the full picture, this week – 28 June 2019

by | Jun 28, 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 highlight a report by Huw van Steenis, who is Senior Adviser to the Governor, Bank of England, which sets out the challenges facing the UK’s central bank in keeping up with the speed of regulatory and technological change in the financial services industry.

Elsewhere, we bring the latest on the news that the Treasury is to carry out a review of the country’s growing payments sector.

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

Click here to get the full picture sent to your inbox every Friday.

key learns from ACAMS’ AML & Financial Crime Conference Europe

According to the Association of Certified Anti-Money Laundering (AML) Specialists (ACAMS), in 2019, collaboration is the most powerful weapon in fighting financial crime.

This was the theme of the association’s 15th annual European conference, as members and experts came together in Berlin, Germany, to explore ways to facilitate and promote collaboration, including managing conflicting legal, regulatory and corporate structures, creating paths to information sharing, and building effective partnerships.

Among the event delegates, representing Encompass was Mark Pflitsch, Business Development Director, and Ruby Schembri, Solutions Consultant.

Here, they share their reflections after a busy programme, which included speeches from the likes of Alexandra Jour-Schroeder, the European Commission’s Acting Deputy Director-General, and Kieran Beer, who is the Director of Editorial Content at ACAMS.

deep dive into AML fines analysis

2019 is set to be a record year of AML fines, according to new research.

Encompass carried out an analysis of AML-related penalties handed down between 2002 and April 2019, finding that there will likely be a peak this year, with total fines overtaking the previous 2014 record of $10.89bn.

The research, which comes after a number of multi-million dollar fines in the past 12 months, showed that, while US regulators penalise the most followed by the UK, monetary sanctions imposed have ramped up, with $7.7bn of AML fines handed out in January to April 2019, compared to $1.16bn in the same period in 2018.

Co-Founders Roger Carson and Wayne Johnson give their thoughts on the research and trends for the future here.

Automation and Operational Efficiency in AML & KYC forum recap

Paul Joseph and Mark Pflitsch, Business Development Directors at Encompass, recently attended the Automation and Operational Efficiency in AML & KYC event, organised by Connect Global Group.

Bringing together a range of senior figures from banks, buy side and other capital market firms, it served as a forum for financial institutions, service providers and consultants to discuss the issues facing businesses today around Know Your Customer (KYC), AML and Risk.

Topics discussed centred on the need for collaboration between industry players and the implementation of emerging technologies, such as Artificial Intelligence (AI), Machine Learning (ML) and blockchain through automation.

Mark and Paul share the key take-away points from the forum, including the challenges facing those in attendance.

report examines the future of finance in UK

A new economy is emerging, driven by changes in technology, demographics and the environment. The UK is also undergoing several major transitions that finance has to respond to.

the full picture, this week – 28 June 2019 | Huw van Steenis, Bank of England | encompass blogThat’s the key findings of a new report, ‘The Future of Finance’, by Huw van Steenis, who is Senior Adviser to the Governor, Bank of England.

Mr van Steenis sets out the challenges facing the UK’s central bank in keeping up with the speed of regulatory and technological change in the financial services industry, aiming to “look beyond the immediate challenges posed by the UK’s withdrawal from the EU to identify longer-term trends shaping the economy and finance”.

He found that profound changes are taking place in the banking, payments and insurance industries, with the rapid shift from incumbent banks to market-based finance, such as challenger banks, likely to grow further in the coming decade. Mr van Steenis stated:

Finance is likely to undergo intense change over the coming decade. The shift to digitally-enabled services and firms is already profound and appears to be accelerating.

Amongst the key challenges identified by the report, Van Steenis found that the risks inherent in the financial system are likely to shift, with a combination of ultra-low interest rates, new regulations and the need to invest in new technologies, meaning many banks will struggle to make their cost of capital.

Read the research and recommendations here.

the Encompass view

The changes outlined in the report highlight the need for a robust, yet flexible, approach to regulatory compliance, especially if, as predicted, these only accelerate in the next few years.

Both technology and customer expectations are evolving at pace and regulated institutions must be able to adapt quickly to remain relevant and profitable, while meeting the ever evolving demands of customers and the industry.

When evaluating solutions to support critical activities like customer onboarding and regulatory compliance, organisations should look for providers that can grow and evolve in tandem with the business environment and economy.

Encompass enables regulated firms to comprehensively detect and prevent financial crime, as well as working to reduce regulatory risk. Through our platform, we help customers to access the full picture, fast when it comes to their client base, which is increasingly important in relation to onboarding.

the Encompass view

The changes outlined in the report highlight the need for a robust, yet flexible, approach to regulatory compliance, especially if, as predicted, these only accelerate in the next few years.

