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the full picture, this week – 29 June 2018

By Cheri Burns | June 29th 2018

the full picture, this week – 29 June 2018

by | Jun 29, 2018 | All Blog Posts

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 Romania backsliding on corruption legislation, Malta being the blockchain capital of the world, and Holland are the World Cup winners.

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anti-money laundering and financial crime

Our globe-trotting round up of financial news takes in banking reports coming out of Hong Kong, a new initiative in the UK, which is saving people from fraud, and what happened to a safe belonging to the head of the Latvian Central Bank…

Panama Canal | the full picture, this week - 29 June 2018 | encompass blogThe South American isthmus has been a name associated with money laundering and tax evasion following the release of the Panama Papers, two years ago. Now following pressure from the EU and Organization for Economic Development (OECD), the country has begun passing legislation designed to make it less appealing to dirty money.

Now, the government has passed Executive Decree 122, which in line with the EU’s Common Reporting Standards (CRS) will mean some company data being shared with 33 other, mainly European, countries. As noted by Insight Crime, an ongoing corruption investigation into former President Ricardo Martinelli illustrates that there is still considerable work left to do.

Hong Kong
KPMG have released their yearly appraisal of banks in Hong Kong. It has found that banks in the region are in a good position following a strong 2017. An emphasis on managing costs has helped to raise profits and mitigated investments made in IT to combat potential cybersecurity threats. Operating profit before impairment charges of all licensed banks also increased by 13 percent to HK$229 billion from HK$203 billion in 2016. On Know Your Customer (KYC), they say:

For their part, Hong Kong’s regulators will also need to consider adapting some of the existing regulatory requirements to address this new approach to risk management, balancing the need to maintain a safe banking system against an imperative to encourage innovation, enhanced customer service and financial inclusion.

The Hong Kong Financial Services Development Council (FSDC) has also published “Building the Technological and Regulatory Infrastructure of a 21st Century International Financial Center: Digital ID and KYC Utilities for Financial Inclusion, Integrity and Competitiveness”. The Chairman of the FSDC, Mrs Laura M Cha, said of the report:

The application of technology for facilitating the provision of financial services is gaining traction globally. During the development of FinTech infrastructure to enhance the KYC process, Hong Kong also needs urgent regulatory fixes to improve customers’ account opening experience and, more importantly, to maintain the city’s financial competitiveness.

Further preventative measures are required to prevent money laundering and criminality occurring within Swiss banks, a report by consulting firm KPMG has found. Banks must do more to foster a culture of compliance and effectively train staff.

In the Long Read in the Guardian, former stock broker Dan Davies explains how fraud works within financial services, and why it is so difficult to prosecute those committing offences. Calling on the example of the Libor scandal, in which traders at major banks manipulated the rate at which banks lend to each other, he illustrates how fraud in financial services is not undertaken by confidence tricksters, but by those who have found a failing in the checks and balances that take place within a bank.

Libor teaches us a valuable lesson about commercial fraud – that unlike other crimes, it has a problem of denial as well as one of detection. There are very few other criminal acts where the victim not only consents to the criminal act, but voluntarily transfers the money or valuable goods to the criminal. And the hierarchies, status distinctions and networks that make up a modern economy also create powerful psychological barriers against seeing fraud when it is happening. White-collar crime is partly defined by the kind of person who commits it: a person of high status in the community, the kind of person who is always given the benefit of the doubt.

A new initiative in the UK has led to a significant volume of arrests. The Banking Protocol is an agreement between banks and the police for the police to provide a rapid reaction to calls where a member of the public may be at risk of being a victim of fraud. Since its roll out in May 2017, it has prevented £24.7m of fraud, and directly led to 197 arrests. Katy Worobec, managing director of Economic Crime at UK Finance, said:

Fraud can have a devastating impact on victims and is often targeted at the most vulnerable people in society, which is why we must work together to prevent it. The Banking Protocol shows how close cooperation between the industry and law enforcement can help to protect victims and crack down on fraudsters. This kind of joined-up approach is crucial to stay one step ahead and ensure that unscrupulous scammers preying on customers are brought to justice.

Ilmars Rimsevics | the full picture, this week - 29 June 2018 | encompass blogEuropean Union executives have been embarrassed by the failure of banks in Latvia and Malta. The failure of anti-money laundering procedures at Latvia’s ABVL, and Malta’s Pilatus Bank has exposed shortfalls which the EU hope will be rectified through the forthcoming 5th Money Laundering Directive (5 MLD).

Questions are still being asked in Latvia of the former President of the central bank, Ilmars Rimsevics. After he had been detained by police for questioning, a safe – purportedly stolen from his office – was found empty in woods outside of Riga. This took place in March, at the same time as the United States called the first warning shots around money laundering failures at Latvia’s ABVL Bank. Yesterday it was announced that State prosecutors would be charging Mr Rimsevics of accepting a bribe.

fintech and regtech

AUSTRAC | the full picture, this week - 29 June 2018 | encompass blogA regtech showcase was held in Sydney this week, examining some of the cutting edge technology that is being developed to counter money laundering. encompass were delighted to be one of the innovative companies invited to participate at the event hosted by AUSTRAC.

