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Written by Jackie Whiting
on July 30, 2020

As we arrive at the end of July, we have an entire month’s worth of stories behind us to share with you. 

But before we begin, two brief updates: you may have noticed that we’ve moved this month’s Monthly Regtech Roundup from LinkedIn to our kompany blog. We hope you enjoy the new platform and suggest bookmarking some of our other great stories for future reading:

Making sense of it all: the unstructured world of shareholder data

Can companies fully trust their Business KYC data? 

But in even bigger news, we’ve launched our new website! This new look was designed with you in mind, and our team has carefully assembled a new interface that improves the experience across devices. It is also now easier to learn more about the collection of KYC and KYB solutions we offer. Take a look here

Now it's time to jump into the news! This month, you'll notice our three stories from July share a common theme: anti-money laundering. 

Will the Dutch AML Utility be a Game Changer for Shared FinCrime Compliance? - Corporate Compliance Insights

Our first story comes out of the Netherlands, where some of the country’s major financial institutions are banding together in the fight against money laundering. 

As Corporate Compliance Insights reports, ABN Amro, ING, Rabobank, Triodos Bank and Volksbank have committed to establishing an organisation that will monitor their combined transactions with the goal of improving their ability to identity and stop money laundering.

“Transaction Monitoring Netherlands (TMNL), as it has been christened, will be the first of its kind, as there exists no such utility today where transactions of multiple FIs are monitored under a single umbrella, with information shared across them.”

Currently the project is in its feasibility study phase but the concept itself has provided the financial industry a refreshed motivation to work toward collaboration in AML monitoring. 

Between increasingly sophisticated financial crime schemes (inspired in large part by the global pandemic) and the pre-existing trend of tightening regulations, there’s never been a better time for a collaboration like TMNL to begin. As Sujata Dasgupta of Corporate Compliance Insights puts it, “In the wake of rapidly rising financial crimes, regulators across the globe have toughened their stance on compliance violations and are scrutinizing banks more closely. Penalties on banks are mounting, jeopardizing their reputation along with financial loss.” 

It is estimated that €16 billion in illicit funds are currently circulating in the Netherlands, meaning that a new initiative of this nature could be a much-needed game changer for the Dutch banking community. Whether this new transaction monitoring utility will prove to be an effective strategy to combat money laundering remains to be seen, but the world will certainly be watching closely with anticipation. 

10,000 companies taken off registry - Times of Malta

For our next story we move things over to Malta where a major change was announced by the country’s Economy Minister, Silvio Schembri. As Times of Malta reports, “Around 10,000 defunct companies have been stricken off the Malta Business Registry, in another move intended to improve the island’s reputation.”

The criteria for removing companies from the Registry included those who failed to file annual reports or accounts and those who did not give official ownership information. After the culling, Malta now has 96,000 companies on the registry. 

According to MInister Schembri, “the move was aimed at safeguarding Malta’s reputation by drastically reducing the number of inactive accounts. It was something which was long overdue...”

This comes at a time when the country has been under increased scrutiny from fellow EU members and regulators around the world. In 2019, as reported in an early story from Times of Malta, “a report by the EP’s Tax3 committee named and shamed seven countries, including Malta, as having levels of foreign direct investment (FDI) that could only be explained to a limited extent by real economic activities taking place within these countries.”

“A national money-laundering risk assessment found that Malta’s large financial sector was one of the biggest drivers of the island’s high threat from the laundering of foreign proceeds of crime.”

But Schembri claims that this cleansing exercise was started long before the Council of Europe released its less-than-exemplary report on Malta last year. “We have intensified the process and a sustainable investment was made into MBR’s portal which will be up and running in a few months’ time.” 

Expected improvements include a portal that operates using a blockchain system as well as AI in order to verify documents. The total number of human resources employees has also increased by 40% and the government is said to be investing in intelligent technologies which have access to data from national and international authorities. The ultimate goal is that all directors and shareholders of businesses will now be screened before being permitted operation rights in Malta.

This is a massive change for a country long considered an international tax haven. Should the mentioned improvements come into effect, this development would mark a major shift in the attitude of AML efforts for not just Europe, but around the world. 

Lawmakers, banking, trade, transparency groups push for sweeping AML bill to be included in NDAA - CFCS  - Association of Certified Financial Crime Specialists

For our final story, we’re staying on topic and keeping this month’s RegTech roundup all about AML. This time though, we’re highlighting the United States, where a coalition of powerful lawmakers, investigators, regulators and influential banking and corporate transparency groups are uniting forces to try and pass a revolutionary piece of AML legislation. 

The Anti-Money Laundering Act (AMLA) of 2020 touches on nearly every area of fighting financial crime, including “many core AML program duties, in some cases opening the door to innovation and better information sharing, including previously impervious ownership structures, but also raising the potential penalty exposure for failures – by individuals and institutions, particularly serial violators.” 

As the former head of AML at Wells Fargo, Jim Richards, says of the proposed legislation, “If enacted, it would be the biggest revision to the U.S. AML/CFT regime since the USA PATRIOT Act of 2001,” 

The spine of AMLA, "is a provision to direct the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), the country’s financial intelligence unit and arbiter of AML rules, to create and maintain a secure beneficial ownership registry of legal entities."

The amendment also includes “critical provisions for law enforcement investigations into organized transnational criminal operations, human trafficking, terrorism financing and other unlawful activity,” according to the ABA.

Perhaps the most encouraging indication that this amendment has strong chances of adoption is its broad bipartisan support. There are key Congressional power brokers as sponsors attached to AMLA that transcend party lines, include Senators Mike Crapo (R-ID), Sherrod Brown (D-OH), Tom Cotton (R-AR), Mark Warner (D-VA), Mike Rounds (R-SD), Doug Jones (D-AL), Jerry Moran (R-KS), Bob Menendez (D-NJ) and John Kennedy (R-LA). 

UPDATE: The above story was published July 1st, 2020. On July 20th, 2020, the House  voted to add the anti-money laundering provisions to the 2021 National Defense Authorization Act with a bipartisan majority of 336 to 71. Learn more at the source.

That brings us to the end of yet another monthly roundup here at kompany!

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