the full picture, this week – 31 May 2019

by | May 31, 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, The International Chamber of Commerce (ICC) Banking Commission’s call to the trade finance industry to work together to ensure that regulation does not hinder the availability of trade finance.

Elsewhere, there is news that social media giant Facebook is reportedly planning to launch its own cryptocurrency and digital payments.

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

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encompass’ research predicts a record year for AML fines

Analysis from encompass, which shows 2019 is set to be year of record AML fines, has been widely reported this week.

The research, carried out by encompass financial advisor Dr. Henry Balani, showed that:

  • 2019 looks set to be year of record AML fines, overtaking 2014 ($10.89bn)
  • $7.7bn of AML fines handed out in January to April 2019, vs $1.16bn in the same period in 2018
  • US-based regulators penalise institutions the most, followed by the UK
  • average fine over the past 17 years is $155m, while the median fine is $2.8m
  • banks still receive majority of penalties, but there is a growing focus on other sectors

The findings have been covered in publications including CCR Magazine, Business Money and FStech.

ICC warns of regulatory overkill in trade finance

the full picture, this week – 31 May 2019 | Olivier Paul, International Chamber of Commerce | encompass blogThe International Chamber of Commerce (ICC) Banking Commission has released a whitepaper urging the trade finance industry to work together to ensure that regulation does not hinder the availability of trade finance and remains relevant in a digital landscape.

The milestone report, titled ‘banking regulation and the campaign to mitigate the unintended consequences for trade finance’, looks at the regulation and compliance requirements that have come into force since the 2007 financial crisis and the industry’s subsequent efforts in promoting their fair treatment of trade finance instruments.

“Clarification and harmonisation of regulation are fundamental to mitigating the serious threat that de-risking poses to the financial system,” says Olivier Paul, Director, Finance for Development, ICC.

Read the latest here.

the encompass view

The wave of regulation that has come as a result of the financial crisis has hit the trade finance sector particularly hard, especially due to the international nature of this activity.

Meanwhile, ever-increasing Know Your Customer (KYC) costs and decreased productivity have led to a de-risking strategy that is disproportionately affecting SMEs. However, significant advances in technology in the same period of time means that trade finance can adopt a new approach.

Efficiency gains from automation mean that customers can drive down the cost of KYC and the time taken to onboard customers without compromising on the quality of compliance. encompass, for example, automates the KYC discovery process to unwrap complex ownership structures, and screen relevant entities and individuals comprehensively for risk in minutes.

the encompass view

The wave of regulation that has come as a result of the financial crisis has hit the trade finance sector particularly hard, especially due to the international nature of this activity.

Meanwhile, ever-increasing Know Your Customer (KYC) costs and decreased productivity have led to a de-risking strategy that is disproportionately affecting SMEs. However, significant advances in technology in the same period of time means that trade finance can adopt a new approach.

Efficiency gains from automation mean that customers can drive down the cost of KYC and the time taken to onboard customers without compromising on the quality of compliance. encompass, for example, automates the KYC discovery process to unwrap complex ownership structures, and screen relevant entities and individuals comprehensively for risk in minutes.

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

advancements in technology to bring big changes to capital markets jobs sector

Up to a fifth of capital markets jobs could disappear over the next decade as advances in artificial intelligence and technology gather pace and change the landscape of the workforce.

While spending on risk management and regulatory reforms in the wake of the financial crisis has led to an increase in employee headcount over the past ten years, the arrival of new machine learning tools and data analytics is set to reverse the trend, according to new research.

Opimas say the asset management industry could well feel the biggest impact as a result of the advances.

While the size of staff in the capital markets will decrease, a change in the type of employees being hired is thought to be likely, as experts in AI, data science and cybersecurity become hot property.

In order to adjust to the changing landscape, financial institutions must implement a new talent strategy, says Opimas, not only because they have to recruit new employees with different skill sets, but also because it will become increasingly apparent that they have to bridge a talent gap within their own organisations.

Finextra has more on the predictions.

Facebook to launch cryptocurrency in 2020

the full picture, this week – 31 May 2019 | Facebook to launch cryptocurrency | encompass blogFacebook is reportedly planning to launch its own cryptocurrency and digital payments.

The social media giant’s plans for a digital payments system in around twelve countries – likely to launch in 2020 – first came to light at the end of last year.

Engineers working on Project Libra, as the initiative is known, are hoping to start testing the currency – known internally as Global Coin – by the end of 2019, according to the BBC.

It is thought that the move, if successful, will disrupt the digital payments landscape, with big tech firms such as Amazon and Google set to explore their own potential to tap into the payments and financial services market.

Get the latest from FStech.

news in brief

The federal minister in charge of Canada’s fight against money laundering supports British Columbia’s public inquiry into dirty money but says a national examination is not necessary. Organized Crime Reduction Minister Bill Blair said money laundering is happening across Canada and internationally, but the federal government has already started implementing measures to combat illegal money. Read more.

Three London homes worth more than £80m have been frozen by the High Court in the second-ever use of anti-corruption orders to stop foreign nationals laundering cash in the UK. Read more here.

AML has never been higher on senior management’s agenda, with regulatory fines now running into billions of dollars, and regulatory action becoming genuinely threatening, according to new research. In a report titled Global Anti-Money Laundering and Trade Sanctions Services Market, the important trends and dynamics affecting growth around the world are highlighted.

The Anti-Money Laundering Council’s has released a report concluding that the Philippines is a haven for dirty money,’ with the findings being described as “not a surprise” in this analysis.

HSBC has launched two new data innovation labs in London and Toronto, as part of its plans to expand its investment in AI and machine learning across its global markets. The research lab in London is expected to employ 100 staff specialised in AI, along with technologists, co-op students and interns, while the Toronto lab will employ 50 members of staff. FStech has the latest.

The Financial Conduct Authority intends to shift its investigative approach in order to give full effect to the Money Laundering Regulations. The FCA is now conducting dual-track investigations into suspected AML systems and compliance issues, as explored here.

the latest from encompass

There is less than a week to go until we host a webinar with Dun & Bradstreet, on 5 June, around aligning customer and vendor due diligence through technology. The webinar will explore the convergence in compliance and procurement strategic objectives and responsibilities, and how joined-up processes can accelerate progress towards the common objectives of reducing costs while streamlining third party onboarding. You can book your place here.

On the blog this week, we shared a recap of our Understanding 5MLD webinar with Dr. Henry Balani, which you can read here.

We also highlighted the encompass research which has shown that 2019 is set to be a year of record AML fines.

meet the encompass team

On 4 June, encompass is hosting The Broker Club’s next Risk Roundtable, discussing accelerating onboarding with automation For more information, contact sally.jones@thebrokerclub.org

From 12-13 June, we will be attending ACAMS AML & Financial Crime Conference Europe in Berlin. We’re looking forward to learning about the latest advancements in managing conflict, regulatory structures and collaborative working. If you’re attending and would like to set aside time to learn more about encompass then contact abis@encompasscorporation.com today.

On 18 June, Ed Lloyd, Executive Vice President and Global Head of Sales & Marketing at encompass, will be speaking at the Automation in AML & KYC Forum in London. This Panel Discussion will cover achieving operational excellence in KYC/AML through automation. The forum welcomes colleagues from banking, capital markets and other financial services to discuss all things automation. Find out more 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.