Chris Wong’s Post

With the rapid growth of the virtual asset market, Taiwan is taking significant steps to enhance compliance standards. In my latest article published on Lexology, I explore the Financial Supervisory Commission's Draft Anti-Money Laundering (AML) Registration Requirements for Virtual Asset Service Providers. In the article, I cover key areas of the Draft, including: 1️⃣ AML registration requirements for VASPs operating within Taiwan. 2️⃣ Internal control and information security obligations. 3️⃣ Mandates for customer complaint procedures and information disclosure. 4️⃣ New mechanisms for legal tender transactions, including trust agreements and bank guarantees. These regulations could reshape Taiwan’s virtual asset industry, potentially leading to market consolidation and stricter compliance obligations for VASPs. https://lnkd.in/gdzt9HPJ

The Financial Conduct Authority (FCA) in the UK is closely monitoring developments in the tokenization space, recognising the opportunities and risks it presents. Their stance on tokenization focuses on consumer protection, market integrity, and fostering innovation within a regulated framework. Here's a summary of the FCA's position: - **Regulatory Framework:** - **Security Tokens:** Classified as providing rights akin to traditional securities under existing regulations. - **Utility Tokens:** Offer access to products/services without ownership rights, typically outside FCA regulation unless classified as e-money. - **Exchange Tokens:** Used for exchange/investment, generally unregulated unless meeting criteria as financial instruments. - **Consumer Protection:** - Emphasis on risk warnings regarding high investment risks and fraud. - Requirement for firms to provide clear, fair, and comprehensive information on risks, costs, and token nature. - **Market Integrity:** - **AML/CTF Compliance:** Mandatory for firms engaging in token issuance/trading, including KYC checks and transaction monitoring. - **Market Abuse Regulation:** Token markets are regulated to prevent market abuse like manipulation and insider trading. - **Operational Resilience:** - **Cybersecurity Measures:** Firms must implement robust cybersecurity protocols, conduct security audits, and have incident response plans in place. To be continued in the next post.

What are the top 10 challenges in Compliance in 2024 - and what are the top strategies? Another article by the Compliance Coach in Finews (https://lnkd.in/e9gZzTfK), Switzerland's leading news site for all professionals in the financial sector:

Let's put my history degree to some use with some history on transaction monitoring. The roots of transaction monitoring can be found in the 1980s. The global significance of Anti-Money Laundering (AML) measures was underscored following the September 11 attacks, prompting financial institutions to implement processes to detect suspicious customer transactions. International bodies such as the Financial Action Task Force (FATF) emerged, proposing recommendations to fortify the financial system against money laundering, terrorist financing, and related illicit activities. In the UK, the Financial Services Authority (FSA) anticipated the Money Laundering Regulations 2007 by drafting a brief report on automated AML transaction monitoring systems. These regulations significantly influenced how financial institutions operate, requiring the implementation of transaction monitoring systems. While automated systems are ideal for firms processing large volumes of transactions, manual processes may still find their place in smaller non-financial entities. The driving force, however, is the establishment of a robust framework that meticulously details and documents decisions on specific transactions. Fast forward to the present, we find ourselves in an era where data and technology serve as powerful tools to enhance TM systems. Advanced tools, machine learning, AI, and data analysis has revolutionized the landscape. As financial crime professionals, it’s imperative for us to upskill and adapt to these advancements to fully comprehend these new TM systems. Here are some areas to consider: - Understanding how disparate data sources are brought together to provide context to transactions. - Ensuring the data cleaning process is effective, resulting in accurate, reliable, and timely transaction monitoring. - Segmenting your clients effectively to avoid broad thresholds. In this era of data and technology, let’s continue to learn, adapt, and innovate to stay ahead in the fight against financial crime. #AML #TransactionMonitoring

On 22 March, the Council of Europe published its long-awaited study of the implementation and effectiveness of the 4th Anti-Money Laundering Directive (https://lnkd.in/dWXB55Tj). Of course, 4AMLD is outdated by now with the 6th AML Regulation, but the report contains many important lessons learned. One area that I’ve always grappled with is the risk-bassed approach of obliged entities. Besides the risks stemming from the customers, products, markets and risk appetite of the institution, the AML/CFT efforts should also be informed by national risk assessments of EU member states. As you know, I’ve repeatedly shared my concerns about whether the right sectors and practices are even on the radar of national authorities. So I won’t repeat my “spiel” here about TBML, global informal money networks like Hundi/Hawala, and the need to connect crypto transfers to offline crime (not just online fraud and scams). On top of that, the report identifies major issues with risk assessments: - A complete lack of or inadequate enterprise-wide risk assessments by most obliged entities, especially non-financial businesses and professions, some non-bank financial institutions and smaller banks. - Outdated or insufficient national risk assessments in some Member States. - Insufficient dissemination and level of awareness and understanding of the national risk assessment findings, especially in the non-financial sectors. - Misalignment between the risk rating of some sectors by the supervisor and the risk rating assigned in the national risk assessment. -In several Member States, the dissemination of the results of the FIU analysis is impacted by limited resources and is not commensurate with major national ML/FT risks.    😩 I am shocked by some of the findings of the report and the accompanying staff working document from the European Commission (https://lnkd.in/dUE5iuNB).    “Since 2018, how many iterations of your national risk assessment (NRA) have been completed? Most Member States carried out a single NRA during the considered period.”   😱 I am shocked… The majority of member states update the NRA every 4 years and three member states every 5 years. Once per 4 or 5 years?!   That is definitely not enough considering the fast pace of technological innovations like AI, Decentralised Finance and crypto. That's like talking about fax machines, floppy disks and cd-roms in the internet age 💾   So there’s still a lot of work to be done, some of which is addressed by the newly adopted AML package, but it will take time and resources to implement the necessary changes. 📩 Do you have questions or comments? Feel free to ask in DMs. #GlobalGroundConsulting #AMLCFT | #RiskBasedApproach | #6AML | #EU | #AI | #DeFi