Nationwide has set aside a £50m fund to help promising fintech startups. The fund will be focussed around seven main themes: house and home; personal data and identity; financial wellness; community and society; banking-as-a-platform; operational efficiency; and new segments.


Summer is here, and with it we have a lot of technology centring on sporting events, particularly the World Cup and Wimbledon. We also illustrate the latest developments in robotic technology including helping you sleep better, and firing you from your job…

While technology continues to improve many lives, spare a thought for this computer programmer whose key card was rejected, leading to a chain of events that led to him being fired and escorted off his work premises, all by computer.

If you find being fired by computer unnerving, how about a robot that can tell you when you will die? Google’s AI can reportedly do just that.

If reading that wanted to make you lie down, then try this new headset, being funded by Johnson & Johnson. The headset stimulates the brain while users are asleep, supposedly leading to a better night’s sleep.

Facebook has announced that it is curtailing its research into drone technology. It said that there were other manufacturers with experience of the sector.

Pepper the Robot, HSBC | the full picture, this week - 29 June 2018 | encompass blogHSBC is launching a full scale robot within its branches. “Pepper the robot” will greet users of HSBC’s 5th Avenue store in New York amongst others. encompass look forward to meeting Pepper in HSBC Buchanan Street, Glasgow…

Wimbledon is nearly upon us, and amongst the strawberries and cream, look out for AI that is using the emotions of players on court to decide which highlights should be shown to TV viewers.

World Cup Tech
In case you hadn’t heard, the Netherlands have beaten Portugal in the final of the World Cup. Yes we know the football World Cup has two weeks left to run, and the Dutch didn’t qualify, but the robot World Cup has just finished with a 1-0 victory to the Dutch team after the final was played in Montreal. Want more? Watch the final, here on Motherboard.

Back to the real World Cup. Despite a second string England team going down 1-0 to Belgium last night, Goldman Sachs have nailed their colors to the mast, and stated England will make the final! (But unfortunately for those England fans reading – will lose to Brazil). Their path has been eased by drawing Columbia, followed by a potential meeting of the Swiss or Swedes to reach the semi-final.


This week we have a full round up of all Blockchain centerd news, including a blockchain religion, and whether it is the most secure way of keeping personal data safe.

While we knew there was a lot of hype around blockchain, perhaps devoting a religion to it, seems a little too much? Wired has the story on the religion, which has been catchily called “0xΩ”.

QZ have developed a list of the top places to be to invest in, or work in, blockchain technology. The winner? Well, it is neither London, nor Silicon Valley.

Fortune examine whether blockchain could be the best thing to happen to the internet. Following leaks such as Equifax and Facebook, they consider whether blockchain is the most efficient way of keeping your data safe online.

Writing in Forbes, Yoav Vilner, describes what he thinks the top five use cases for blockchain technology will be. He cites streamlined supply chains; smarter predictions; building decentralized apps; simplifying the Internet of Things; and, fortifying identity management as his major five.

Malta has taken further steps to becoming the world leader in blockchain and digital currencies with the passing of a trio of Bills relating to blockchain, cryptocurrencies and distributed ledger technology. The Acts will see the creation of the Malta Digital Innovation Authority which will help the island become a leader in test uses for blockchain.

Could blockchain technology help with space exploration? That’s the question being asked in Space magazine, where the answer has come back as a resounding “yes”! And if it can be used in space exploration, surely it can be used in public services and making government more efficiently write coincentral.

artificial intelligence

The German Government has issued a call of concern that top scientists working in the field of AI and advanced technology could be tempted to leave for global tech firms in the United States.

An Indian tech evangelist has written in Technology Review how the mass of different dialects, scripts, dress and culture in India makes it the perfect testing ground for AI technology.

The Register reports on a group of AI experts who have been grilled by the House of Representatives on the current power of AI and the question of whether robots will ever take over. (They won’t).

Forbes has an interesting piece on how AI is shaping city planning to make neighbourhoods smarter using AI technology.


Writing in Forbes magazine, contributor Dante Disparte argues that banks have still not caught up to the value of cryptocurrencies, and should they not embrace them, cryptocurrencies will be left to try and regulate themselves across the internet.

Bjarni Benediktsson | the full picture, this week - 29 June 2018 | encompass blogWith its wealth of cheap electricity, many digital “miners” are using Iceland to mine for crypto assets. But now the Icelandic Finance Minister, Bjarni Benediktsson, is worried about the possible effects on the country. A report from KPMG found that 90% of Iceland’s power last year, was dedicated on cryptocurrency mining.

In techworld, journalist Laurie Clarke argues that while cryptocurrencies are inherently safe, it is the exchanges that are not yet properly secure.

Although this malware primarily relates to ‘cryptojackers’ such as GhostMiner and Loap, which secretly mine cryptocurrency from computers without the owner’s awareness, there is also malware geared towards hacking cryptocurrency exchanges.

