the full picture, this week – 30 November 2018

By Magalie Pimentel | November 30th 2018
the full picture, this week – 30 November 2018 | encompass blog

the full picture, this week – 30 November 2018

by | Nov 30, 2018 | All Blog Posts

As we enter the holiday season, we take one last look at the latest news in financial crime compliance and technology before taking a break over December. We’d like to thank you all for your interest and support and look forward to bringing you a re-styled the full picture, this week in the New Year!

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financial crime and regulation

The crypto sector is hitting the headlines following a roller coaster few weeks for Bitcoin. The cryptocurrency suffered a sharp fall over Thanksgiving weekend, affecting the entire sector.

With governments globally moving towards regulation of the sector, The Next Web explains in detail how unregulated cryptocurrency exchanges are used to facilitate money laundering. The article points out that exchanges in countries with little to no anti-money laundering (AML) regulation received 36 times more Bitcoin from money launderers. Once cleaned, 97% of this ends up in countries with lax AML laws.

In the UK, cryptoassets are high on the agenda for the Financial Conduct Authority (FCA). Addressing the Regulation of Cryptocurrencies event in London, the FCA’s Executive Director of Strategy and Competition, Christopher Woolard, anticipated increased adoption by both businesses and individuals, and reiterated the government’s commitment to combating financial crime risk stating:

the Treasury will undertake one of the most comprehensive responses globally to the use of cryptoassets for illicit activities by applying and going further than the existing directive, the fifth EU Anti-Money Laundering Directive (5AMLD).

And sticking with 5MLD, according to PaymentsCompliance, the European Council is keen to see members states implement the Directive ahead of the 2020 deadline in light of recent money laundering scandals.

In Ireland, it’s the gambling sector that is bracing itself for a new regulatory regime. The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2018 completes the country’s transposition of 4MLD into national law and brings all gambling service providers into the scope of AML regulations. Justice Minister Charlie Flanagan announced the start of the new Act saying:

Criminals seek to exploit the EU’s open borders and this EU-wide measure is really important for that reason. I and my Government colleagues are committed to systematically tackling corruption and organised crime.

Central Bank of Ireland (CBI) has also issued guidance for “Schedule 2 Firms” that now need to register with the CBI for money laundering purposes. Schedule 2 activities include lending, payment services and foreign exchange.

The property sector faces scrutiny in Australia with more than AU$5 million worth of Melbourne real estate frozen as part of an investigation into the alleged laundering of offshore funds by Chinese nationals.


Earlier this week it was reported that France and Germany would be likely candidates to host a special payment channel, known as a Special Purpose Vehicle (SPV), created by Europe to circumvent the U.S. Iran sanctions. This was confirmed by Reuters, who also report that the scope of the SPV may be significantly scaled back so that oil sales may no longer be covered.

Whether this reduced scope will be sufficient to keep Iran in the 2015 Nuclear Deal is still to be determined, as suggested by Ali Akbar Salehi, head of the Atomic Energy Organization of Iran, who said:

Our priority is to be able to enjoy some banking system for financial transactions and to be able to sell our oil. If the SPV answers the two priorities that I just mentioned…, then yes it could be a workable proposal, it can be helpful in keeping the deal alive. dives deeper into some of the issues here.

Nicaragua’s Vice-President Rosario Murillo, the wife of President Daniel Ortega, has become subject to U.S. sanctions. She is accused of corruption and serious human rights abuses.

And in a first, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned two Bitcoin addresses for their involvement in the SamSam ransomware attacks.

Over in Europe, calls for tougher sanctions against Russia following it’s seizure of Ukrainian navy vessels and sailors, are being considered, but one EU diplomat ruled out any knee-jerk reactions saying,

We are not going to move very quickly on any new sanctions, there could be some later on, that is not ruled out. But for now the unity of the 28 is key. And focus on de-escalation.


The Financial Brand reports on a recent Cognizant report that has found that retail banking is lagging when it comes to the adoption of automation technology. The report suggests that a disconnect between the business and IT may be a primary reason for this. Only 12% of of bankers think other business units share the responsibility to implement automation despite wide-ranging business benefits.

Some forward-looking financial institutions, however, are making significant strides in the adoption of new technologies including artificial intelligence and machine learning. In a Forbes article, Tamara Sigler, Vice President in Capital One’s Center for Machine Learning explains that the bank “hopes to minimize friction and inconvenience for customers while enhancing their ability to stop fraudulent activity” with these new technologies.

A detailed article in Information Age addresses ongoing concerns that artificial intelligence will destroy jobs in the future. Amongst the arguments for the adoption of AI, the article lists a statistic from PwC anticipating that while approximately 7 million existing jobs could be lost to AI, another 7.2 million could be created.

the latest from encompass

Earlier this week we welcomed onboard new client, APPx Group Holdings, a Canada-based Fintech incubator and leader in diversified Blockchain 2.0 development. A visionary in the FinTech sector, APPx is working closely with Canadian regulators to ensure the country’s regulatory environment offers the necessary controls to protect both companies operating in the sector and consumers, while still allowing for continued innovation. According to Jay Ruckenstein, President & Co-Founder at APPx:

We have worked closely with Canadian regulators since founding the company and are keen to take a leading role in defining AML best practice for the Fintech sector. By raising standards across the board, the whole industry benefits from a good reputation, which encourages adoption and integration within the mainstream financial system.

With an estimated two to five percent of GDP currently laundered globally each year, regulations must continue to evolve to protect the global financial system but these changes don’t come without their challenges to regulated firms. Over on our blog we outline four strategies to futureproof your AML compliance programme.

And there’s still time to sign up to our final webinar of the year on Friday 7 December, featuring Chris Bull, Founding Director of Kingsmead Square. The webinar will explore the drivers for law firms to redesign the client intake and Know Your Customer processes, and the significant benefits of employing ‘design thinking’ to this challenge.

Join us to understand:

  • the importance of offering a superior experience at the very earliest stages of a business relationship
  • the role of process automation in business intake and client matter inception
  • what can you automate and what you need to leave to people

Book your place here.

That’s it from “The Full Picture, This Week” this year! Look out for our 2018 wrap-ups coming up in the next few weeks.

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: Magalie Pimentel

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