Chris Laws, Global Head of Product Development, Supply & Compliance Solutions at Dun & Bradstreet, explains why the EU blacklist is an important tool to combat financial crime and will be welcomed by those responsible for the fight against money laundering. 

The EU recently updated its anti-money laundering blacklist that names countries it considers to have deficiencies in tax rules that could favour tax evasion and anti-money laundering (AML) activities. The European Commission introduced the list at the end of 2017 and recently added ten new jurisdictions including United Arab Emirates, Oman and Barbados. The updated list has been rejected by governments within the EU, and now Brussels is being forced to review the list that was established to promote tax governance and prevent tax avoidance. The published objectives include ensuring transparency and fair tax contribution, and coupled with the 5th EU Money Laundering Directive, the list was viewed as a valuable tool in the fight against money laundering, helping to protect global organisations from the reputational and financial risk of illegal activity within their supply chains.

The recent debate comes after a year of high-profile scandals engulfed some of Europe’s biggest banks and Nienke Palstra, at campaign group Global Witness believes that “Europe has a major money-laundering problem”. While organisations such as the Financial Action Task Force – a group established 30 years ago by the G7 – were set up to combat fraud at an international level, previous list have excluded countries such as Panama, which recently hit the headlines relating to high-profile financial fiascos. With a rapidly changing landscape and increasingly sophisticated financial crime, having accurate information on country level risk essential to help businesses to identify potential illegal activity and take steps to mitigate exposure.

The Brexit effect

The UK’s National Crime Agency reported a 10% rise in ‘Suspicious Activity Reports’ (SARs) in 2018 compared to the year before, with specific money laundering reports increasing by 20%. The agency’s report came as London was accused of “acting as a global laundromat, washing hundreds of billions of pounds in dirty money from around the world” and the impending departure from the EU is likely to exacerbate concerns about illegal activity within the UK.

With continued uncertainty over trade arrangements post Brexit, UK-based companies looking at trading opportunities outside of the EU will need to evaluate the risk involved with working within other markets and complete comprehensive due diligence and take steps to ensure strict controls over transactions with countries flagged as posing increased risk. According to the NCA, Brexit will increase the number of opportunities for money laundering as foreign firms could potentially look to invest ‘dirty money’ in British businesses as EU AML agreements become increasingly uncertain.

Is technology the answer?

Despite the uncertainty, businesses can evaluate potential risks and limit exposure by implementing an efficient and clear risk management policy – and ensuring they have a transparent view of supplier and partner relationships. A robust compliance process is achieved through a combination of the right data and the right technology to support effective Know Your Customer (KYC) and Know Your Vendor (KYV) activities.  A PWC report in 2016 looked at the ‘future of onboarding’ and suggested that technology provides a solution to accurate identification and verification, using technologies such as biometrics, blockchain and digital identification. The utilisation of artificial intelligence (AI) is increasing and can be a valuable tool to support compliance processes.

AI can be used to develop an informed and accurate compliance model, untangle an overwhelming volume of data and identify (and therefore reduce) false information in monitoring systems. Traditional tools and technology are simply not able to manage the increasing amount of data sources and the speed of change that artificial intelligence can process. AI systems can reduce the time spent on manual processes, allowing compliance experts to devote attention to more in-depth analysis of suspicious activity.

The ongoing fight against money laundering

The ever-increasing sophistication of criminal organisations and their ability to mask illegal activities poses a genuine challenge for businesses operating in high risk jurisdictions. It’s more important than ever to know exactly who you are doing business with and having access to details such as beneficial ownership and ‘People with significant control’ (PSC). With a recent survey suggesting anti-money laundering compliance costs U.S. financial services firms $25.3bn a year, it’s an expensive and very real issue that businesses need to take seriously.

Tools such as the EU blacklist can play a crucial role in delivering increased transparency to deter and identify illegal activity and to ensure an enhanced level of scrutiny of business relationships to mitigate risk. Using third-party data to complement a company’s existing data set can improve due diligence, and having the latest technology in place to analyse huge volumes of data could be key to avoiding exposure to regulatory fines and reputational damage.

This is the warning from Nigel Green, the Founder and CEO of deVere Group. Mr Green says: “The actual process of leaving the EU itself is now increasingly irrelevant.  Indeed, even if the UK didn’t leave, unprecedented damage to the UK’s financial services industry has already been done.

“Following years of uncertainty and a lack of firm leadership from all parties, firms across the sector have had to take precautionary action to safeguard their interests. 

“Typically, this involves relocating parts of their business or key staff to places like Paris, Luxembourg, Dublin, Frankfurt and Amsterdam, or setting up legal entities in the EU.  Sometimes this has been done publicly, but a lot has, so far, not been disclosed, so we still can’t know the full scale of the situation.”

He continues: “With no meaningful access to the EU’s single market, the UK’s financial services sector is bracing itself for what is likely to be a long and steady decline, ultimately losing its coveted ranking as the world’s top financial centre.

“The lack of confidence in the UK’s financial services sector, which contributes around 6.5 per cent to the country’s GDP, will inevitably hit jobs and the government’s tax base.”

The deVere CEO concludes: “The steady drain of investment, talent and activity away from UK financial services might be able to be stopped, the situation might be recoverable, but confidence needs rebuilding fast.”

(Source: deVere Group)

Merchant account and card payment fee comparison service Merchant Machine have carried out a study to look at the extent of these economic changes to find its true value in the world we live in. The research uncovers the impact cashlessness has had on specific industries, personal spending and how much different countries have adopted the payment method. Some of the key findings are outlined below:

Cashless Countries

Revenue from cashless payments has become hugely significant for a number of nations across Europe, but who is yielding the most in recent years? Below are the EU countries with the highest revenue from card payments.

• Power of the Pound - With an astounding €106.7 trillion revenue in 2017, the United Kingdom are far and away the leading nation for cashless payments across Europe.
• Revenue Generating Germany - Ranking 2nd in our study of cashless revenue is Germany with €55.8 trillion last year alone.
• Frivolous France - Another nation proving themselves to be tech-savvy and spend-happy are the French, who gathered a €27.2 trillion in cashless payments last year.

Big in the Industry

Contactless forms of payment have created a new level of convenience for people around the world, and this has provided a real boost for certain industries. Below are some of the biggest winners:

• Cashless Clothing - Last year, the use of contactless payments to purchase clothing skyrocketed a huge 321% from the year before, topping all other key business types.
• Parking Payments - The inconvenience of having to pay for parking has been improved somewhat by the ease of payment, with 132% more transactions last year than previous.
• Public Transport Perks - Another business reaping the benefits of technology is public transport, where 91% of all payments are contactless.

