Friday's Final Word | Week 20

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

?? Inflation:?a breeding ground for?financial crime

???Prediction: AML?efforts will be pursued aggressively

??Kim Jong Un?gets?crypto?account approved

?? ChatGPT?could worsen the?"scam pandemic"

???EU lawmakers back rules for generative AI

Inflation: A breeding ground for financial crime

The?World Bank?predicts that inflation will remain above central bank targets in emerging markets and developing economies for the next few years.?Inflation?not only affects?financial stability?but also contributes to increased rates of financial crimes such as?theft,?embezzlement, and?money laundering. The vulnerable are particularly at risk during economic downturns, facing higher rates of human trafficking and exploitation. Governments, financial institutions, and law enforcement agencies must?collaborate to identify and combat illegal activities,?provide support to those in need, and protect global trade from the hidden?threats of inflation.

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AML and financial crime efforts will be pursued aggressively

Global AML fines increased by 50% in 2022, with financial institutions facing enforcement actions for compliance breaches. Financial institutions need to take a more aggressive stance in defending against threats such as ransomware and international money laundering, while also conducting extensive risk assessments and staying ahead of evolving AML regulations. Collaboration, data management, and transparency are crucial in the fight against financial crime, and regulatory updates and frameworks, such as the Trans-Atlantic Data Privacy Framework and the establishment of a supranational Authority for Anti-Money Laundering, can support these efforts.

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‘Kim Jong-Un’ gets approved for Gate.io crypto account

Gate.io, a cryptocurrency exchange, faced scrutiny after an on-chain investigator successfully passed their Know Your Customer (KYC) checks using the name Kim Jong-Un and an email address associated with cybercriminal activities. This experiment aimed to debunk the assumption that crypto exchanges have stringent identity verification processes. The incident highlighted flaws in Gate.io's application process and raised concerns about the effectiveness of KYC requirements in preventing money laundering, while also pointing out the risks associated with storing customer information.

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How ChatGPT Could Worsen the ‘Scam Pandemic’

Scammers are exploiting the capabilities of generative AI technology, such as ChatGPT, to perpetuate their fraudulent activities, posing a threat to the ongoing "scam pandemic". The advanced language generation abilities of ChatGPT allow scammers to create realistic scam messages and fake websites, making detection and discernment more challenging. As the frequency of scams increases, banks and financial institutions must enhance their protection measures, leverage AI and machine learning technologies, and educate consumers to combat the growing threat of automated fraud and scams facilitated by tools like ChatGPT.

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EU lawmakers back transparency and safety rules for generative AI

Yesterday, in a series of votes, the European Parliament lawmakers have supported amendments to the draft AI legislation, including regulations for foundational models used in generative AI technologies like OpenAI's ChatGPT. The amendments require providers of foundational models to implement safety checks, data governance measures, and risk mitigations before market release. Foundational model makers must also reduce energy consumption, register their systems in an EU database, comply with transparency obligations, and ensure adequate safeguards and disclosure of copyrighted materials for generative AI technologies. The lawmakers also focused on strengthening protections for fundamental rights in biometric surveillance.

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Fourthline Appoints New CFO and Supervisory Board Member

RegTech provider Fourthline has appointed Peter Grausgruber as its Chief Financial Officer (CFO) and Bob Geiman as a member of the Supervisory Board. Grausgruber brings extensive experience from his previous role as CFO at Bitpanda, while Geiman has a background in investing and operating technology companies. Fourthline’s co-founder and CEO, Krik Gunning, said: “We are excited to have Peter and Bob join our leadership team. Peter’s experience in scaling Bitpanda will be invaluable as we continue to grow and mature as a company. Bob brings a wealth of experience in building and scaling technology businesses and has a deep understanding of what it takes to build an industry leading company in the identity space. We are confident that his insights will help us achieve our ambitious goals. We look forward to working together to drive the future success of Fourthline.”

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