What’s Going On, 8 July 2021 – PSE, FATF, Wolfsberg, OMG

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I’ve bit the bullet and scheduled my CGEIT certification exam for the 6th of August, because nothing cements one’s resolve like leaping headfirst into deep water. Between that and the six (6!) short essays I have to craft for the Institute of Corporate Directors to complete the Professional Director Program due at the end of the month, this month is looking pretty tight. I don’t really intend to stop posting here, mind you, but if I miss an update or two, I can only offer my apologies.

Here are some things that have crossed my feeds:

  • The news of the day is that the Philippine Stock Exchange (PSE) is considering becoming a cryptocurrency exchange. This is great news for crypto enthusiasts, of course, and besides adding legitimacy to cryptocurrency, it ensures that a measure of investor protection will be present. To make my stance on these things clear: I am generally pro-cryptocurrency and I feel that there are opportunities in this space for Filipinos. (Certainly we have missed out on some of the wealth-building opportunities that came with the early days of the crypto industry and that FOMO is a big part of my perspective.) The question that comes to mind with the PSE’s announcement is, of course, “how?” Compliance with the regulations is only going to be one part of the puzzle, and even that isn’t particularly straightforward. How will the PSE comply with the Travel Rule? How will the PSE discipline errant cryptocurrencies? A part of me feels this was only wishful thinking on the part of the PSE, but another part of me is hopeful that there is real substance behind this line of thinking.
  • Besides adding the Philippines and several other jurisdictions to the grey list, the FATF has been busy looking at how technology is used to fight money laundering and terrorist financing. The report I’m most excited about is their new report on Opportunities and Challenges of New Technologies for AML/CFT since I’m in the middle of in a dry spell for new tech and business ideas. I will admit that I have yet to go through this – it’s 76 pages! – so I’m just going to have clear some time to hunker down and go through the report.
  • Next, the FATF is looking to understand how data pooling, collaborative analytics and data protection are being conducted, and have published a stocktake to better understand this. If it hasn’t become clear yet, every AML specialist in the world today must learn to balance the needs of AML and data protection, and it’s good that the FATF is trying to understand what the issues are. I’ll have more to say about this when I can spare the time.
  • Lastly, and perhaps relevant to the item in the news about the PSE and cryptocurrency, the FATF has published a second 12-month review of how its recommendations have been implemented by virtual asset service providers (read: cryptocurrency exchanges and the like). At 46 pages, it’s another meaty read, but well worth it given how at odds the cryptocurrency compliance space is at the moment vis-a-vis the FATF’s Travel Rule. I’ll post more about it once I’ve had a chance to read the report.
  • Just for completeness’s sake, the FATF has also come out recently with reports on ethnically or racially motivated terrorism financing and money laundering from environmental crime, as well as guidelines on proliferation financing risk assessment and motivation. I might come back around to these when I’ve more time to read.
  • The Wolfsberg Group has been largely silent lately, their last publication coming out in October 2020. For those not in the know, the Wolfsberg Group is an association that consists of thirteen global banks whose focus is to develop frameworks and best practices for FIs to manage risks, particularly around money laundering and the finance of terrorism. Their perspective is important. The FATF is a policy-making policy-recommending body and it approaches AML/CFT from that perspective. The Wolfsberg Group looks at best practices in light of the current realities facing FIs. Their latest publication is a paper that covers how to demonstrate effectiveness in assessing risk and in the conduct of AML/CFT. It’s not a lengthy read (5 pages long), so I’ve actually already read it. I’ll use some of it when I prepare my articles for DNFBPs.

And… I thought I had a news article about an initiative in China managing to properly anonymize client data for AML processing, but I seem to have lost it. It’s now buried in reports about China’s new AML rules. I guess I’ll have to keep looking for that news article. Or did I dream it up?

Photo by Wesley Tingey on Unsplash

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