Home and Away

In years gone by, using a card on foreign shores would be a frightening prospect for many, but in 2018, it appears that is no longer the case. Our study has traced the value of cashless payments back to 2006, and show how people have started to adopt card payments abroad and on home soil.

• Global Spenders - In 2006, the revenue from international cashless transactions was estimated at around £4.9 billion, and has increased eightfold and now sits at £40.4 billion
• Card Happy - The average monthly spend on card for individuals was £422 last year, a 78% increase from 2006.
• Foreign Transactions - Until 2011, the average international monthly spend on card was under £10, but now stands at £34

Ian Wright from Merchant Machine stated that: “The popularity and preference towards cashless payments appears evergrowing. While so many are aware of the decline of cash usage and increase in card transactions, but this study helps to break down where these changes are most felt.”

(Source: Merchant Machine)

Market Outlook

Mihir Kapadia, CEO and Founder of Sun Global Investments

When it comes to investment trends, every year appears to have a certain theme which dominates the markets and beyond throughout the course of those twelve months. 2017 was largely a stock market year, with global markets closing at record highs thanks to a booming global growth rate, loose tax and monetary policy, low volatility and ideal currency scenarios (for example, a weaker pound supporting inward investments). It was also a crazy year in the consumer segment with market momentum captivated with crypto assets, leading to established financial services firms to create special cryptocurrency desks to monitor and advise.  Today, things are looking very differently.

Markets have since moved from optimism (led by stock markets) to a cautious tone (with an eye out for safe haven assets). This is largely due to the concerns over slowing global growth rates (especially from powerhouse economies like Germany and China), volatile oil markets and Kratom Powder For Sale induces significant market threats with the likes of Brexit and the trade wars. The rising dollar has also not helped much, with Emerging Market and oil importing economies suffering with current account deficits.

At the World Economic Forum’s annual meeting in Davos last month, the International Monetary Fund (IMF) has warned of the slowdown, blaming the developed world for much of the downgrade and Germany and Italy in particular. While the IMF does not foresee a recession, the risk of a sharper decline in global growth is certainly on the rise.  However, this risk sentiment doesn’t factor in any of the global triggers – a no-deal Brexit leading to UK crashing out of the EU or a greater slowdown in China’s economic output.

While the IMF does not foresee a recession, the risk of a sharper decline in global growth is certainly on the rise.

Volatility expected

 We have lowered earnings expectations globally due to more subdued revenue and margin assumptions. We believe investors will be confronted by increased volatility amid slower global economic growth, trade tensions and changing Federal Reserve policy. Our base case relies on the view that the US may enter a recession in 2020. As the market dropped 9% in December, the worst market return in any 4th Quarter post World War II, many risks are starting to be discounted by the market. We have reduced industrials, basic materials and financials due to heightened risks.

There are a number of factors that are driving this view, but it is important to note that upsides to the risks do exist:

• The Fed: The Fed’s slow pace of hiking interest rates is meant to be just enough to keep wage inflation from accelerating, but not so much that it crushes business and consumer spending. It’s a difficult balancing act.
• Fiscal stimulus: The tightening of fiscal conditions has already created a slowdown that only time and lower rates will heal. The impact from the US Government’s lower tax rates and higher spend will end when 2019 does.
• Trade and China: The lack of clarity on trade has created an ‘uncertainty tax’, forcing companies to seek alternative means of procurement, adding to inefficiencies and holding back some investment decisions. China is trying to stimulate its consumer sector, but the country is already weighed down by high debt and defaults, and it has limited ability to create demand at present.
• European politics: Brexit negotiations and Italy’s budget situation have added to the political fog affecting investor confidence.

In uncertain markets like these, we should look to do three things: reduce risk, focus on high quality and stay alert for opportunities due to dislocations.

So what do you do?

We have dialled down risk in 2018 and will likely continue to do so in 2019 as we expect global growth to slow. However, the expected volatility could cause dislocations that are not fundamentally driven, resulting in tactical opportunities to consider.

The best piece of advice to be relayed is: “Don’t run for the hills”. In uncertain markets like these, we should look to do three things: reduce risk, focus on high quality and stay alert for opportunities due to dislocations.

It would be ideal to shift allocations from cyclical to secular exposures, especially away from industrials, basic materials, semiconductors and financials due to heightened risks. It would also be ideal to focus on high-quality companies with secular growth opportunities that can generate dividends as well as capital appreciation.

Two sectors stand out as both strategically and tactically attractive - aging demographics and rapidly improving technology are paving the way for robust growth potential in healthcare. Accelerating growth in data, and the need to transmit, protect, and analyse it ever more quickly, make certain areas in technology an attractive secular opportunity as well. Where possible, our advice to investors is to maintain a tactical portion of their risk assets, because volatility may give them the opportunity to find mispriced sectors, themes and individual securities.

Still, in this climate, the bottom line is that you should be increasingly mindful of risk in your portfolio so that you can reach your long-term investment goals. 

Eastern Economies vs. Western Economies: Countries, Sectors and Projects to Watch

Dr. Johnny Hon, Founder & Chairman, The Global Group

The global economic narrative in 2018 was characterised by growing tensions between the US and China, the world’s two largest economies. The US imposed 10% to 25% tariffs on Chinese goods, equivalent to more than $250bn, and China responded in kind.

This had a seismic effect on global economic growth which, according to the IMF, is expected to fall to 3.5% this year. It represents a decline from both the 3.7% rate in 2018 and the initial 3.7% rate forecast for 2019 back in October.

Although relationships between Eastern and Western economies are currently strained, suggestions that a global recession is on the horizon are exaggerated. China’s economy still experienced high growth in 2018.

However, it is clear that trade wars have no winners. The rise of protectionism in the West is creating more insular economies and we are at a time when increased efforts are needed for mutual understanding. There are still enormous opportunities across the globe: India is among several global economies showing sustained high growth, and innovations in emerging markets such as clean energy or payments systems continue to gather pace. Investors who are savvy and businesses with true entrepreneurial flare can triumph at a time when others may be stagnating.

The rise of protectionism in the West is creating more insular economies and we are at a time when increased efforts are needed for mutual understanding.

Here are the exciting countries, sectors and projects to look out for in 2019:

Countries

Recent trends in foreign direct investment (FDI) reveal a growing trend to support developing economies. In the first half of 2018, the share of global FDI to developing countries increased to a record 66%. In fact, half of the top 10 economies to receive FDI were developing countries.

