the industry overall.

In terms of fintech, especially, the UK has consolidated its position as a leader in the space, as well as seeing the funding it attracts increasing, so it is clear that that this is a key area, and it is crucial that firms open themselves up to the benefits of emerging technologies when considering their processes.

At Encompass, we see first-hand the advantages brought by these tools, from getting the full picture on your clients to improving business relationships and efficiencies, and it is only by embracing these that we will move towards a real change.

Paul Joseph | Business Development Director, Encompass

US House of Representatives approves bill exposing shell company owners

the full picture, this week - 25 October 2019 | US House of Representatives | Encompass blogThe US House of Representatives has approved a bill that would expose the owners of shell companies, to help curb money laundering and other crimes including bribery.

The bill requires that people “who form corporations or limited liability companies in the United States” report the names of the owners and anyone with a large financial stake in the company “in order to prevent wrongdoers from exploiting (them)… for criminal gain.”

It will also help law enforcement “in detecting, preventing, and punishing terrorism, money laundering, and other misconduct” involving US corporations and limited liability companies.

The measure was approved in the House by a 249-173 vote and now goes to the Senate.

Known as the Bipartisan Corporate Transparency Act, it was introduced by Democrats Carolyn Maloney and Tom Malinowski, as well as Republican Peter King.

“Anonymous shell companies have become the preferred vehicle for money launderers, criminal organisations, and terrorist groups and we’re letting these bad actors get away with criminal actions,” said Ms Maloney, adding that the bill “will change that.”

Get the latest.

crypto chief believes centralised digital currencies could deter corruption

The ability to program digital currencies could grant central banks greater control over the monetary system, according to the co-founder of cryptocurrency investment platform Revix.

Sean Andrew Sanders commented:

Physical cash has limitations in terms of corruption, terrorist financing. You have all these activities because you aren’t actually interacting with the money, and if you’re able to program that then that’s the very interesting thing about digital money.

 

This means if you send money to someone, there may not be a central party that knows exactly who the sender and receiver is, but there can be algorithms and there can be other kinds of databases that just verify and say ‘this is a good transaction and this is a bad transaction’… certainly that is quite powerful for central authorities. 

 

I think if you look at the People’s Bank of China – and the rumours are that they’re a couple of months away from releasing their first digital currency – it makes a lot of sense if you’re wanting to be able to control the money supply as you want to do with monetary policy.

Maria Demertzis, deputy director at economic think tank Bruegal, added that there could be a great deal of digital currency interest from central banks primarily because of the amount of control they bring.

news in brief

Up to a third of the world’s banks are not equipped to survive an economic downturn and must reinvent their business models to compete in a digital age, according to a report by consultancy McKinsey.

Half of Millennials would, if offered, purchase investment products through a well-known BigTech company like Google, Apple or Microsoft. Find out more via FSTech.

Only 17 per cent of banks have succeeded in digitally transforming at scale, according to new research from Infosys and Efma. More than 350 financial services companies took part in the report, which found legacy technology and system integration challenges were perceived as the biggest barriers to digital transformation.

Mark Zuckerberg says that a global payments system like Libra “needs to get built” and that the US risks ceding financial leadership to China if it does not take the initiative. However, the Facebook CEO admits that his company is “not the ideal messenger right now”.

A major Anti-Money Laundering (AML) operation involving more than 60 police officers has taken place in Gibraltar. According to a Royal Gibraltar Police statement, a significant number of assets, including top range vehicles, vessels and other possessions, were seized.

The payments industry is increasingly being exposed to the technological transformation that is occurring outside of the financial services sector. But is the space ready to drive productivity in payments with artificial intelligence? That’s discussed in this article.

digital financial crime: KYC and joining the dots

Digital regulation and navigating the ‘fog of innovation’ were the subjects of discussion as financial crime practitioners, regulators and regtech experts gathered for a roundtable hosted by RegTech Associates and the Financial Conduct Authority (FCA).

Read more about the stimulating debate here.

in the spotlight Kishen Rajan, Senior Software Engineer

Kishen Rajan | encompass staff“Sometimes, it feels like hiking up a mountain but with people that you trust” – that’s how our Senior Software Engineer, Kishen Rajan, reflects on his journey with Encompass to date.

Looking for a fresh start, Kishen, who is a key part of our engineering team based in Australia, moved to Sydney to take on a role in our early days – and hasn’t looked back since.

He takes us through what the day-to-day workings of a role like his involve, shares what motivates and excites him most about the part he plays, and gives a glimpse into life as part of the Sydney office.

meet the Encompass team

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

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

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.

BIIA 2019 Biennial Conference | 30 October – 1 November | Okura Prestige Hotel, Bangkok, Thailand

Reflecting the acceleration and shift in focus of technological changes in the business information space, this year’s BIIA Biennial Conference will focus on the impact and capabilities of artificial intelligence, the challenges of working with a wider range of business sizes, and the importance of identity in compliance. Join Encompass CEO and Co-Founder Wayne Johnson, who will be speaking at the event.

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.