IBM is looking to bring some clarity to the crypto scene by ranking currencies and ICOs after signing a partnership agreement with AI firm WatermelonBlock.

In a survey conducted by ING, 9% of Europeans said that they already hold some digital currencies, and a further 25% said they would be willing to invest. While around one-third thought that cryptocurrencies would be the future of spending and investing, another third said that they had never heard of cryptocurrencies, while 46% said they considered crypto to be riskier than stock and shares.

supply chain

Trade disputes between the EU, US and China continue to rumble on. This week though, one prominent US company has put its head above the parapet to make a statement…

Harley Davidson | the full picture, this week - 29 June 2018 | encompass blogHarley Davidson has become the first private business to make formal business arrangements following the heightened tensions over trade between the United States and EU. Harley said in a statement that it would begin to outsource the building of some motorcycles destined for the EU to foreign destinations to ensure that additional taxes were not required. The company has decided to absorb additional costs which will add about £1,600 to the cost of a motorcycle. Donald Trump has attacked the idea, saying Harleys should “never” be made abroad. Further comment and reporting in CNN and Independent.

Chinese media, have been particularly vociferous in their condemnation of the US administration, calling the tariffs imposed on Chinese goods a “symptom of paranoid delusions.” Meanwhile amid reports that the US Government would limit Chinese investment into US firms, stock markets have fallen considerably, as the markets get nervous. Treasury Secretary Steve Mnuchin has denied the reports, first reported in the Wall Street Journal and Bloomberg. In the feud one loser may be Boeing. Bloomberg report that the Chinese may be more tempted to buy aircraft parts from their French counteIPArt Airbus, rather than the American company.

Australia is taking significant steps to end modern slavery in the country. Businesses with a turnover of at least $100 million will need to declare what steps they are taking to end modern slavery in their supply chains.

A British national has been found guilty of human trafficking after trafficking five women from Nigeria to Germany to work as prostitutes. Josephine Lyamu is the first person to be sentenced under new modern slavery laws. She will be sentenced next month.


In our sanctions round up we look at several countries who have been backsliding in their legislation, the response to US requests to stop buying Iranian oil, and Turkey buying Russian missiles.

The United States is aggressively trying to stop purchases of Iranian oil, with no waivers for companies or countries who do business with Iran. Japan is mulling over whether to agree to American requests to cease buying Iranian oil, report the Japan Times.

Nordstream | the full picture, this week - 29 June 2018 | encompass blogRussian and United States officials met this week to discuss energy, in particular the Nordstream gas pipeline from Russia to Germany, which the US has been considering adding sanctions to. With restrictions placed on Iranian oil, and a surprise shortage coming from canada, CNBC report whether the US may ask their Russian counteIPArts to up production levels.

Separately, Italian officials have called for sanctions on Russia to be eased. Russia failed to meet borrowing targets due to US and EU targets last year report Reuters.

Turkey has potentially fallen foul of US restrictions by buying military hardware from Russia. Turkey has taken delivery of an S-400 missile system from Russia.

North Korea
An investigation by the South China Morning Post has revealed that sanctions on North Korea are hurting the very poorest in society.

With the sanctions in place, the amount of humanitarian aid reaching the country has dropped dramatically in recent years, its value going from US$117.8 million in 2012 to US$43.8 million in 2016, according to the East-West Center and the National Committee on North Korea.

EU officials have hauled over the coals the Polish Foreign Minister following changes to the Polish judiciary. Unpersuaded by the need for the legislative changes, it now seems likely that the EU will look to sanction Poland in the near future, possibly by removing voting rights.

The EU has slapped travel restrictions on the Venezuelan vice-president and ten others for alleged human rights abuses. Meanwhile, the Washington Times report that financial sanctions were not biting because of the rise in oil profits flowing into the country.

Venezuela is in the grip of a deepening political and financial crisis marked by shortages of food and medicine, causing masses of residents to flee across its borders. A broad coalition of nations in the international community has condemned Venezuela’s leaders, accusing them of using the nation’s resources for personal gain.

Like Japan, India is also weighing up whether to oblige the US by stopping purchases of Iranian oil. The Hill also report on how India has been caught up in Countering America’s Adversaries Through Sanctions Act (CAATSA), designed to prohibit companies doing business with Russia’s defence sector.

The Romanian Government is considering seriously backsliding on legislation designed to stop corruption. These include decriminalising several corruption offences such as abuse of office, a crime that earned Social Democrat leader Liviu Dragnea a prison sentence that he plans to appeal against. A statement from twelve western nations read:

We, Romania’s international partners and allies, call on all parties involved in amending Romania’s criminal and criminal procedure codes to avoid changes that would weaken the rule of law or Romania’s ability to fight crime or corruption,” reads a joint letter published simultaneously on twelve embassies websites. The countries that signed the statement are Belgium, Canada, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, and the United States.

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 robotically 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.

Author: Cheri Burns
LinkedIn Profile | Cheri Burns

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