This trend will accelerate in 2019 - the slow economic global growth, and subsequent currency depreciation means the potential yield on emerging market bonds is set to rise dramatically this year. More and more investors are realising the great potential of these developing economies, where the risk versus reward now looks much more attractive than it did in recent years. Asia in particular has benefited from a 2% rise in global FDI, making it the largest recipient region of FDI in the world.

India and China are both huge markets with a combined population of over 2.7 billion, and both feature in the world’s top 20 fastest growing economies. However, the sheer quantity of people doesn’t necessarily mean the countries are an easy target for investment. There are plenty of opportunities in both India and China, but it takes a shrewd investor with a good local business partner to beat the competition and find the right venture.

Other Asian economies to invest in can be found in Southeast Asia, including Vietnam, Singapore, Indonesia and Cambodia. In a recent survey by PwC, CEOs surveyed across the Asia-Pacific region and Greater China named Vietnam as the country most likely to produce the best investment returns – above China.

Investors who are savvy and businesses with true entrepreneurial flare can triumph at a time when others may be stagnating.

Sectors

One sector in particular which remained resilient to the trade wars throughout 2018 was technology. By mid-July, flows into tech funds had already exceeded $20bn, dwarfing the previous record amount of $18.3bn raised in 2017. This was a result of the increased accessibility and popularity of technologies in business.

In the area of Artificial Intelligence (AI) for example, a Deloitte survey of US executives found that 58% had implemented six or more strains of the technology—up from 32% in 2017. This trend is likely to continue in 2019, as more businesses realise AI’s potential to reduce costs, increase business agility and support innovation.

Another sector which saw significant investment last year was pharmaceuticals and BioTech. By October, these had already reached a record high of $14 billion of VC investment in the US alone. One particular area to watch carefully, is the rising demand for products containing Cannabidiol (CBD), a natural chemical component of cannabis and hemp. Considering CBD didn't exist as a product category five years ago, its growth is remarkable. The market is expected to reach $1.91 billion by 2022 as its uses extend across a wide variety of products including oils, lotions, soaps, and beauty goods.

Projects

At a time of rising trade tensions and increased uncertainty, cross-border initiatives are helping to restore and maintain partnerships and reassure global economies. China's Belt and Road Initiative is a great example of how international communities can be brought closer together. From Southeast Asia to Eastern Europe and Africa, the multi-billion dollar network of overland corridors and maritime shipping lanes will include 71 countries once completed, accounting for half the world’s population and a quarter of the world's GDP. It is widely considered to be one of the greatest investment opportunities in decades.

The Polar Silk Road is another international trade initiative currently being explored. The Arctic offers the possibility of a strategic commercial route between Northeast Asia and Northern Europe. This would allow a vast amount of goods to flow between East and West more speedily and more efficiently than ever before. This new route would increase trading options and would make considerable improvements on journey times – cutting 12 days off traditional routes via the Indian Ocean and Suez Canal. It could also save 300 tonnes of fuel, reducing retail costs for both continents.

Since founding The Global Group - a venture capital, angel investment and strategic consultancy firm - over two decades ago, I have seen the global economic landscape change immeasurably. The company is built around the motto ‘bridging the frontiers’, and now more than ever, I believe in the importance of strong cross-border relationships. Rather than continuing to promote notions of protectionism, we must instead explore new ways of achieving mutual benefit and foster a spirit of collaboration.

Brexit, Trade Wars and the Global Economy

Robert Vaudry, Chief Investment Officer at Wesleyan

If there’s one thing that financial markets do not like, it is uncertainty - which is something that we’ve faced in abundance over the last couple of years.

The UK’s decision to leave the European Union and President Trump’s 2016 election in the US, sent shockwaves through markets, and the two years that followed saw increased volatility across asset classes. This year looks set to be fairly unpredictable too, but in my view there are likely to be three main stabilising factors. Firstly, I expect that the UK will secure some form of a Brexit deal with the EU – whatever that may look like – which will give a confidence boost to investors looking to the UK. Secondly, the trade war between America and China should also come to an end with a mutually acceptable agreement that further removes widespread market uncertainty. Thirdly, the ambiguity surrounding the US interest rate policy will abate.

The Brexit bounce

A big question mark remains over whether or not the UK is able to agree a deal with the EU ahead of the 29th March exit deadline. However, with most MPs advocating some sort of deal, it’s highly unlikely that the UK will leave without a formal agreement in place. So, what does this mean? Well, at the moment, it looks more likely than ever that the 29^th March deadline will need to be extended, unless some quick cross-party progress is made in Parliament on amendments to Theresa May’s proposed deal. While an extension would require the agreement of all EU member states, this isn’t impossible, especially given that a deal is in the EU’s best interests as the country’s closest trading partner.

The ambiguity surrounding the US interest rate policy will abate.

The result of any form of deal will be a widespread relief that should be immediately visible in the global markets. It will bring greater certainty to investors, even if the specific details of a future trading relationship between the UK and EU still need to be resolved. Recently, it was estimated that Brexit uncertainty has so far resulted in up to $1trn of assets being shifted out of the UK, and I personally don’t see this as an exaggeration. Financial markets have been cautiously factoring Brexit in since the referendum vote in 2016 and, if we can begin to see a light at the end of the Brexit tunnel, it is likely that some of these vast outflows will be reinvested back into the UK. We can also expect to see a rise in confidence among UK-based businesses and consumers, at a time when the unemployment rate in the UK is the lowest it has been since the mid-1970s.

All of these outcomes would help lead to a more buoyant UK economy and the likelihood that UK equities could outperform other equities – and asset classes – in 2019.

Trade wars – a deal on the table?

Looking further afield, the trade tensions that were increasingly evident between the US and China last year could also be defused. The last time that China agreed to a trade deal, it was in a very different economic position – very much an emerging economy, with the developed world readily importing vast quantities of textiles, electronic and manufacturing goods. However, given China’s current position as one of the world’s largest economies, it has drawn criticism from many quarters regarding unfair restrictions placed on foreign companies and alleged transfers of intellectual property.

Either way, global financial markets are eager for Washington and Beijing to reach a mutually agreeable trade deal to help stimulate the growth rates of the world’s two largest economies.

It was estimated that Brexit uncertainty has so far resulted in up to $1trn of assets being shifted out of the UK.

