Welcome to norbloc’s quarterly newsletter, here to report on the RegTech news of the first quarter of 2024. In this edition we take a look at the latest sector updates as the global cost of financial crime is measured at US$1.4 trillion per year with immeasurable consequences for individuals, entities and the global economy.
The year has begun with noteworthy regulatory advancements, such as the significant improvements within the UAE AML framework. While in Europe, we’re welcoming the European Digital Identity framework, and the harmonization of the Union-wide AML regulatory framework. We’re also seeing the expansion of KYC obligations to online marketplaces and platforms in proportion to their size as a result of the Digital Services Act (DSA) — tune in to the norbloc podcast. Additionally, the UK Financial Conduct Authority (FCA) is once again putting pressure on businesses to rectify AML shortcomings.
On this backdrop, we highlight the impact of technology, in particular, the rise of the KYC orchestration platform for its ability to accommodate dynamic workflows, client segmentation and tailored risk rules, offering personalization, flexibility and scalability.
At norbloc we’re proud to announce Sancus, the KYC orchestration platform, has been singled out as The Category Winner for Innovation: Data Flow Management, and recognized as One to Watch in the Chartis Research Financial Crime and Compliance50 2024 report.
💡Industry news worth reading
Last month the UAE was removed from the FATF grey list. The Financial Action Task Force (FATF) welcomed the United Arab Emirates’ significant progress in improving its AML/CFT regime, announcing that the UAE is no longer subject to additional scrutiny just two years after being placed on the list of jurisdictions under increased monitoring.
This is a remarkable achievement for the UAE and a testament to the country’s diligent efforts to comply with the recommendations set out in the FATF’s action plan for an improved AML regime.
Some of the measures taken to combat money laundering include:
- the establishment of the Executive Office and a a specialist court;
- the revision of existing laws along with the adoption of new AML/CTF guidelines and a new Penal Code;
- the exchange of information for improved data quality and international cooperation.
This decision is expected to further stimulate trade and investment in the UAE as trust in the country’s financial system increases drastically.
Coming straight from the UK, the FCA has sent yet another Dear CEO… letter to some lenders, safe custody providers, money brokers and financial leasing companies. The letter addresses certain shortcomings identified within their AML policies and procedures, for example:
- discrepancies between firms’ registered and actual activities;
- financial crime controls which had not kept pace with business growth;
- a failure to carry out proper risk assessments of their own or their customers’ activities;
- a lack of clarity regarding customer due diligence, enhanced due diligence processes and ongoing monitoring procedures;
- inadequate employee training, resourcing and oversight of financial crime issues and requirements.
The European Digital Identity Framework is progressing with the digital target that there will be a EU-wide framework for the deployment of a trusted, voluntary, user-controlled digital identity by 2030 in line with the Digital Decade Policy Programme 2030.
The harmonized digital identity framework has the objective of breaking down barriers, creating cross-border economic value by facilitating easier access to goods and services, and empowering Union citizens and companies throughout the internal market.
A key component to the European Digital Identity Wallet (EDIW) is the only once principle introduced in order to reduce administrative burden and operational costs linked to identification and authentication procedures, such as customer onboarding. This principle will have cross-border application, thus requiring the development of interoperable eGovernment services across the Union, such that citizens and companies will not have to provide the same data to public authorities more than once.
A question worth contemplating: How will the Union ensure that the aim to facilitate cross-border value is achieved across the internal market when each Member State will create one (or more) EDIW that citizens and business will be free to use or not use?
The European Commission is taking steps towards achieving harmonization within the AML legal framework by passing the first AML/CFT Regulation and the 6AMLD.
This is promising as cross-border irregularities within the AML framework pose a significant challenge to regulated entities across the Single Market, especially SMEs and startup companies. With the removal of such barriers, such entities will be able to more efficiently optimize their internal processes and achieve compliance. The main benefits of the new AML laws are:
- the introduction of the Single AML/CFT Rulebook which will serve as the foundation for coordinating the work of the future AML Authority.
- harmonization in the private sector will ensure regulatory consistency helping the Single Market to thrive.
- harmonization of the tasks and powers of national supervisors and Financial Intelligence Units will boost cross-border cooperation.
📌In case you missed it…
Norbloc has launched The norbloc podcast, your source of hand-picked RegTech news hosted by Alkisti Rocanas, where we’ll be joined by experts in the field to discuss industry news worth knowing, the latest regulatory updates and technology worth investing in.
In the first episode we were joined by Penny Spyropoulou , Legal Advisor at norbloc, to decipher the EU’s Digital Services Act, aimed at preventing illegal activities and safeguarding fundamental rights online. Penny is a Lawyer specialized in Information and New Technologies Law and shares the incoming rules and responsibilities, highlighting how online platforms and marketplaces will now need to upgrade their processes to abide by the DSA or risk mind-blowing fines for non-compliance.
🎧 Listen in: #1 Penny Spyropoulou: Decoding the DSA
Does the DSA affect you? Chat with our team to learn more.
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