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Written by Jackie Whiting
on March 31, 2021

We kicked off the start of March by joining the Financial Times fifth annual list of Europe’s fastest growing startups. The list, compiled with research company Statista, lists the European companies that achieved the highest compound annual growth rate in revenue between 2016 and 2019. We’re proud to have joined an impressive collection of technology companies recognised by the Financial Times. Read the full list here to see where we ranked!

You may remember that last month we mentioned we had joined a panel discussion alongside some of our fellow Austrian tech companies. If you missed it, you can watch the full event here to learn more about the power and potential of Austrian entrepreneurs, including the mark they’re making on the North American tech scene. 

In podcast news, our CEO Russell E. Perry and DueDil CEO Justin Fitzpatrick sat down for a conversation on the critical importance of understanding true business identity with OWI Managing Director Cameron D’Ambrosi. You can listen to their entire chat here.

And finally, before we get to the news, we are excited to announce that kompany now provides real-time access to the company register in Malaysia! This means our clients now have access to company data, including original register reports of Malaysian companies.

Now, onto the first story of our March RegTech Roundup. This month’s theme is all about the exceptional cost of money laundering and the unexpected ways it filters into the criminal world through seemingly legitimate institutions. 

Authorities issue fresh guidance on trade finance money laundering risks

As originally reported by Global Trade Review, the Financial Action Task Force (in collaboration with the Egmont Group), are urging lenders to better prevent and fight against trade-based money laundering (TBML). 

First, a reminder of what TBML entails: trade-based money laundering involves criminals moving “illicit funds through the international trade system in order to disguise their origin.” There are common ways criminals accomplish this type of money laundering and the new guidances aim to stop them. 

Recommendations to financial institutions include considering the corporate structures of clients (for example, those importing and exporting goods) with a specific focus on whether they appear “unusually complex and illogical, such as the involvement of shell companies or companies registered in high-risk jurisdictions”. The FATF and Egmont Group also suggest that things like the ownership models and registered addresses of clients be thoroughly scrutinised. 

Where trade finance is concerned, banks are also told to continue their monitoring efforts for abnormal activity including the “sale of atypical goods or the use of shipping routes that are inconsistent with the wider industry, as well as unconventional or overly complex use of financial products, and the intermingling of different types of trade finance products for different segments of trade transactions.” 

Additional red flags include any late changes to payment arrangements, the use of transit accounts and international payment pathways that inevitably wind back up in the country of origin. All of these occurrences can and should trigger a deeper look from lenders. 

Noteworthy to mention is the fact that this is actually the second time in the last several months that trade-based money laundering risks “associated with documentary trade finance instruments” have been spotlighted by the FATF.  

London galleries issued with money laundering alert on top artworks

The United Kingdom’s National Crime Agency is warning London’s art world that they must do more to stop artwork from being used to launder illicit funds. In fact, according to the Evening Standard, the aforementioned law enforcement agency estimates that tens to hundreds of millions of pounds are being laundered through art sales all over the country’s galleries. 

There’s a growing concern that the current “lax” standard of checks are making it too easy for criminals to take advantage of the market. Galleries have already been encouraged to file more “suspicious activity reports” when there are worries about the buyer or seller and the source of destination of the money involved in the transaction. 

However, despite this direction, the director general of the NCA’s national economic crime centre said, “there has been an inadequate response and that an official 'amber alert; has been sent to dealers in the capital and elsewhere in Britain.”

Currently the UK art market is valued at $12.7 billion (£9.11 billion), making it the second biggest in the world and as a result, a relatively high risk area for money laundering. Criminals target the art world as an avenue for money laundering because art has a subjective value which means you can set high and low prices as required without suspicion and as well as already being “a market used to operating with anonymity.”

Whether or not increased scrutiny or invention by regulators happens in the immediate future, this topic has become a hot one for the United Kingdom with momentum likely not slowing down anytime soon.

Covid fraud costs Americans $382 million

It can sometimes be too easy to log financial crime in the seemingly far-off category of criminal acts that don’t necessarily impact everyday people. Of course, this is simply not true and as highlighted in our final story of the month from CNBC, the cost of this category of crime has begun to weigh heavily on Americans over the course of the pandemic.  

According to the Federal Trade Commission (FTC), “Fraud linked to the Covid pandemic has cost Americans $382 million." As of March 23rd, "more than 217,000 people have filed a coronavirus-related fraud report with the agency since January 2020, according to federal data. The average person lost $330 but the older the victim the higher the loss - $500 for those in their 70s and as much as $900 for those in their 80s." 

Criminals have stolen from Americans using a variety of scams that according to CNBC include those related to stimulus checks, unemployment benefits, COVID vaccines, fake cures and donations to non-existent charities. Identify theft has proven itself to be a recurring problem “relative to unemployment benefits collected during the pandemic.” 

The FTC’s $382 million figure likely understates the scope of fraud, since it’s based on incidents reported by the consumers themselves and many are expected to go unreported.

Government agencies are urging people to think twice before handing over money or personal information anytime anyone asks for it.

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

March was International Women’s Month and we celebrated with stories of women in RegTech that we suggest you read:

5 Influential Women in RegTech (in 2021)

In Conversation with kompany's Chief Operating Officer Johanna Konrad 

In Conversation with AML & KYB Expert Susan White

And finally, never miss important news from us again by subscribing to our newsletter and we’ll keep you informed each and every month. And if you enjoyed the read, follow us on LinkedIn and Twitter! You’ll receive next month’s news round up and stay informed on the latest happenings in all things RegTech, compliance and regulatory news.

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