Be kind to the FED

2018 saw an unprecedented spat between the US President and his Head of the Federal Reserve. What began as verbal rhetoric quickly escalated into a full-frontal assault on Jerome Powell, and the markets were unimpressed. With the added uncertainty about the impact of a Democrat-led US House of Representatives, we headed into a perfect storm, and equity markets in particular rolled over in December. Ironically, this reaction, coupled with a data showing that both the US and the global economy are generally slowing down – albeit from a relatively high level – has resulted in a downward revision of any US interest rate rises in 2019. The possibility of up to four US interest rate rises of 25bps each during 2019 is now unlikely – I expect that there will only be one or two rises of the same level.

 Transitioning away from uncertainty

So, in summary, 2019 is set to be another big year for investors.

The recent protracted period of uncertainty has hit the markets hard, but we’ll have a clearer idea of what lies ahead in the coming months, particularly regarding Brexit and hopefully on the US and China’s trade relations too. If so, this greater certainty should pay dividends for investors in the years to come. UK equities are expected to strongly bounce back in 2019, which is a view that goes against the current consensus call.

This has stemmed from the fact that in recent years, diesel has come in for a lot of scrutiny recently due to the levels of Nitrogen Oxide our vehicles emit. So much so that the government in the UK proposed plans to ban any sales of new diesel and petrol vehicles by 2040 as they try to clean the nation’s air quality.

We are currently being encouraged to make the transition over to electric and hybrid vehicles, but just what effect will this have on traditional fuel sources? Lookers, who offer a variety of car servicing plans, explore what the future of fuel looks like for the UK.

Will the prices of fuel fluctuate?

The reported on the yo-yo affair of fuel prices in the UK and noted a number of influencing factors. Brexit and harmful emissions to UAE conflict, have meant that fuel prices haven’t been steady for some time now – and a plan to eliminate petrol and diesel cars will not help steady the cost of fuel either.

After witnessing a three-year high in how much petrol and diesel was costing on the UK’s forecourts, the RAC and other industry experts have encouraged supermarkets to reduce their fuel prices to make the public be able to afford the fuel type. At the start of 2018, three of the UK’s leading supermarkets had listened to the RAC’s call for lower fuel prices, and reduced fuel prices by up to 2p per litre as of February 2018.

RAC fuel spokesman, Simon Williams, stated: “Both petrol and diesel are now at their highest points for more than three years which is bound to be making a dent in household budgets.”

“Both petrol and diesel are now at their highest points for more than three years which is bound to be making a dent in household budgets.”

In 2014, the OPEC made a decision to increase the level of domestic fuel production in the UK, which led to a price drop to 98p in January 2016 — the lowest price of fuel per litre since the financial crisis in 2009. However, the UK still heavily relies on imported energy and fuel – around 38% of the UK’s total energy consumption is reliant on imported energy. Could our trading relationships be at risk after Brexit? And, of course, we must also consider how the uncertainty around the value of the pound could affect fuel costs following Brexit.

Immediately following the UK’s decision to leave the EU, the value of the pound experienced a fall of 20% against the dollar. This caused fuel prices to increase by around 10p per litre and experts to raise concern that Brexit could mark the end of cheap fuel in Britain. The combination of higher crude oil prices and the devaluation of the pound mean Britain should expect higher fuel prices become the norm.

Electric Charging Hubs

You may know that the market of electric vehicles has been criticised since the mobile was launched.  This has been due to a lack of EV charging points raising concern for many drivers, but could a transition towards electric and hybrid vehicles see us eventually wave goodbye to traditional fuel?

Following in the footsteps of other countries around the globe, like New Zealand who are rolling out easier-to-find charging stations, in the past 12 months, the UK’s electric car charging infrastructure has evolved substantially to suit the lifestyles of many drivers with many more EV charger installation points appearing. The UK also has over 20 companies and organisations installing and running nationwide or regional electric car charging networks.

The UK’s electric car charging infrastructure has evolved substantially to suit the lifestyles of many drivers with many more EV charger installation points appearing.

BP have also stated that they would be adding an increased number of charging points for electric vehicles into their UK fuel stations within the first few months of 2018. Oil firms are also recognising the potential for growth into the battery-powered vehicle market. A decision that follows in the footsteps of their rival, Shell, who have already invested money in several electric car infrastructure companies to install charging points at their service stations. According to The Guardian, the British oil firm, BP, is also investing $5 million (£3.5 million) in the US firm Freewire Technologies, which will provide motorbike-sized charging units at forecourts to top up cars in half an hour.

Tufan Erginbilgic, chief executive of BP Downstream, commented: “EV charging will undoubtedly become an important part of our business, but customer demand and the technologies available are still evolving.”

A multimillion-pound deal with ChargePoint saw InstaVolt installing at least another 3,000 rapid charging points across fuel station forecourts across the UK. Some researchers have also claimed they could have developed an ‘instantly rechargeable’ method that recharges an electric battery in the same time as it would take to fill a gas tank – a solution to one of the biggest headaches of electric vehicles.

2017 turned out to be a record year worldwide. In November 2017, global figures hit three million for the number of electric vehicles collectively on the roads – with China proving to dominate the market. Whilst oil firms such as BP expect the electric market to continue to rise, they hope the oil demand is not seriously affected – by cutting themselves a slice of the electric vehicle charging cake though, firms are covering their back if traditional oil demand does take a dip in line with the government’s plans to reduce harmful emissions and cut back on crude oil prices.

While fuel’s cost looks like it’ll be uncertain for the foreseeable, it appears that both the high fuel prices and efforts to improve the UK’s air quality will cause the EV market to increase and success is forecast to continue to surge in the years leading up to 2040.

Sources:

It has equally attracted the attention of retail investors and potential bad actors. Combine the elements of hype tactics, fanciful notions of a new paradigm, and greed, we have the perfect market factors which could induce a frenzy unlike we’ve seen since the beenie babies craze. Oh wait, this sounds awfully similar to 2017, does it not? Below Jamar Johnson, crypto expert and owner of Otravel.ai, explains the potential regulation trends we may be looking at when it comes to cryptocurrencies.

Sure, many are now jumping on the blockchain bandwagon, and it is up to responsible regulators to guide the market and its participants responsibly for the next wave of blockchain mania, if and when it arrives. However, we must take on a more nuanced approach to said proposed regulation: how does a regulator support true innovation while not stifling its stated goals through high-cost barriers to entry as some might argue has taken place in New York with the BitLicense? How does countries like the United States incorporate policy frameworks that are similar to Singapore and Malta which are emerging as a hotbed for attracting blockchain talent? The issue becomes even trickier, when one factors in the opportunities for wealth creation (estimated to be in the trillions) despite the US currently lacks a comprehensive framework towards the blockchain across all 50 states.

