Friday's Final Word

Welcome to Fourthline's weekly newsletter, where we share insights, developments, and the latest news to help keep you sharp! Enjoy ???

???Who’s keeping tabs on? the little guys developing AI?

???Switzerland drafts tighter rules to combat money laundering

???A compliant alternative to Video-Ident in Germany

???UK urged against delay in setting AI rulebook?

???Crypto compliance: addressing challenges and innovations in AML

?? The UK's fight against financial crime is more connected than ever

Who’s keeping tabs on regulatory compliance for the little guys developing AI?

Smaller tech companies, including startups and individual app developers, are not taking data privacy and transparency seriously enough, according to a study by the Data Protection Excellence Centre. The study found that 12% of apps from startups and individual developers lacked a published privacy policy, while only half of the apps meant for children considered age restrictions and aligned with child privacy standards. The research also highlighted a lack of transparency in using AI, with fewer than 10% of apps transparently disclosing AI use or model sources.

Read full article here

Switzerland drafts tighter rules to combat money laundering

Switzerland has introduced new draft rules aimed at strengthening its anti-money laundering regulations. The proposed changes would hold lawyers and consultants accountable for reporting risks related to money laundering and increase oversight of legal entities like trusts. The draft rules, set by the Swiss government, will be presented to parliament in 2024 after consultation. The regulations would extend due diligence and reporting requirements to lawyers, accountants, and consultants involved in setting up trusts, holding companies, and real estate deals, and would establish a central registry to track beneficial ownership of legal entities to combat money laundering through shell companies. Additionally, the rules would tighten obligations for banks and firms to monitor sanctions violations and expand scrutiny for real estate transactions and high-value cash payments for precious metals and gemstones.

Read full article?here

A compliant alternative to Video-Ident in German

This article discusses the challenges that German companies, particularly financial institutions, face in complying with KYC processes due to the EU Anti-Money Laundering Directive and local regulation. It examines various KYC methods, such as Video Identification (Video-Ident), Personal Identification (Post-Ident), and Electronic Identification (eID), outlining their pros and cons. The article also introduces the "German Flow," a fully digital KYC solution that that combines biometric data, address verification, and bank account confirmation, and aims to streamline the compliance process for financial institutions while maintaining user-friendliness and scalability.

Read full article?here (in German)

UK gov’t urged against delay in setting AI rulebook as MPs warn policymakers aren’t keeping up

A UK parliamentary committee investigating AI has urged the government to prioritize the introduction of legislation to regulate AI technology. The committee argues that the government's current approach risks falling behind the rapid development of AI and could leave the UK trailing other regions, such as the EU, in terms of AI regulation. The committee's interim report highlights twelve challenges related to AI governance, including issues like bias, privacy, and liability for harms, and calls for a "tightly-focused AI Bill" to be introduced in the upcoming session of parliament.

Read full article?here

Cryptocurrency Compliance: Addressing Challenges and Innovations in AML

The article explores the complex relationship between cryptocurrencies and AML compliance. It delves into the challenges and innovations in addressing AML concerns within the cryptocurrency landscape. The convergence of cryptocurrencies and AML prompts questions about maintaining transaction integrity in a decentralized environment while balancing privacy and accountability. The article discusses the unique traits of cryptocurrencies, such as their decentralized nature and anonymity, which pose challenges for AML efforts. It highlights regulatory gaps, risks, and the evolving landscape of regulation and technological solutions.

The article presents case studies like the Silk Road and ransomware attacks to underscore the importance of effective AML measures. It examines the delicate balance between compliance and privacy, including potential approaches such as privacy-focused cryptocurrencies and decentralized identity solutions. The article anticipates trends such as enhanced blockchain analytics, decentralized identity solutions, global regulatory convergence, AI and ML integration, and the adoption of RegTech. It concludes by emphasizing the significance of upholding AML compliance for a secure and credible cryptocurrency ecosystem, where industry commitment to regulatory guidelines shapes its responsible future.

Read full article?here

How the UK is making the fight against financial crime more connected than ever

Although the UK’s pursuit of becoming a fintech hub and financial services powerhouse has made it a force to be reckoned with on the world stage, in doing so, it has made itself a larger target for criminal exploitation.

The UK government is introducing the Economic Crime and Corporate Transparency Bill to combat financial crime and money laundering. The bill includes three core pillars: encouraging data sharing for private-to-private information, creating a third-party utility for sharing suspected fraud information, and reforming Companies House to require identity verification for directors and enhanced sharing of fraudulent behavior evidence. These measures aim to enhance transparency, data exchange, and the identification of fraudulent activities within the financial ecosystem. The bill is expected to come into force in late 2023 or early 2024 if ratified into law.

Read full article?here

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