the full picture, this week – 30 August 2019

by | Aug 29, 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 week, there is a warning from the UK’s fintech founders over its place as a global fintech leader. Elsewhere, tensions reportedly surface between Facebook and Libra backers as a result of regulatory pushback. These issues, and more from around the globe, give us plenty to dive into for your Full Picture, This Week…

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Key learns from the 5th Australian Financial Crime Summit

Marking the 30th anniversary of Australia becoming an Anti-Money Laundering (AML) jurisdiction, professionals from financial services and other industry sectors gathered in Sydney for the 5th Australian Financial Crime Summit.

The purpose of the event, which Encompass sponsored, was to focus on financial crime issues, utilising the combined expertise of professionals within related fields. Items on the agenda included case studies and best practice examples – delivered by experts on both domestic and international law enforcement – panels, roundtables, and more.

Our Business Development Manager, Gary Clarke, and Mike Kearney, Product Marketing Specialist, took in the busy two-day schedule and share the key themes and some of their learnings.

in the spotlight: Ketul Patel, Solutions Consultant

Ketul Patel is no stranger to the financial services industry and all that it entails.

Having been involved across Know Your Customer (KYC) and AML as a consultant, project manager and in various other roles before moving to Encompass, his knowledge and experience meant he had a solid sense of where the ‘place to be’ was – and that was working with automation.

A firm believer in the technology and its worth, he grabbed the opportunity to become a member of the Encompass Solutions Consulting team, for which he now uses his expertise to take customers through their journey with our solution.

Here, he tells us about his career so far, why his background meant he was an ideal fit for the company, and what it’s been like finding his feet in a role he took up earlier this year.

fintech founders warn of risks over UK’s leader status

The UK’s fintech founders have warned that the nation could lose its place as a global leader.

The Digital Finance Forum surveyed 50 founders of UK fintech firms to assess their levels of optimism around the sector’s growth prospects. In addition to Brexit-related concerns, nearly half said that the rules applying to Open Banking should extend to sectors including insurance and utilities, as the Open Data trend picks up pace.

A total of 63 per cent said the UK is a global leader in the development of fintech, but only a third said this will still be the case in five years.

Fears over the impact of Brexit are at the root of this outlook for more than two thirds of respondents, who said they were either worried or extremely worried about the consequences for their business.

Christian Faes, chair of the Digital Finance Forum and chief executive of LendInvest, said: “The UK must not be complacent about being the world leader in fintech – and there’s definitely a feeling from founders, as revealed through this survey, that this threatens to be the case.

“There is clearly an opportunity with the new government to make the fintech sector a priority again.”

the Encompass view

The UK has long been a leader in the fintech space, and recent figures that showed the sector is attracting investment at a record rate – despite the political uncertainty in the lead-up to Brexit – only served to cement its status.

However, what this survey illustrates is that there is no room for complacency. While there remains a real belief in the UK, its companies and what it produces, this must continue to develop and be developed.

The implications of Brexit are bound to impact on confidence, as we maneuver in a period of uncertainty, and as businesses are forced to consider what it means for their international operations. The potential for divergent regulatory regimes may ultimately add a burden to businesses and increase the need for automation, That said, in the AML space, given the UK will remain a member of the Financial Action Task Force (FATF) (setting the standards upon which the EU legislation is based), we expect a fairly uniform approach to continue across UK and EU regulators in the near term.

The fact that the UK has a regulatory regime that embraces innovation has been key to the industry progressing and attracting top talent and, as these results suggest, enhancing this and making fintech a priority will go a long way towards ensuring the UK maintains its standing in the sector overall.

the Encompass view

The UK has long been a leader in the FinTech space, and recent figures that showed the sector is attracting investment at a record rate – despite the political uncertainty in the lead-up to Brexit – only served to cement its status.

However, what this survey illustrates is that there is no room for complacency. While there remains a real belief in the UK, its companies and what it produces, this must continue to develop and be developed.

The implications of Brexit are bound to impact on confidence, as we maneuver in a period of uncertainty, and as businesses are forced to consider what it means for their international operations. The potential for divergent regulatory regimes may ultimately add a burden to businesses and increase the need for automation, That said, in the AML space, given the UK will remain a member of the Financial Action Task Force (FATF) (setting the standards upon which the EU legislation is based), we expect a fairly uniform approach to continue across UK and EU regulators in the near term.