Self-regulation organisations are commonplace in other sectors - for example, the Regulatory Authority in the Financial sector (FINRA) plays a major role in the Regulatory organisation of the broker and exchange.

The current EU laws do not provide protection to any investor who can be exposed to the risks of digital asset markets, taking into account the significant prices and the lack of supervision of offers and exchanges.

While many nations have discussed their policy towards the blockchain and cryptocurrencies, some of the smallest countries and regions have quickly moved into the creation of novel laws and programs designed to attract top talent within the blockchain space--like Malta, Singapore, and Puerto Rico being the closest US example, to date.

New and evolving financial technology companies need to comply with a network of laws and regulations that are designed to help customers and finance their finances and reduce the costs of repairing terrorists.

Across the pond, the Financial Authority of the United Kingdom provides fintech companies with a single domestic finance Regulatory Authority, clear qualification and test parameters, the possibility of waivers (on permission and review) and direct cooperation with Regulatory Authority.

The initial coin offer (ICOs) have become a popular way for businesses to earn money by launching a new digital coin in exchange for crypto currencies such as bitcoins or air. In countries like the US, it will be prudent for ICO founders to have clear guidance from a professional lawyer or legal team to help navigate the complex body of legals and regulations surrounding the offering of securities and meeting the Howey Test.

Last year, the Financial Authority (FCA), the UK's Financial watchdog, issued a statement detailing the risk of investment in ICOs.

In February, the U. s. Treasury Committee, which consists of several politicians, launched a request for digital currencies and a dispersed technology or a blockchain.

Part of the act requires digital exchange and portfolio to apply customer-specific care checks such as banks.

The regulatory environment within the US concerning digital currencies are not clear just yet. But we know they are coming and on its way to being formed (look into places just as Puerto Rico, Wyoming, or New York as an example). But regulations are coming. New announcements and stances are being made on a recurrent basis. The benefits for proper regulatory structure in the US is not there just yet, but the opportunity is too great to ignore: new tax base, the ushering in of the next waves of America’s greatest entrepreneurs, and the shape the narrative for the blockchain revolution currently underway.

According to the Independent, many companies are struggling to decide on importing and exporting in light of confusion over the direction Brexit will take businesses.

But what is the current state of the nation’s trading with the wider world? In this article British brand Gola, that is renowned for its classic trainers, take an in-depth look at the UK’s imports and exports, from the items we sell the most of to what we’re buying in, as well as which countries are our top import and export locations.

Terminology rundown

With so much talk in the tabloids and newsrooms about trade and Brexit, you might be wondering what some or all of the terminology springing up means.

Before we delve further into what the UK has to offer in terms of trade, let’s break down some of the terminology:

• Import and export — an easy one to start with, imports are items and goods we buy into the country. Exports are items and goods we sell to other countries.
• Trade deficit and trade surplus — these two terms come under the umbrella of the balance of trade. It is essentially the difference between monetary value of a country’s exports and imports. If a country is importing more goods than it is exporting, then the country has a trade deficit. A trade surplus occurs if a country is exporting more than it is importing. Generally, a trade deficit is considered concerning as it is seen as the country being unable to produce enough goods to supply its people, requiring them to import more.
• “Special relationship” — The oft-cited “special relationship” with the US boils down to our trade relationship. In 2016, the UK exported £100 billion worth of goods and services to the US, running a trade surplus with the US of £34 billion.
• Single market — The European Single Market is a single market that guarantees the free movement of goods, services, capital, and labour within the EU.
• Customs Union — A customs union is where a group of states or countries agree to charge the same import duties to each other.

It is important to note that, regarding the “special relationship” with the US, the UK does export more to the US than any other country. However, when considering the EU as a whole with the same trade laws etc, rather than 27 separate countries, the EU imports more from the UK than the US by far.

What are we exporting?

According to the Observatory of Economic Complexity (OEC), in 2016 the UK’s top export item was cars, which accounted for 12% of the overall $374 billion export value that year. One of example of this is the world renowned Mercedes-Benz, which offer a variety of cars, including the Mercedes Gle.

Other popular UK products were gas turbines (3.5%), packaged medicaments (5.2%), gold (4.0%), crude petroleum (3.4%), and hard liquor (2.1%).

We also export a fair amount of food and drink, with items such as whisky and salmon popular abroad.

The BBC also points out that exports and imports are not just physical goods. In this digital age, it’s easier than ever to offer services as exports too, and the UK does just that, via financial services, IT services, tourism, and more.

Where are we exporting to?

In 2016, our top export destinations were:

1. United States (14%)
2. Germany (9.5%)
3. The Netherlands (6.0%)
4. France (6.0%)
5. Switzerland (5.1%)

China, one of the countries the UK is eyeing up for a potential trade deal after Brexit, accounted for 5%. Again, it is worth considering that Europe as a whole accounted for 55% of our top export destinations.

What are we importing?

We are importing rather similar items as we’re exporting. Top imports into the UK in 2016 included gold (8.2%), packaged medicaments (3.1%), cars (7.8%) and vehicle parts (2.5%).

Where are we importing from?

For 2016, the top origins of the UK’s imported products were:

1. Germany (14%)
2. China (9.8%)
3. United States (7.5%)
4. The Netherlands (7.3%)
5. France (5.8%)

The UK’s trade deficit

Despite our popular products, the nation is sitting with a trade deficit to the EU — we import more from the EU than we sell to the EU. In 2017, we exported £274 billion worth to the EU, and imported £341 billion’s worth from the EU. In fact, the only countries in the EU that bought more from us than we bought from them were Ireland, Sweden, Denmark, and Malta. Our biggest trade deficit is to Germany, who sold us £26 billion more than we sold to them.

The UK also has a trade deficit with Asia, having sold £20 billion less in goods and services than we bought in.

As previously mentioned, we have a trade surplus with the United States, as well as with Africa.

A trade deficit is generally viewed in a poor light, as it is basically another form of debt: the UK imported $88.4 billion from Germany in 2016. Germany imported $35.5 billion from the UK, making a difference of $52.9 billion owed by the UK to Germany.

With uncertainty abound about the impact of Brexit on imports and exports, it remains to be seen how UK businesses will continue to trade abroad, and if focuses will shift.

