Doing the bare minimum is no longer acceptable when it comes to anti-money laundering/counter-terrorist financing (AML/CTF) compliance. The global regulatory environment is evolving around governments implementing stricter AML laws, international regulators increasing enforcement actions, and new innovative technology that opens up opportunities for businesses, consumers, and criminals. Let’s have a look at what has been happening over this week.
Pandora papers leak reveals the secretive, mysterious world of offshore companies and trusts
The Pandora Papers comprises 11.9 million leaked documents (2.9 terabytes of data) published by the International Consortium of Investigative Journalists (ICIJ) on 3 October 2021. The papers expose the secret accounts (offshore structures and trusts in tax havens such as Panama, Dubai, Monaco, Switzerland, and the Cayman Islands) of 35 world leaders, including current and former presidents, prime ministers, and heads of state, along with more than 100 billionaires, celebrities, and numerous business leaders. The financial data leak exposes how and if exposure of this caliber has the potential to shift the way banks, big financial conglomerates, regulatory bodies, and governments make strategic decisions in the interest of promoting financial transparency and more judicial scrutiny of the offshore system.
New Zealand in consultation to amend and update their AML regime
The New Zealand Ministry of Justice released a statutory review of the AML/CFT Act 2009. Statutory review is targeted at considering the introduction of a new registration regime for all AML/CFT businesses, a licensing regime for VASPs, and direct penalties for senior managers.
New Zealand needs a robust, effective, and current AML/CFT regime, both in domestic law enforcement and keeping in line with the march of international obligations. At the same time, the compliance obligations introduce frictions into the operation of the New Zealand economy. Ultimately, a balance must be struck between these pressures.
Fraud and corruption news:
LPL Financials charged $4.8 million for neglecting their due diligence
The USA’s top independent broker, LPL financials, failed to maintain their customer’s identity verification leading them to pay a total of $4.8 million to the US authorities. Their lack of due diligence paved the way for money laundering. The Securities and Exchange Commission (SEC) alleged in an administrative proceeding that LPL’s KYC policies did not catch inconsistencies in Garcia’s application for an LPL investment account that he eventually used to defraud MEDI, his advisory client of $3.1 million in public funds. In response, LPL released a statement saying, “We fully cooperated with our regulators and law enforcement to resolve and fully remediate this matter.”
UAE officials fined six firms Dh 17.3 million (USD 4 million) for breaching AML laws
The Central Bank of the UAE (CBUAE) has imposed financial sanctions on six exchange houses operating in the country and fined them Dh17.311 million for violating AML and CTF laws.
The UAE has recently taken a host of measures and also introduced new legislation to ensure that the local financial companies adhere to AML/CFT laws. Dozens of companies have also been issued fines over the last couple of years for violating the norms. To achieve and maintain a high level of AML/CFT compliance, the Central Bank warned that it would continue to impose further administrative and/or financial sanctions on companies not complying with the local regulations.
KYC tech and trends:
The ongoing dilemma of integrating crypto and regulations
The cryptocurrency community is torn in-between having KYC measures and doing away with them completely, which raises controversy on how governments, regulators, and financial authorities should regulate the space. Many crypto users argue that having regulators breathing down their necks could lead to sharing personal data, hence going contrary to the basic principles of anonymity and data privacy of cryptocurrencies.
Amidst the tug of war between pro-KYC and anti-KYC users, KYC presents itself as an inevitable process that crypto companies must adhere. Still, privacy remains a key issue for crypto users when dealing with KYC processes. Instead of this, decentralized KYC solutions are gradually coming up to narrow the digital identity gap and give users an acceptable KYC process without compromising their data security. It will be an exciting pathway to see what unfolds for the crypto industry soon.
This week at Data Zoo:
Learn how to verify your Kenyan Citizens
The East African country Kenya is expecting to have a strong economic recovery with a forecasted growth of 6.6% as the nation’s vaccination gains momentum and the services industry rebounds from a brutal pandemic fallout. Instantly verify your Kenya customers with access to 90% coverage. We utilise superior independent; government, credit, utility, and commercial data sources to provide industry-leading match rates and superior ~2.4 second response times.
Data Insider’s second podcast on ‘Opening Banking and Digital Identity’, Coming soon!
Stay tuned for our second episode with industry experts Memoona J. Anwar, and Tony Fitzgibbon. The conversation uncovers the global adoption and the future of the open banking industry with the regularly updating regulations.
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Author Sara Singh Tak, Data Zoo Marketing Specialist
About Data Zoo:
Data Zoo is setting the new standard for identity verification. With over a decade of experience, we have helped top global organisations reduce risk and verify their customers. Our innovative global solutions utilise independent; government, credit, utility, and commercial data sources to provide clients with industry-leading match rates and unparalleled response times.