Fintech Finance Magazine Spring 2017

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COMPLIANCE

A deep clean Banks and other financial services have been buckling under the increasing compliance burden for years. But now there is a genius automated system that helps keep them whiter than white. Aqubix Director Kristoff Zammit Ciantar explains The best inventions are always deceptively simple; the ones that have everyone muttering ‘why didn’t I think of that?’ under their breath. Aqubix’s KYC Portal (KYCP) is one such – and it’s riding the crest of a wave as a result. This automated compliance monitoring and anti-money laundering (ALM) service was launched last November to a rapturous reception from both overworked compliance officers and institutions buckling under the strain of the cost and risk associated with ever-changing regulatory requirements; regulations that they’re finding it increasingly hard to keep pace with. There have been some high-profile cases recently that have highlighted the flaws and vulnerability in complex manual compliance processes, including Deutsche Bank’s $630million anti-money laundering fine and HSBC’s Moroccan drug lords scandal. As the challenges around AML increase, PriceWaterhouseCoopers has predicted that the global cost of complying will shoot to more than $8billion this year.

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“The biggest challenge at the moment across not just the financial industry, but any organisation that has to conduct compliance and anti-money-laundering (AML) due diligence, is ever-increasing regulation,” says Aqubix director, Kristoff Zammit Ciantar. “I did some research recently that suggested the work companies have to do to keep in line with regulatory requirements is increasing by 18 per cent every year. And at the moment, the processes for all this work are manual, done by human beings. “Companies have to have compliance officers to process all the applications, all the forms and all the documents, and assess risk. This means the process also depends on the human bias of the compliance officer him or herself – resulting in instances of money laundering not being spotted.” According to Zammit Ciantar , the majority of fines are as a result of organisations failing to identify suspicious behaviour and act on it in time. And the biggest risk of all is existing customer monitoring.

“When we asked companies at Finovate 2017 – including big named banks from the Netherlands, UK and US – if they are compliant in terms of past vetted subjects, the answer was a resounding ‘no’, says Zammit Ciantar . “This is clearly a major industry issue. Organisations are so focussed on meeting increasing requirements surrounding the onboarding of new customers that legacy risk issues are on the back burner. “Yet regulations state that companies have to ensure all the past vetted subjects sitting in their database, remain constantly compliant. They have to do ongoing reviews to ensure there are no expired documents and undertake constant screening checks. Yet almost no one that we’ve met so far is compliant on that, because the reality is it’s impossible to keep up with the past vetted subjects as well as onboarding new customers.”

Entering the time warp The revised Payment Services Directive (PSD2) and ever-more-stringent General Spring 2017


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