Sources:

https://atlas.media.mit.edu/en/profile/country/gbr/

https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/whodoestheuktradewith/2017-02-21

https://www.bbc.co.uk/news/business-41413558

https://www.independent.co.uk/news/business/news/brexit-uk-imports-exports-uncertainty-british-import-export-business-a8589796.html

https://www.investopedia.com/articles/investing/051515/pros-cons-trade-deficit.asp

https://fullfact.org/europe/what-trade-deficit-and-do-we-have-one-eu/

https://www.dw.com/en/is-germanys-big-export-surplus-a-problem/a-18365722

When the General Data Protection Regulation came into force in May, it affected every company that does business within the European Union and the European Economic Area EEA. Its main purpose is the protection of each individual’s data, but their privacy and compliance obligations have put a significant burden on companies of all sizes and across all sectors.

Similar legislation exists in Turkey, although there are distinct differences. On one notable point, however, they are in harmony: just as not complying with GDPR requirements carries substantial penalties, so does any breach of Turkish provisions. Failure to comply can lead to administrative fines and criminal penalties. As a result, every company that does in Turkey already, or which plans to do so, needs to be aware of how these laws might affect their operations.

Partly in anticipation of GDPR, Turkish Data Protection Law (DPL) was enacted in 2016. Turkey’s supervisory authority, The Personal Data Protection Board (DPB), is still publishing assorted regulations and communiqués relating to it, as well as draft versions of secondary legislation. Under these changes, data controllers who deal with personal data are subject to multiple obligations. In addition, the legislation also applies to ordinary employees, making it significant for every company operating in Turkey.

The grounds for processing under DPL are similar to GDPR - saving that explicit consent is needed when processing sensitive and non-sensitive personal data.

So when comparing DPL with GDPR, what are the differences that impact businesses operating in Turkey? Although it stems from EU Directive 95/46/EC, DPL features several additions and revisions. It does, however, contain almost all of the same fair information practice principles, except that it does not allow for a “compatible purpose” interpretation and any further processing is prohibited. Where the subject gives consent that data may be compiled for a specific purpose, the controller can then use it for another purpose as long as further consent is obtained, or if further processing is needed for legitimate interests.

The grounds for processing under DPL are similar to GDPR - saving that explicit consent is needed when processing sensitive and non-sensitive personal data. Inevitably, this is much more time-consuming. Such a burdensome obligation would initially make it seem that DPL provides a higher level of data protection compared to GDPR, but DPL’s definition of explicit consent also has to be compared to GDPR’s regular consent. ‘Freely given, specific and informed consent ‘ is common to both, while GDPR further requires ‘unambiguous indication of the data subject's wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the processing of personal data relating to him or her’.

While DPL consent might appear to be less onerous than GDPR, no DPB enforcement action has yet occurred: interpretation of explicit consent therefore remains uncertain. Under DPL, the processing grounds for sensitive personal data are notably more limited than under GDPR – with the exception of explicit consent, the majority of sensitive personal data can be processed, but only if it is currently permitted under Turkish law. The sole exception is data relating to public health matters.

Controllers have to maintain internal records under GDPR, whereas DPL does not make any general requirement to register with the data protection authorities.

Equally burdensome under DPL is the cross-border transfer of personal data to a third country. As determined by the DPB, the country of destination must have sufficient protection – either that, or parties must commit to provide it. DPL also states that: “In cases where interests of Turkey or the data subject will be seriously harmed, personal data shall only be transferred abroad upon the approval of the Board by obtaining the opinion of relevant public institutions and organisations”. Under this provision, data controllers must decide whether a transfer could cause serious harm, and if it does, they need to obtain DPL approval. However, it is unclear how these interests might be determined.

Controllers have to maintain internal records under GDPR, whereas DPL does not make any general requirement to register with the data protection authorities. Instead it has a hybrid solution: registration and record-keeping requirements. DPL specifies a registration mechanism: data controllers have to register with a dedicated registry. Under a draft DPB regulation, before completing their registration they are required to hand over their Personal Data Processing Inventory and Personal Data Retention and Destruction Policy to the DPB.

For businesses which have to comply with DPL, GDPR, or both, it would be prudent to ensure that they are not duplicating their efforts. The best way to achieve this is by aiming for a flexible compliance model that successfully meets the obligations of the regulatory authorities across multiple jurisdictions.

Website: www.kilinclaw.com.tr/en/

Effectiveness So Far

The run up to the implementation date of the EU General Data Protection Regulation on 25 May 2018 saw a flurry of activity – most visibly in communications with customers; notifying them of changes in privacy policies and seeking their opt-in consent for marketing activities. While many communications were not strictly necessary, they reflected the focus of many businesses on external-facing compliance initiatives, such as their public facing privacy policies and contractual arrangements with vendors.

The key practical challenges for businesses have centered on thoroughly operationalising GDPR and creating a GDPR compliance culture. The GDPR introduces some new and enhanced rights, such as the right to erasure, but equally importantly, it introduces principles which require changes to internal procedures and systems. Technology changes have often been time-consuming and expensive to implement. Creating a GDPR compliance culture has, for many businesses, been equally challenging. For many organisations, the area of focus in the short to medium term is the work required on internal-facing compliance initiatives, such as staff training and policy formulation and integration. While many aspects of GDPR compliance have taken the form of a ‘re-papering’ exercise, the challenges in becoming compliant are generally much deeper.

For many organisations, the area of focus in the short to medium term is the work required on internal-facing compliance initiatives, such as staff training and policy formulation and integration.

Practical challenges faced by businesses

Some of the practical challenges faced by businesses have been in identifying and understanding the scope of the personal data held and processed – including its nature, location, security requirements and, most fundamentally, the business drivers and legal grounds for collecting and processing such data in the first place. While principles of data minimisation and purpose limitation are not new under the GDPR, they were frequently overlooked under previous legislation as businesses collected increasing amounts of personal data and used them in ways in which were not necessarily consistent with the original purpose. Many businesses have not properly addressed these fundamental issues which are frequently coming to light in practice in two key areas: managing data subject rights and responding to data breaches.

For example, the right to erasure applies in a specific set of situations but many organisations do not possess the level of granular detail about their processing operations required to respond accurately or efficiently. Organisations which have made superficial policy changes will lack the deeper understanding of the internal business processes resulting from a detailed data mapping exercise or a thorough analysis of an organisation’s grounds for processing. This often makes responding to such requests much more time-consuming, and in certain cases leads to organisations fulfilling requests by default to save administrative burden. This is far from ideal, particularly where some data categories processed about an individual are likely to be outside the scope of the right to erasure. Moreover, there may be legitimate business reasons for retaining such data. A related practical issue is the lack of uniformity across European jurisdictions on exemptions to and derogations from the rights of individuals to have access to their personal data, and the lack of guidance from regulators on the scope of some of the exemptions.

