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Written by Jackie Whiting
on May 31, 2021

As we approach the start of a new month, it’s time to shine the spotlight on three stories reported this past May that deserve to be on your radar. From plans by the European Union to name and shame banks that fail to fight money laundering to the increasing price of real estate in Western Balkan cities, this month’s RegTech roundup will catch you up on the anti-money laundering challenges, losses and wins across Europe. 

But before we go into detail, make sure to add the 2021 CoinGeek Conference, held in Zurich from June 8th to June 10th to your calendar. CoinGeek Conferences are known for being among the biggest Bitcoin conferences in the world and are highly anticipated events within the Bitcoin and blockchain world. We’re proud to be represented at this esteemed event by our Chief Technology Officer, Peter Bainbridge-Clayton who will explain how KYB compliance can be enabled using BSV. Register for the event by clicking here.

Our CEO Russell E. Perry also sat down with Matt Neil from the FinTech Innovation Network to chat about which trends he’s observing in the financial services industry and the challenges that go along with them. Watch a snippet of their conversation now.

And if you’d prefer to read a summary of kompany’s latest services and offerings, you can find us in Planet Compliance’s 2021 RegTech Directory by downloading the booklet from their website. Learn the ways in which we stand out from other RegTech providers and read an interview with our CEO in which he shares insights including how the peak of the coronavirus crisis impacted kompany. 

Now, onto the first story of our May 2021 RegTech Roundup. This month’s theme is all about what’s at stake in the fight against money laundering. Enjoy!

Money laundering pushes up property prices in Western Balkan cities (bne IntelliNews)

There’s an unexplained property boom going on throughout Western Balkan cities and rampant money laundering is the presumed culprit. Both the real estate and construction sectors are a popular channel for criminals to launder money due to the relative ease and ability to absorb large amounts of capital, according to a report by the Global Initiative Against Transnational Organised Crime. 

In the Western Balkans, there is a longstanding history of these sectors absorbing illegal revenue, owed in large part to the weak regulatory culture. For example, in several countries across the region, companies that apply for a construction permit are not legally obliged to display proof of their capital or its origin. This allows individuals to disguise illicit money as prepayments by clients, liabilities to suppliers and loans from other parties entirely. The harsh impact on honest people looking to invest in real-estate is becoming clear, especially when considering the suspicious growth experienced in light of a global pandemic.

“...many property markets across the region have been skewed by laundered money as prices are artificially driven up by criminals who want to launder their assets there. Although real estate prices dropped across the region in 2020 due to [coronavirus] COVID-19 …  many places still showed gains since 2017.”

“In Albania, it reports price hikes in both the capital Tirana – which has experienced a construction boom and a spike in property prices – and the coastal city of Vlora, where prices have also soared. While Albania’s economy as a whole, especially the tourism sector, was hit by the pandemic, real estate activity expanded by 5.5% in 2020.”

Should this trend continue unchecked, it’s an inevitable outcome that real estate prices will rise to the point of making housing unaffordable throughout the Western Balkans. “Furthermore, the dirty money being made and laundered in the region is perpetuating an ecosystem of crime and corruption that weakens the rule of law and hampers the ability of institutions to deal with the problem.”

The situation will continue to be monitored but it’s been identified that action is desperately needed to put the region on a more positive course. 

EU to name and shame banks that fail to fight money laundering (Independent.ie)

“Cancel culture” is taking on a new meaning throughout the European Union as the European Banking Authority (EBA) announces they are setting up a centralised database to “name and shame financial institutions in the EU that have weak anti-money laundering controls.”

The EBA, “which is responsible for creating a single rulebook for bank regulation in the EU,” wants to collect and store information on banks who display weaknesses in their anti-money laundering efforts, while also providing information on how national regulators are responding to institutions who fail to meet the defined standards. 

But before the assembly of such a database can begin, the meaning of AML “weakness” must be defined, which requires input from relevant stakeholders. Therefore, the EBA is currently seeking input on how to define such weaknesses while also asking how the information on financial institutions should be shared with officials and the public. 

The Central Bank of Ireland said back in December that financial firms in the country “were ignoring their legal responsibilities in relation to the prevention of money laundering and the financing of terrorism and leaving oversight to unqualified staff.” 

The hope is that this new database will go beyond simply discouraging offences and instead also act as an enablement tool to help institutions across the EU manage their weak spots and more effectively combat money laundering. The EBA stated that one of the main goals of the database would be to help regulators better coordinate and allocate resources across national borders for tasks such as one-site inspections and off-site monitoring.

Malta passes Moneyval: island no longer 'non-compliant' (Times of Malta)

Our last story comes courtesy of Times of Malta, where we end things on a positive note as the its been reported that “Malta has demonstrated ‘significant process’ in fighting money-laundering and terrorism financing”. 

After a list of shortcomings were first identified by Moneyval, the Council of Europe's anti-money laundering monitoring body, in 2019, the country has reportedly achieved full compliance with twelve of the 40 recommendations - noting significant progress in its money laundering management. 

For the additional twenty-eight recommendations, minor deficiencies remain but Malta no longer has any “non-compliant” or “partially compliant’ ratings according to the most recent report from Moneyval. It should be noted that there are four possible ratings of compliance across 40 recommendations, they are “compliant, largely compliant, partially compliant and non-compliant.”

Areas in which Malta has made overall progress includes (but are not limited to): the regulation of real estate agents and lawyers, the accuracy of Beneficial Ownership Information and the speed of filing suspicious transaction reports. 

Failing the Moneyval test in 2019 came with its list of troubles, particularly the damage to the country’s reputation and its businesses and workers in the financial services sector “who had seen years of work and investment put at risk because of the way the government in the past seven years undermined the institutions and closed an eye to financial crime.”

Matla hopes to continue this positive momentum as it awaits a forthcoming report from the Financial Action Task Force in which assessors will decide whether or not to put the country on a list of untrustworthy locations. A final decision is expected to be announced by mid June.

That's it for this month! But before you go...

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