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Written by Jackie Whiting
on February 26, 2021

February has been a short but busy month at kompany. Our founder joined podcast hosts John and Steve for an episode of their San Francisco based FinTech Newscast. They chatted about the world of anti-money laundering and what the new presidential administration has in store for the regulatory ecosystem in the United States. You can give that a listen by clicking here.

We also joined a panel discussion alongside some of our fellow Austrian tech companies. The event, hosted by Advantage Austria, brought together two powerful startup hubs in Austria and the United States and offered the North American audience a unique perspective on what’s going on here in Europe when it comes to tech companies like us. If you missed it this time around, make sure to follow kompany on LinkedIn and Twitter to never miss an event like this in the future. 

And before moving on to our first news story of the month, we of course also need to mention that February marked the commercial launch of our shareholder discovery product: UBO discovery. This latest innovation makes understanding the shareholder structure of legal entities an easy task. You can search across international borders to find the answers your team needs, and all company information supplied is backed by our global network of real-time audit-proof data. You can learn more about the full capabilities of UBO discovery by visiting our website. 

Now, onto the first story of our February RegTech Roundup. This month’s theme is all about the future of compliance and the different needs of groups in both the UK and North America when it comes to the fight against money laundering.

Advocates push for US to embrace role as global anti-corruption champion

The global anti-corruption organisation known as Transparency International released a new report this past month that advocated for the rules that require financial institutions to do due diligence on their clients should be expanded to cover “hedge funds, private equity, lawyers and accountants.” This would mean expanding the Know Your Customer requirements that banks must adhere to the groups mentioned above. 

In their report, the organisation also recommended to introduce, “increased protections for whistleblowers, clamping down on abuse of ‘golden visa’ programs, and better monitoring and more international cooperation around cross-border financial transactions.” Transparency International also supports the Countering Russian and Other Overseas Kleptocracy (CROOK) Act, a bipartisan bill introduced earlier in February in both the Senate and the House of Representatives. The bill, if passed, would “impose additional financial penalties on significant violators of the Foreign Corrupt Practices Act, then use that money to fund programs that fight global corruption.” 

As Sean McGoey of the International Consortium of Investigative Journalists outlines in this story, it’s important to highlight that the United States fell to its lowest ranking since 2012 in Transparency International’s Corruption Perception Index. This is the result of a combination of factors that includes attacks on whistleblowers, the lack of oversight into COVID-19 relief funds, and the persistent attempts to undermine the integrity of the 2020 election. 

Making some strong moves in support of anti-money laundering and anti-corruption efforts would be a way for the United States to “reassert a leadership role in preventing corruption worldwide.” 

The majority of cross-border transactions use US dollars. This implies that the United States has a disproportionate impact on how money is moved around the globe and its financial rules hold a lot of influence when it comes to how we effectively fight corruption and money laundering globally. 

Therefore, by making even some of the changes outlined above, Transparency International hopes that the United States will re-establish itself as a global leader in the fight against dirty money and corruption throughout the Biden era. 

Financial Institutions Want More Clarity on Anti-Money-Laundering Changes

Staying in the United States for our second story, the Wall Street Journal reported earlier this month that “financial-sector compliance professionals want more input from the government on how to make their anti-money-laundering programs effective.”

Regulators had proposed amending anti-money-laundering rules last year in order to offer financial institutions more flexibility in how they can distribute resources within their compliance programs. One survey of compliance professionals, revealed a common expectation that regulators should provide a clearer path on what is expected of them. For example, survey respondents said they would benefit from greater regulatory clarity on the topic of risk assessments. They go on to say that “feedback from FinCEN on suspicious activity reports filed under anti-money-laundering rules would help shape the way such reports are filed, potentially increasing their value to law enforcement.”

FinCEN has proposed changing the definition of an effective compliance program to cover three key elements, including a requirement that “information provided to officials has a high degree of usefulness to the government authorities who are responsible for conducting investigations into financial crimes.”

The key takeaway for the RegTech community? Respondents to the above survey were clear in their belief that the increasing adoption of technology is one of the most important drivers of building an effective anti-money-laundering program. 

Tax abuse and money laundering is trapping billions in poverty, says UN

A United Nations commission report is calling for a global crackdown on corruption, money laundering and tax abuse. According to the report, these practices are trapping billions of people around the world in a cycle of poverty and making a dire climate situation even worse. 

As originally reported by The Guardian, the commission reports estimates that “10% of the world’s wealth could be hidden offshore at a time when governments were under growing financial strain because of the Covid pandemic, and as inequality soars.” The panel of world leaders, central bank governors and business and civil society representatives also went on to say that “criminals were laundering assets worth as much as 2.7% of global GDP each year.”

These estimates are particularly worrying when you consider that even during a pandemic, the wealth of billionaires globally had increased by nearly 30% between April and July of last year, all while the rest of the world experienced significant turmoil that of course, continues today.

The co-chair of the panel responsible for the report and former Prime Minister of Niger, Ibrahim Mayaki, summarises the situation,  “Closing loopholes that allow money laundering, corruption and tax abuse and stopping bankers, accountants and lawyers from enabling crime are steps in transforming the global economy for the universal good."

That’s it for this month! But before you go…

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