Organisations which have made superficial policy changes will lack the deeper understanding of the internal business processes resulting from a detailed data mapping exercise or a thorough analysis of an organisation’s grounds for processing.

Another area where the lack of internal awareness becomes apparent is in respect of data breaches. The GDPR defines a data breach extremely broadly. Media attention is often focused on large-scale breaches involving millions of records containing financial and sensitive personal data. However, practically any unauthorised access to personal data (including within an organisation) can amount to a notifiable breach. This reflects the volume of data breaches which regulators are handling – with some European regulators handling between six and twelve breach notifications each day. The GDPR imposes a well-publicised default period of 72 hours during which the appropriate regulatory authority must be notified. This frequently exposes, in real time, knowledge gaps within an organisation relating to the nature and location of the personal data held, security arrangements and internal processes.

Overall impact on businesses

The GDPR is a reflection of the increased importance placed by EU law on personal privacy as a fundamental right, which needs to be taken into account when treating personal data as an essential input in business processes, if not a commodity in itself. That is simply an unavoidable cost of doing business. While increased awareness of such rights has been positive, the notification fatigue suffered by individuals has been less beneficial. This resulted partly from the lack of concrete guidance from regulators sufficiently early in the run up to the implementation date. Similarly for businesses outside the EU, the uncertainties regarding the GDPR’s extra-territorial scope has often resulted in protracted discussions and unnecessary compliance burdens. That said, there is an almost inevitable harmonisation upwards towards EU privacy standards. For example, Japan has harmonised its laws to EU standards, and there are forthcoming changes in the United States – currently the state of California, but potentially at a federal level – to move towards GDPR standards. The key test of the GDPR’s effectiveness and overall credibility will be in enforcement. Six months in, it is still too early to gauge regulatory appetite for the headline fines of up to 4% of global revenue. In the coming months, the results of investigations and enforcement actions will start becoming clear. The internal costs to businesses are more difficult to assess, although they are largely unavoidable.

Website: https://www.faegrebd.com/

Even though it’s early days for open banking there are already plenty of trailblazers offering new services, writes Huw Davies, CCO at Token.

From forex to rental accommodation, personal identification to loyalty schemes, many customer experiences are starting to be transformed by the effects of Europe’s Second Payment Services Directive (PSD2) just months after it was introduced.

Low-cost travel currency provision, securing a new rental flat, buying goods online and viewing your complete financial position across multiple bank accounts have all become easier thanks to third parties taking advantage of the access the regulation gives them to customer bank details to provide new services. Innovation is alive and kicking and motivation to succeed is high.

For banks, initially concerned that PSD2 would allow others to come between them and their customers, the prize comes in keeping themselves at the centre of their customers’ digital banking experience. This will allow them to continue to collect valuable transaction data that will help them cross-sell and up-sell their own products and services.

For merchants and service providers, open banking promises to remove some of the hassle – known as friction – of registering new customers, recognising existing customers and completing purchases. It could also make it easier to make targeted offers and build loyalty.

Meanwhile, fintechs are hoping that the new services they can provide, such as bank-account aggregation, will capture the public’s imagination, helping them create new businesses.

Payments

The sheer variety and success of those already operating in the payments area proves open banking’s value.

Online property portals are developing open banking services that help both landlords and tenants kick off a new tenancy faster and at a lower cost. Traditionally, the first rental payment is often made by debit card, incurring high processing fees. The alternative is to set up a Bacs payment, which can involve visiting a bank branch and filling in forms. The whole process can take up to 10 days to complete.

For landlords and tenants alike, this can be too long and there’s no guarantee that any payment will ultimately go through. Meanwhile, the landlord may have lost alternative tenants. Savvy online property marketplaces will begin using open banking to take immediate payment directly from the renter’s bank accounts by the end of the year.

This approach not only circumvents the high fees but also cuts the amount of time it takes to make that first payment from days to seconds. Down the line, we expect these portals to incorporate identity and credit checks as well as recurring monthly payments into their solutions, removing further areas of friction.

In travel money and investments, there’s also plenty of activity. Caxton, for example, aims to remove the pain points associated with registering for and using a pre-loaded foreign-exchange card. These include high fees, delays in clearing the first payment from the customer’s bank account and the need to log into both bank and forex provider. Like the property portals, forex providers can take immediate payment directly from bank accounts, cutting the cost and closing the time gap from registration to live accounts.

Online investment services are also looking to offer similar services to streamline account setup and moving funds.

In all these areas, open banking is cutting the hassle and increasing automation, helping to bring down costs and improve the customer experience.

The scope of these services can and will be broadened out as open banking payment services take off and the simple use cases are proven. Expect to see recurring and bulk-payment facilities that will take the strain out of volume transactions, as well as services that offer lending on the back of payments.

Data aggregation

Allowing third-party access to bank data will open up the opportunity for far wider data aggregation than previously possible. Until now customer data was held in silos by different companies – banks, merchants and service providers. Post PSD2, those silos can be connected and the data within them pooled and analysed to create a richer customer picture. This can be used to offer new, relevant services and build loyalty.

There are many fintech and banking propositions that allow customers to view all their bank accounts from different providers in one place. At present, what you can do with the service is limited to views of account information. Soon, a more advanced version will allow customers to unlock the value of these services and act on the information – make payments between accounts held at different banks to pay off an overdraft, for example, or sweep money from a zero-interest current account into a savings account. Users will even be able to set up rules-based parameters around events that will automatically trigger money movement, helping them manage their finances better.

Similarly, loyalty programmes are more effective when they know more about a customer. Many are merchant-specific – think Tesco Clubcard or Boots Advantage. When the retailer can see beyond the customer activity within their own store they can make timely and relevant offers to tempt customers away from rivals to spend more with them. It’s no surprise, then, that we’re starting to see loyalty card providers expand the range of what they collect to include bank data.

Identity and verification                   

When it comes to identity, verification and authentication, cumbersome processes create friction, which is a huge problem. Passwords are the bane of modern life. But PSD2 promises to change all that. Consent to access relevant customer bank details need only be given once so forms for a car loan, for example, could be filled in automatically by the loan provider. This not only improves the customer experience – less paperwork – but because the data is coming from the bank it has already been checked and verified so the loan can be processed quicker too.

As identification and verification services mature and develop, recurring payments and subscription facilities will be added.

Open banking is a new way of accessing financial services. While today’s offers may be limited in their functionality, their providers have clear road maps for further development. Just as with other revolutionary processes and technologies, it will take time to see how far they will go. But open banking’s capacity to reduce friction, risk and cost as well as make processes faster and more efficient means it will undoubtedly become an important part of our everyday lives. It’s over to the innovators.

