In the first few months of the year, there’s always a lot of prognostication in the Governance, Risk & Compliance world about what the year’s big Compliance issues will be. The biggest changes are always ones we don’t see coming and don’t already have a plan for, but here are a few of the trends I think we’ll be talking about across 2019.
With the FinTech world continuing to expand at an explosive rate, we’re going to see a lot of businesses looking to automate as much of their AML and KYC process as possible to keep up with their increasing user bases. The businesses that can get automatic on-boarding systems in place that are easy to use for their customers, as well as efficient and accurate for themselves, will have a huge advantage over their competitors.
More generally, technology will continue to be at the frontline of AML – in the FCA’s financial crime report, almost all of the types of frauds that top firms reported as being most prevalent last year were tech-based, including Vishing, Malware, Hacking and Account Takeovers.
Cryptocurrency is still controversial in the finance world, with some believing it’s the future of the industry and others seeing it as a pipe dream that will never fulfil its promise. For now, though, no one can deny that there is an increasing amount of activity involving crypto, and 2019 will see many governments introduce formal regulation around the technology, with the international intergovernmental organisation FATF planning to release a set of AML standards covering cryptocurrency in June.
Just this month we’ve seen a situation showing how unprepared traditional regulation is for some unique aspects of cryptocurrency with the death of QuadrigaCX’s CEO resulting in users of their exchange losing access to millions of pounds worth of bitcoin. At the time of writing it’s unclear if their customers will ever get their money back, a situation which would be unthinkable for a bank or building society. As crypto continues to try to move away from its controversial early image, it will be interesting to see how the sector reacts to efforts that aim to bring it more in line with traditional finance.
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