Friday's Final Word

Welcome to this week's edition, where we explore major developments in fraud prevention, regulatory challenges, corporate accountability, and the evolving landscape of digital currencies and financial misconduct.

????Govt’s failure to prevent fraud guidance ‘remarkably prescriptive’

?? Bitcoin advocates: EU privacy rules could kill crypto's core promise

?? TD’s next CEO talks about AML fiasco

?? KPMG: A paradigm shift in financial crime

?? TikTok knew its livestreaming feature allowed money laundering

Govt’s failure to prevent fraud guidance ‘remarkably prescriptive’

The UK government released guidance on November 6, 2024, for its new "failure to prevent fraud" offense, which will take effect in September 2025 and applies to large organizations and their subsidiaries. Under the law, companies can be held criminally liable if associates commit fraud to benefit the organization, though they have a defense if they can prove they had reasonable fraud prevention procedures in place. The guidance provides detailed recommendations across six principles - including top-level commitment, risk assessment, and monitoring - with particular emphasis on whistleblowing and technology solutions, while Serious Fraud Office director Nick Ephgrave warned companies to "get their house in order or face criminal investigation."

Read full article here

Bitcoin advocates warn: new EU privacy rules could kill crypto's core promise

The Financial Action Task Force (FATF) Travel Rule, originally designed for traditional finance in 2012, has been extended to bitcoin transactions, requiring Virtual Asset Service Providers to collect and share Know Your Customer information. The rule, which went into effect on December 30, 2024, in the EU and is already active in the UK since September 2023, is facing criticism for potentially undermining bitcoin's privacy principles and creating security risks through centralized data collection. Critics argue that despite similar rules being in place for traditional finance for over a decade, there's little evidence they've reduced money laundering, while the new requirements could particularly burden smaller institutions and exclude vulnerable populations from accessing bitcoin services.

Read full article here

TD’s next CEO talks about AML fiasco

TD Bank's incoming CEO, Raymond Chun, acknowledged at a recent investor conference that the bank's $3.09 billion anti-money laundering (AML) fines underscore the critical need for experienced staff and external benchmarking. TD has paused growth targets and launched a strategic review to satisfy regulators, even as its expenses surge due to investments in risk and control infrastructure. Chun emphasized, “Talent at the most senior levels in AML is absolutely one of the top priorities that we have as an organization.” The bank is also restructuring its U.S. assets to meet regulatory caps and considering its stake in Charles Schwab as part of its strategic overhaul.

Read full article here

KPMG: A paradigm shift in financial crime

In 2023, an estimated US$3.1 trillion in illicit funds flowed through the global financial system, encompassing human trafficking, drug trafficking, terrorist financing, and fraud schemes, according to a KPMG report. The report identifies six major trends reshaping financial crime compliance: geopolitical factors, rising compliance costs, evolving customer expectations, AI advancements, enhanced data analytics capabilities, and shifting compliance efficiency demands. As traditional processes struggle to keep pace with sophisticated criminal techniques, KPMG emphasizes that organizations must prioritize robust compliance measures while leveraging new technologies, particularly AI and machine learning, which are expected to become central to financial crime detection and prevention strategies over the next decade.

Read full article here

TikTok knew its livestreaming feature allowed money laundering and child exploitation

TikTok has known for years that its livestream feature facilitated child exploitation and money laundering, according to a newly unsealed lawsuit from Utah. Internal investigations revealed that adults paid teens to perform sexualized acts on TikTok Live and that the platform was used for laundering money and selling drugs. Utah's attorney general accused TikTok of monetizing the exploitation of minors, calling it “unconscionable.” Despite these findings, the lawsuit alleges that TikTok “slow-rolled implementing safety measures” due to the profitability of these activities.

Read full article here