Ever since the UK’s decision to leave the EU was announced, there has been a lot of speculation surrounding what will happen to the Irish border. Northern Ireland is part of the UK, which would leave the EU when Brexit goes through, but the Republic of Ireland will remain in the EU. This has led to many calls for border controls between the countries. It’s generally agreed that customs checks on goods will be required, yet whether passport checks are needed remains debatable. Recently the Chancellor of the Exchequer has suggested using blockchain to solve the issue.

In this post, we assess whether implementing blockchain will solve the Irish border issue. We conclude that it’s highly unlikely that blockchain alone will solve the problem, but a solution that incorporates blockchain as part of the process is more likely.

Why Blockchain?

The current line from the Treasury according to one source is that they are ‘actively considering technologies that could help facilitate trade over the Northern Ireland – Ireland land border.’ This was confirmed by Chancellor Phillip Hammond, who, when asked about how the government could achieve smooth trade after Brexit announced “there is technology becoming available ... I don’t claim to be an expert on it, but the most obvious technology is blockchain.”

Yet there are a few theories as to how blockchain could be involved practically. That’s not so surprising, as the only real major use of blockchain so far has been to power the cryptocurrency bitcoin.

What Could Blockchain Do?

Essentially, blockchain is a decentralised ledger which stores a digital record of transactions which is tamper proof. There have been a number of companies that have started to apply blockchain technology to their supply chains, with the most common reason to keep track of goods. One such example is of a start-up that used blockchain to track its tuna stock, every time it changed hands from net to supermarket the blockchain was updated.

This could be applied to the Irish border for documenting the movement of British goods through the supply chain, as a way to verify compliance with the EU’s rules. Checking blockchain certifications should be more efficient than paper ones, but it will be slower and it’s still unclear what other benefits this could hold.

Are There Any Other Options?

Presumably there are other options, given that the Treasury has revealed barely any details as to how blockchain might be applied. Especially as research into dealing with 6,000 heavy goods vehicles per day crossing the border has shown that using blockchain as a solution is ‘untested or imaginary’.

There’s still a chance that there won’t be a hard border and no technological solution will be required. Until the logistics and exact requirements are sorted out, it remains to be seen what will happen in terms of a solution.

Will it Be Successful?

According to most experts who have thought about the logistics of using blockchain to solve the Irish border issue, probably not. However, a solution that includes blockchain in part could be possible.

Indeed, in an interview with Cointelegraph, Vili Lehdonvirta, an associate professor and senior research fellow at the University of Oxford stated that “in my assessment there is zero chance that blockchain technology will help deliver a ‘frictionless’ border between Northern and the Republic of Ireland.”

Added to this, Nick Nick Botton, an expert on trade affairs and digital economies at Landmark Public Affairs stated that “The Northern Ireland issue is sadly not one that will likely ever be solved via technology, it's strictly a political issue at this stage.”

For businesses whose model relies on importing and/or exporting over the Irish border, seeking out financial options in case plans to use blockchain or other technology to sort out the issue fails is a good idea. Currently, it seems like there isn’t much of a plan, but that should all change in the near future.

On the back of Deutsche Bank’s recent ordeal, Finance Monthly gets the lowdown from Zac Cohen, General Manager at Trulioo, who discusses the steps banks and other financial institutions can take to strengthen their fight against money laundering.

Deutsche Bank recently made headlines after the German financial watchdog BaFin appointed an independent auditor to monitor the bank’s Anti Money Laundering (AML) compliance. This is the first time such an appointment has been implemented, highlighting the bank’s failure to meet due diligence requirements surrounding terrorist financing, money laundering and other illicit flows of capital.

As banks and financial organisations now operate in an increasingly global marketplace, they must grapple with the consequences of handling cross border transactions. Having lax Know Your Customer (KYC) procedures in place can be potentially crippling for banks worldwide, with fines being issued in the hundreds of millions if chinks in their anti-money laundering armour are uncovered.¹ Yet despite over $20 billion being spent on compliance annually, only 1 per cent of illicit transactions are seized each year.²

Financial globalisation, still very much a reality despite shifting geo-political attitudes towards it, makes international money laundering practices a real force to be reckoned with. Indeed, international money laundering is becoming more widespread and this is, in part, down to the difficulties in maintaining full transparency when dealing with international clientele.

Banks and other financial institutions are legislatively obliged under Anti-Money Laundering rules to have full knowledge over their clients’ identities and the origins of their wealth. With money coming in from all corners of the globe, banks must be able to perform Know Your Customer (KYC) and Know Your Business (KYB) checks on a client base that may be moving money all around the world. In addition, establishing a “beneficial owner”, a derivative of KYC, must be a priority before financial transactions occur. The 4^th Anti Money Laundering Directive (4AMLD) stipulates the necessity of ascertaining the beneficial owner of business customers, partners, suppliers and other business stakeholders. Some transactions, originating from unknown geographic localities, can be particularly difficult to verify.

The key to combatting this problem is leveraging the available technologies that can be implemented to help promote transparency. This is crucial as these technologies have the view to reducing the occurrence of fraudulent transactions passing through banks and financial institutions. Bad actors are becoming increasingly sophisticated in their techniques in directing fraudulent money through banks, employing techniques such as under- or over-invoicing, falsifying documents, and misrepresenting financial transactions. This increasing sophistication that coincides with the rise in global money laundering, up 12 per cent from the previous year.³

There are however, multiple technical advances that are available to help implement and streamline the process of checking and verifying ultimate beneficial owners and promoting transparency. Automated systems and artificial intelligence programmes can be used to scour company documents for a streamlined electronic ID verification sytems to verify personally identifiable information in conjunction with ID document verification and facial recognition technology to help paint a full picture of each beneficial owner of a business.

Putting this all together to create certainty and transparency about who you’re doing business with is crucial. Deutsche Bank have suffered severe reputational damage as a result of several anti-money laundering breaches that have reached the public’s attention over the last few years. The question remains, can banks implement the technology and processes they need with sufficient effectiveness to recover from this reputational strain?

1 https://www.reuters.com/article/us-deutsche-bank-moneylaundering-exclusi/exclusive-deutsche-bank-reports-show-chinks-in-money-laundering-armor-idUSKBN1KO0ZC

2 https://www.politico.eu/article/europe-money-laundering-is-losing-the-fight-against-dirty-money-europol-crime-rob-wainwright/

3 https://www.pwc.com/gx/en/services/advisory/forensics/economic-crime-survey.html