Friday's Final Word
Get the latest on how regulators are tightening the screws on crypto, banking, and AI to combat financial crime worldwide—plus, why lawyers might be the next weak link.
?? MiCAR and AML: new regulations on cryptocurrencies in Italy
?? Crypto banks under fire? Regulatory crackdowns and opportunities
????Lawyers vulnerable to money launderers?
?? AI becomes Uncle Sam's super sleuth
?? FT: Both challenger and traditional banks need to do more to prevent fraud
MiCAR and anti-money laundering: new regulations on cryptocurrencies in Italy
Italy's recent Legislative Decree 129/2024 aligns with EU's MiCAR regulation, establishing a robust framework for crypto-assets while dividing supervisory responsibilities between Consob and Banca d'Italia. The decree introduces strict sanctions for unauthorized crypto services and mandates a unique transaction identification code by December 2024, with 144 Virtual Asset Service Providers (VASPs) already registered in Italy managing €2.7 billion in crypto assets. This regulatory evolution, stemming from the Fifth Anti-Money Laundering Directive, specifically targets the anonymity risks in crypto transactions while establishing comprehensive guidelines for VASPs.
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Lawyers vulnerable to money launderers: FINTRAC
FINTRAC has issued a warning bulletin about the exploitation of legal professionals by money launderers, revealing that in 2022-23, legal professionals were involved in transactions totaling $110 billion, with approximately 2,400 suspicious transaction reports filed. The agency highlights that lawyers' expertise in trust accounts, corporate structures, and real estate transactions, combined with their exemption from federal AML regulations (except for BC notaries), creates a significant vulnerability that professional money launderers and organized crime groups are actively exploiting.
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AI becomes Uncle Sam's super sleuth
The U.S. Treasury Department's new AI-powered detection system has proven remarkably effective in its first year, saving taxpayers $3.8 billion by freezing suspicious transactions and recovering fraudulent payments. While private sector adoption of AI for fraud detection remains cautious due to regulatory concerns, experts suggest that the Treasury's success could accelerate implementation across the financial industry. The technology's ability to analyze patterns 24/7 and detect subtle fraud signals that humans might miss positions AI as a crucial differentiator in future payment systems, potentially improving both fraud prevention and customer experience.
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Crypto banks under fire? Regulatory crackdowns and opportunities
In the wake of FTX's collapse, U.S. regulators have intensified scrutiny of crypto banks, with Customers Bank and United Texas Bank facing enforcement actions for AML compliance deficiencies, while TD Bank received a multi-billion-dollar fine for failing to monitor 92% of its transactions. Meanwhile, European regulators are also tightening oversight, with the UK's FCA investigating crypto payments firm BCB and potential USDT delistings in the EU, though opportunities remain for compliant institutions like Sygnum Bank and Bison Digital. Despite the crackdown, industry critics argue there's a double standard in enforcement, pointing to disparities in how traditional banks and crypto firms are treated.
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FT: Both challenger and traditional banks need to do more to prevent fraud
With fraud accounting for 36% of reported crime and ￡1.17bn stolen from UK customers in payment scams last year, financial institutions face mounting pressure to enhance their anti-fraud measures. As new legislation takes effect in October giving banks more power to investigate suspicious transactions, institutions must focus on collaboration, partnerships, and disruption strategies while maintaining continuous financial crime management processes. The article highlights Starling Bank's recent fine for inadequate controls as a wake-up call, emphasizing the need for robust governance and regular staff training in both traditional and challenger banks.
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