🚀 𝐍𝐞𝐰 𝐀𝐫𝐭𝐢𝐜𝐥𝐞 𝐀𝐥𝐞𝐫𝐭: 𝐄𝐥𝐞𝐯𝐚𝐭𝐢𝐧𝐠 𝐓𝐁𝐌𝐋 𝐑𝐢𝐬𝐤 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭 I am excited to announce the release of our article, "𝘌𝘭𝘦𝘷𝘢𝘵𝘪𝘯𝘨 𝘛𝘉𝘔𝘓 𝘙𝘪𝘴𝘬 𝘔𝘢𝘯𝘢𝘨𝘦𝘮𝘦𝘯𝘵: 𝘍𝘳𝘰𝘮 𝘞𝘪𝘯𝘥𝘰𝘸 𝘋𝘳𝘦𝘴𝘴𝘪𝘯𝘨 𝘵𝘰 𝘋𝘢𝘵𝘢-𝘋𝘳𝘪𝘷𝘦𝘯 𝘈𝘱𝘱𝘳𝘰𝘢𝘤𝘩," which delves into the critical issue of Trade-Based Money Laundering (TBML) and the necessity of a data-driven approach to combat it effectively. I wrote this article in collaboration with Laurent Claassen from TENSIG. 𝐖𝐡𝐲 𝐓𝐡𝐢𝐬 𝐌𝐚𝐭𝐭𝐞𝐫𝐬: Money laundering facilitates illicit funds from criminal activities, undermining financial systems and public trust. TBML, a sophisticated form of money laundering, exploits the complexity of international trade, posing significant challenges for detection and prevention. 𝐊𝐞𝐲 𝐇𝐢𝐠𝐡𝐥𝐢𝐠𝐡𝐭𝐬: 🔍 Detailed insights into TBML methods, including over-invoicing, under-invoicing, multiple invoicing, and more. 🌍 Examination of the global regulatory framework, emphasizing the role of international cooperation and standards set by the Financial Action Task Force (FATF). 🏦 Key challenges for banks regarding TBML risk management. 💡 Call for a more data-driven approach, leveraging advanced analytics, AI, and blockchain technology to enhance TBML risk management. 🤝 Advocacy for collaboration between public and private sectors to improve data sharing and overall TBML risk management. 𝐈𝐬 𝐲𝐨𝐮𝐫 𝐨𝐫𝐠𝐚𝐧𝐢𝐳𝐚𝐭𝐢𝐨𝐧 𝐟𝐚𝐜𝐢𝐧𝐠 𝐜𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞𝐬 𝐢𝐧 𝐓𝐁𝐌𝐋 𝐑𝐢𝐬𝐤 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭? 𝐆𝐞𝐭 𝐢𝐧 𝐭𝐨𝐮𝐜𝐡 𝐰𝐢𝐭𝐡 𝐨𝐮𝐫 𝐞𝐱𝐩𝐞𝐫𝐭𝐬! Read the full article here and discover how a shift towards a data-driven approach can significantly enhance the effectiveness of TBML risk management. Let's work together to protect the integrity of our financial systems and ensure the security of global trade. Join the conversation and share your thoughts on how we can better tackle TBML challenges! #Compliance #TBML #RiskManagement #AML #DataDriven #FinancialCrime #RegTech #Banking #TradeFinance #Innovation #Collaboration #Tensig

Consultation Paper on Proposed Regulatory Approach, Regulations and Notices for Digital Token Service Providers issued under the Financial Services and Markets Act 2022  https://lnkd.in/gg9gUTHs

Supporting Wealth Managers with Regulatory requirements. Going forward, the wealth and asset management sectors will be subject to increased regulatory scrutiny. Firms will therefore be under pressure to demonstrate that they have robust compliance frameworks in place to meet regional and global regulatory requirements. As a result, firms are looking for more effective ways of protection against global financial crimes. Lysis Group helps to remove the unknown and equip firms with the framework and structure to face global regulatory challenge without concern. https://lnkd.in/djQzGKU5

The new development leverages large language models, allowing users to prioritize high-risk alerts; the offering reduces investigation time by up to 90%. 👉 Learn more in this The TRADE News article by Wesley Bray: https://lnkd.in/eKxvVP3x #fintech #regtech #steeleye #artificialintelligence #compliance #regulation

Thank you Mexico Business for the interview! We delved into some critical topics during our discussion, focusing on how automation and knowledge are pivotal in mitigating money laundering risks 🔍 👉 Spoiler alert: We explored the transformative power of technology in compliance processes, the importance of staying ahead with continuous learning, and shared some actionable insights on how Complif helps businesses to better comply with regulations 🚀 https://lnkd.in/emBr6_iA