Q3 2024 | norbloc's newsletter

Saying goodbye to Q3 of 2024, we're here to fill you in on the AML compliance highlights worth taking into the last quarter of the year — From a change in FATF's Presidency and the UAE's updated AML strategy following their removal from the grey list earlier this year, to unfortunate developments regarding Swedbank's money laundering case in the Baltics and the FCA reprimanding Starling Bank for having built on ‘shockingly lax’ customer checks — more on all this below.

For those in Athens this week, find Elpie F. and I, Alkisti Rocanas , at the 18th NextGen Payments & RegTech Forum on Thursday, 10th October, organized by QUBE Corporate Events .

??Industry news worth reading

In July, Elisa de Anda Madrazo of Mexico was appointed President of the Financial Action Task Force (FATF) until 30 June 2026. Guided by the principles of inclusiveness, diversity and transparency, the new Presidency will prioritize the following:

• Advance financial inclusion to counter-act reliance on cash and unregulated channels which would otherwise increase risk of money laundering and terrorist financing.
• Strengthening the effectiveness and cohesion of the Global Network, a unique network for maintaining global cooperation to fight financial crime. For example, working closely with the IMF, the World Bank, the United Nations, and others to build countries’ capacity to tackle illicit finance.
• Supporting the effective implementation of revised FATF Standards with a focus on the recently strengthened standards on asset recovery, beneficial ownership, and virtual assets.
• Ensure success in the new round of Assessments, which will prioritize the delivery of more focused, risk-based and timely mutual evaluations to ultimately achieve more impactful reforms.
• Promote the use of innovative technology to drive strategic initiatives between public and private bodies to ensure 'integrity by design' for AML practice.

Overall, the FATF highlights its commitment to robust governance based on the principles of integrity, accountability and transparency.

Meanwhile, the UAE which was removed from the FATF grey list in February, recently announced the new 2024-27 UAE National Strategy for Anti-Money Laundering, Countering the Financing of Terrorism and Proliferation Financing (AML/CFT/CPF).

The new strategy leverages global best practices adopting a risk-based approach. Formulated around 11 strategic goals with reference to the latest National Risk Assessment developed using the The World Bank Group ’s methodology, the strategy aligns with the highest international standards and focuses on the key pillars of risk-based compliance: effectiveness and sustainability.

The new national AML strategy is focused on:

• Understanding risks across different sectors,
• Enhancing international cooperation and strategic partnerships,
• Strengthening oversight of financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs),
• Improving transparency of beneficial ownership information,
• Optimizing the use of financial data for effective investigations and asset recovery,
• Maintaining robust frameworks to combat terrorism financing and illicit organizations,
• Updating legal and regulatory frameworks to align with global standards,
• Fostering coordination and collaboration between public and private sectors,
• Developing centralized data systems for monitoring,
• Ensuring adequate resources and training for various entities,
• Adhering to international standards and the UAE's national objectives, submitting regular progress reports to that effect.

H.H. Sheikh Abdullah bin Zayed Al Nahyan, Deputy Prime Minister, Minister of Foreign Affairs and Chairman of the Higher Committee Overseeing the National Strategy on Anti-Money Laundering and Countering the Financing of Terrorism, stated:

"The UAE’s proactive approach not only safeguards the integrity of the global financial system but also strengthens our position as a leading international financial center and trade hub."

Elsewhere, Former Swedbank CEO, has been sentenced to 15 months in prison for a money laundering case concerning the bank's Estonian branch. To bring you up to speed, a Swedish appeals court has recently overturned an earlier acquittal from the lower court, finding former CEO guilty of gross fraud on 1 out of 6 counts, for providing misleading information to shareholders and the public regarding Swedbank's AML measures in Estonia.

The Court determined that this was, 'likely to influence the assessment of the Swedish bank in financial terms and thereby cause damage.'

And while we're on the topic of failing AML, the Financial Conduct Authority has fined Starling Bank ￡28,959,426 for 'shockingly lax' financial controls.

Looking back, the Bank grew from nothing in 2016, to 3.16 million customers and ￡452.8 million in revenue by end of 2023. It's clear that this exponential growth came at the expense of AML compliance.

Specifically, the FCA found that the challenger bank had severe failings within its sanctions screenings processes, as the bank's screening tool had been screening customers against a fraction of the financial sanctions lists.

Additionally, Starling had opened more than 54,000 accounts for almost 50,000 high-risk clients, repeatedly breaching the FCA's requirement to refrain from opening accounts for high-risk customers until their AML framework was strengthened.

A stark example of the bank's AML shortcomings, in June 2022, Starling had opened new accounts for 294 customers previously rejected for 'financial crime reasons', of which 112 were on the blacklist of Cifas , the UK's largest cross-sector fraud sharing database.

Further investigations by the FCA quickly led to the discovery of wider systemic issues regarding policies, procedures and senior management that lacked AML experience and skills.

This is yet another case underlining that neobanks often misjudge AML compliance as a 'nice-to-have' when in reality it is a key pillar, undercutting their customers, themselves and the economy.

??In case you missed it...

Earlier in September, norbloc was in Ilhavo, Portugal for a crucial European project — The TANGO EU Project.

norbloc is bringing unique expertise towards trustworthy data management and sharing solutions, together with the support of the European Union and a network of European partners, to provide data sovereignty and governance to citizens, businesses, and public administration around Europe.

We drive digital data innovation forward, with empowerment, security and sustainability as the key principles that accompany us, to guarantee that data privacy and protection are centerstage.

Our goal is to make sure that across the EU, your data is yours to control.

?? Find out more about the TANGO initiatives.

Careers at norbloc

norbloc is made up of people with all types of experiences, backgrounds and career paths. We want our team to reflect the diversity of our customer base and the world at large.

Are you looking to make the next step in your career? ?? Discover more