The Trust Edition | July 2024

?? This month's essential AML/KYC news, insights, and regulations from around the world.

FATF Plenary Deep Dive: Key Outcomes and Future Directions

The final plenary session, which was under the governance of T.Raja Kumar, President of Singapore, came to a close at the end of June. Over 200 jurisdictions and international entities attended to discuss efforts against money laundering, terrorist financing, and proliferation financing, and several resolutions were made.

?? Introducing the FATF’s New President, Elisa de Anda Madrazo

The new president of the FATF, Elisa de Anda Madrazo, has brought forth a new focus for the organization in outlining the priorities she will pursue in her presidency. These include:

• Using a Risk-Based Approach (RBA) to Endorse Financial Inclusion: This ensures that financial services are democratized and accessible to marginalized parts of the population through risk assessment. The FATF will customize measures according to the unique risks posed by specific financial activities. This will help prevent the movement against money laundering and terrorist financing from excluding legitimate users from the financial system.
• Increased Efforts in Asset Recovery, Beneficial Ownership, and Regulation of Virtual Assets (VAs): This includes focusing on identifying assets obtained through illicit activities and confiscating and repatriating them. Increasing the transparency and governance of virtual assets like cryptocurrencies and of individuals who own or benefit from companies or other entities is also pushed forward.

?? Country Monitoring and High-Risk Jurisdictions

Jamaica and Turkey were removed from the increased surveillance list. They were congratulated for adhering to their AML/CFT frameworks and successfully addressing the previously identified vulnerabilities.

?? However, Monaco and Venezuela were added to the list, and increased monitoring is needed. The countries are committing to implementing strategic action plans to strengthen their AML/CFT frameworks.

The session reiterated previous worries regarding the Democratic People’s Republic of Korea (DPRK), underlining the clear weaknesses in its AML/CTF approach. The FATF concluded that heightened vigilance and increased enforcement of defensive measures when dealing with the DPRK must be implemented.

?? Mutual Evaluations of India and Kuwait

???? The Plenary highlighted India’s robust technical compliance and pinpointed key improvement areas. These included strengthening non-financial sectors and the efficiency of prosecution.

???? Kuwait was shown to be operating within a reasonable legal framework in regard to addressing money laundering concerns but was urged to focus on an enhanced understanding of key risks and to freeze malicious assets in a more timely manner.

?? Read our recent piece for more details on the conclusions of the Plenary.

Industry Updates

?? Coinbase Fined for AML Compliance Breaches

Coinbase has been fined ￡3.5 million by the FCA for poor AML controls. This is the FCA’s first enforcement action against a business trading crypto assets.

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The Financial Conduct Authority fined Coinbase’s subsidiary, CB Payments Ltd, for “repeatedly breaching a requirement that prevented the firm from offering services to high-risk customers”. High-risk customers included those on sanctions lists, politically exposed people, and those who declared themselves unemployed.

?? Enhanced due diligence must be carried out when dealing with high-risk customers. This case shows the importance of prioritizing AML processes that include solutions such as sanctions and watchlist checks, PEP screenings, adverse media checks, and more to avoid these large fines.

?? KPMG Releases Latest Insights on Gen AI and KYC Fraud

KPMG's latest report delves into the growing challenges posed by generative AI in Customer Due Diligence (CDD) and KYC fraud. As AI evolves, so do fraudsters' tactics, utilizing deep fakes and falsified documents to bypass security measures.

“In 2022, banks incurred losses of ￡1.2 billion to payment fraud. Despite institutions intercepting 61.5p of every ￡1 of fraud, the emergence of GenAI deepfakes has given rise to a new wave of impersonation fraud that existing systems are ill-equipped to handle.”

The piece discusses the need for a forward-looking strategy that can countermeasure the application of AI in fraud. The need for advanced biometrics, including facial recognition, voice identification, and behavioral biometrics, based on measurable patterns of human activities, forms a safer authentication toolkit that is more difficult to circumvent with AI-powered deep fakes.

?? Read the piece here.

ComplyCube News

?? Product Update: Introducing Mobility

We're excited to announce our latest product update: our driver verification checks, which feature integrations with the DVLA (UK) and AAMVA (US) for the Mobility as a Service (MaaS) sector.

The MaaS sector has seen impressive growth since the pandemic. McKinsey’s 2023 quarterly report on the future of mobility highlighted the industry as one of the most innovative, with drastic growth on the horizon. The report looks forward to forecasts for 2035, outlining the industry’s current growth trend. It states,?

“Mobility is one of?the hottest sectors, with?start-ups and traditional OEMs?constantly developing new technologies and transportation options.”

In light of this, businesses must implement the necessary measures to safeguard these scaling operations, including critical security measures such as driver screening and driver’s license verification.?

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Integrations for Driver Verification

The DVLA

The Driver and Vehicle Licensing Agency (DVLA) is a UK government organization responsible for maintaining records of drivers and vehicles. It issues driving licenses, collects vehicle excise duties, and ensures that drivers and vehicles meet safety and environmental standards.

Access to the DVLA (UK) enables the verification of driver competency, providing critical data points on records of received offenses, restrictions, or penalty points.

You can also retrieve details regarding what vehicles drivers hold permission to drive and mandated speed limits. Verify whether your drivers meet all necessary criteria.?

AAMVA

The American Association of Motor Vehicle Administrators (AAMVA) is a non-profit organization in the US that aims to develop highway safety and vehicle administration policies.

The organization includes motor vehicle and law enforcement administrators and executives from 50 states, the District of Colombia, and parts of Canada.

Similarly, the integration with AAMVA can be used to corroborate critical driver information.

?? Head over to our website for more information on these checks.

?? All you need to know about the UK Digital Securities Sandbox (DSS)

??? Our new guide on the UK Digital Securities Sandbox is now available on our website.

?? The UK Digital Securities Sandbox (DSS) is the UK government’s policy for gradually implementing a framework for tokenizing traditional financial instruments, such as securities like company equity.

This framework requires relevant firms to adhere to crypto KYC (Know Your Customer) regulations while simultaneously supplying a degree of flexibility for achieving UK Security Token Offering (STO) compliance.

Read our guide on the UK Digital Securities Sandbox on our website.

??? For more information on our suite of AML, KYC, and IDV services, start a conversation with one of our ComplyCube experts and find a solution today.