The fact that the UK has a regulatory regime that embraces innovation has been key to the industry progressing and attracting top talent and, as these results suggest, enhancing this and making fintech a priority will go a long way towards ensuring the UK maintains its standing in the sector overall.

Alex Ford | VP Operations, Encompass

Tensions surface between Facebook and Libra backers

The regulatory pushback on Facebook’s digital currency project Libra appears to be leading to tensions with some of its commercial partners, with several companies reportedly considering their positions.

The news comes after reports emerged that competition watchdogs at the European Commission have begun probing potential anti-trust issues relating to Facebook’s plans, with a focus on the governance structure and membership of the Libra Association.

The probe is the latest in a series of hurdles facing Facebook as it strives to reassure regulatory bodies and politicians the world over about privacy, security and competition worries regarding its new currency unit.

The pressure has resulted in at least three of the firms weighing up their future involvement with the project, with two companies actively considering pulling out, according to reports.

Bank of England governor proposes digital currency to curb dollar dominance

The governor of the Bank of England has proposed the creation of a network of central bank digital currencies to curb the dominance of the US Dollar on international trade.

Mark Carney explained that history shows the rise of a reserve currency is founded on its usefulness as a medium of exchange, by reducing the cost and increasing the convenience of international payments.

The additional functions of money – as a unit of account and store of wealth – come later, and reinforce the payments motive.

Central bank digital currencies have been increasingly explored by monetary authorities around the world, with around 70 per cent of central banks researching them as something to complement or replace traditional money, according to a report by the Bank for International Settlements (BIS).

“Technology has the potential to disrupt the network externalities that prevent the incumbent global reserve currency from being displaced,” he commented, adding that retail transactions are increasingly taking place online rather than on the high street, and through electronic payments over cash.

“The relatively high costs of domestic and cross border electronic payments are encouraging innovation, with new entrants applying new technologies to offer lower cost, more convenient retail payment services,” stated Carney.

news in brief

The Swiss Financial Market Supervisory Authority, FINMA, has published guidance on how it applies Swiss AML rules to financial services providers supervised by FINMA in the area of blockchain technology. FINMA has also issued banking licences to two new blockchain service providers. Read more.

Open Banking platform Tink has published an open letter calling on the UK’s financial regulators to show greater flexibility around the September deadline for the implementation of Application Programming Interface (API) standards under the second Payment Services Directive (PSD2). More here.

Pakistan’s Prime Minister, Imran Khan, has set up a 12-member committee to ensure the execution of the Financial Action Task Force’s (FATF) 27-point action plan, days after the country was put on a ‘blacklist’ for its failure to curb funnelling of funds to terrorist outfits. Get the latest.

While most financial applications of AI have been in the customer service space, there are other areas that banks are working with to improve through implementation of innovation technology. Prag Sharma, head of emerging technology at Citibank’s TTS Global Innovation Lab, highlights in conversation with Finextra that there are a few main areas that financial institutions are working to improve with AI technology.

The Financial Conduct Authority is investigating whether a Qatari-owned British bank complied with AML rules amid reports the lenders’ clients may have ties to extremist organisations. Al Rayan Bank has also placed short-term restrictions on the bank accounts of certain individuals whom it deems “high-risk” or “politically exposed” following talks with the City watchdog earlier this year, a spokesperson for the lender told Law360.

the latest from encompass

Want to know more about what Encompass is? We’re delighted to launch our new explainer video giving you a short snapshot of the challenges our KYC solution meets and how it can benefit your business.

Regardless of size, developing an effective AML programme is essential for any regulated business. In this series of infographics, developed in collaboration with OCEG and Refinitiv, we explore this process, from developing your strategy, through effective risk assessment, and responding to suspicious activity.

meet the Encompass team

Augmenting Customer Due Diligence: the importance of a connected approach to data and technology.

Presented by Encompass, Dun & Bradstreet and Dow Jones, this breakfast seminar, taking place on Thursday 19 September at 1 Lombard Street, London, will explore how connected processes can accelerate progress towards the common objectives of reducing costs while streamlining customer due diligence. During the seminar, we will discuss top common challenges and priorities in CDD and the benefits of intelligent automation for customer due diligence.

Book your place.

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.