Both technology and customer expectations are evolving at pace and regulated institutions must be able to adapt quickly to remain relevant and profitable, while meeting the ever-evolving demands of customers and the industry.

When evaluating solutions to support critical activities like customer onboarding and regulatory compliance, organisations should look for providers that can grow and evolve in tandem with the business environment and economy.

Encompass enables regulated firms to comprehensively detect and prevent financial crime, as well as working to reduce regulatory risk. Through our platform, we help customers to access the full picture, fast when it comes to their client base, which is increasingly important in relation to onboarding.

Ed Lloyd | EVP Global Head of Sales & Marketing, Encompass

UK government to conduct major payments review

the full picture, this week – 28 June 2019 | Philip Hammond | encompass blogChancellor Philip Hammond has announced a Treasury-led review of the UK’s evolving payments landscape.

There will be an industry-wide examination of the impact of technology and changing regulation on the UK’s financial services sector, as the country prepares to leave the EU.

Referencing the rising number of digital payments firms that have established themselves, Hammond said the review would bring together “policymakers and regulators to make sure that our regulation and infrastructure keeps pace with the dizzying array of new payments models”. He added:

London’s position as the premier global financial services hub depends on our ability to capture a share of these booming markets. And it depends, too, on our ability to integrate the technologies of the future into our mainstream financial services… In short, to remain a dominant player we in the UK must do what London’s markets have always done: evolve. Refuse to stand still; reject the notion of the status quo; embrace change, disruption and challenge. Adopt, adapt and synergise enthusiastically and energetically.

FStech brings the latest.

banks falling behind in digital transformation

Despite investing more than $1trn globally in new technology over the last three years, the majority of banks have yet to see any financial gain from their digital transformation programmes, according to a report issued by Accenture into banks’ IT investment.

While the study found that those banks who had invested most heavily in digital services had generated greater profit, this was, on the whole, due to cost savings rather than an increase in revenue.

The report also found that just 12% of surveyed banks have fully committed to digital transformation, 50% made little progress and the remaining 38% are in the midst of their transformations but their digital strategies lack coherence. Richard Lumb, group chief executive of Financial Services at Accenture, commented:

Even the most digitally focused banks have a big challenge ahead and will need to find ways to generate new revenue as traditional fee income gets squeezed. To achieve stronger returns on their digital investments, banks will need to radically increase market-share based on pricing, take additional risk on new revenue opportunities or add services customers are willing to pay for.

Read more.

news in brief

The United Arab Emirates Central Bank is focusing on the real estate sector as part of its work to combat money laundering in the country, officials have revealed. Read more.

The adoption of AI is expanding, with more than a third (38 per cent) of businesses implementing some form of the technology within the past year. A survey of 500 professionals, carried out by MHR Analytics, found that machine learning or AI featured in respondents’ analytics approach in the last 12 months. Read more.

Four United States senators have introduced a bipartisan bill intended to put an end to the country’s status as a key destination for financial crime. The senators, who collectively represent both Republican and Democratic parties, made note of the fact that in 2018 the Tax Justice Network ranked the U.S. as the second most attractive jurisdiction in the world for “illicit financial flows and (…) tax evasion.” It is sandwiched between Switzerland (#1) and the Cayman Islands (#3). Get more here.

One in five businesses in the UK are losing customers and revenue due to ‘dirty data’, according to new research. A Censuswide survey of 510 UK and US decision-markers for information database firm Dun & Bradstreet found that, a year on from the introduction of the General Data Protection Regulation (GDPR), almost 20 per cent of businesses have lost a customer due to using incomplete or inaccurate information about them. Get the latest from FStech.

Lloyds has frozen 8,000 accounts of offshore banking customers after they failed to provide identity information in response to a money laundering crackdown in Jersey. The lender asked thousands of account holders to provide extra KYC information in 2016 but, three years later, thousands had failed to respond satisfactorily. The Independent has more.

webinar

how to reduce friction when onboarding new merchants

the latest from encompass

Merchants demand a quick, effective way of dealing with all aspects of processing payments. A competitive market has meant that frictionless onboarding, setup and customer experience are among the differentiators for new prospective merchants. But what exactly does a good experience look like, and how can technology solutions such as the encompass platform assist, particularly in the onboarding stage, in making it a reality?

We will delve into the issue, explaining the key indicators in the digital age and how this applies to the payments industry, in an upcoming webinar, on July 25. 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.