1. Home Working is Here to Stay
Remote work became the new norm in 2020 as people stayed and worked at home due to pandemic-related restrictions. For example, in Hong Kong, remote working policies have become a necessity rather than an option.
In fact, HSBC recently told its 30,000 staff located in Hong Kong to work from home for up to 4 days per week. The bank has even hinted that they are not planning to go back to the pre-Covid office working practices.
The same trend is being experienced in other parts of the world and is proof that remote work and compliance teams are here to stay.
2. Growth of RegTech Adoption
In 2020, compliance teams had to do most of their work remotely creating a heavy reliance on RegTech solutions.
The solutions helped organizations to maintain a continuous and uninterrupted provision of services. As new RegTech solutions surface in the market, we expect to see more companies adopt these new integrated systems.
RegTech adoption is a major trend in 2021. Screena provides clients with advanced RegTech capabilities to augment their existing AML and KYC solutions.
3. Regulators are Playing a Major Role in RegTech Adoption
Financial regulators played a key role in the adoption of RegTech solutions in 2020. The shift to RegTech was accelerated by the pandemic.
For example, in April 2020, the Financial Action Task Force officially recommended RegTech solutions for the digital onboarding of new clients. Recently, FATF’s executive secretary David Lewis reiterated the “need to see better use of technology” to tackle money laundering, which will serve for “smarter, more efficient and effective action.” We expect to see more organizations adopting RegTech solutions in 2021.
4. The War Against Money Laundering is Still a Priority in 2021
The year 2020 saw a significant increase in public spending due to COVID-19 relief measures by governments across the globe. This created opportunities for money launderers to exploit existing loopholes.
In 2021, we expect to see more concerted efforts to fight against dirty money and other money laundering practices as stated by the president of FATF in a speech at the G20 Summit in Riyadh.
5. The EU’s Commitment to Bolster its AML Strategy Across the Region
After a series of money laundering incidents across Europe in the last few years, the European Commission stated in 2020 its plans to fight against financial crime across the region.
In July 2021, the European Commission presented a more ambitious package of legislative proposals aimed at strengthening its anti-money laundering and anti-terrorism financing rules.
The goal of the new package, that includes the creation of a new EU AML Authority combined with a Single EU Rulebook for AML/CFT, is to better detect suspicious transactions and activities and close all loopholes that criminals exploit to launder dirty money.
6. Entry of Crypto and Virtual Assets into the Mainstream Financial World
Cryptocurrencies and virtual assets have in previous years remained in a grey regulatory zone but are now being regulated on a larger scale than before.
The regulations have come as a result of the release of the 2019 FATF revised AML/CTF standards for virtual assets. A recent report indicated that 35 of all the 54 reporting jurisdictions across the world had implemented the revised standards.
According to the US Commissioner of the IRS, Charles Rettig, the United States needs congressional authority to issue new regulations on crypto and virtual assets as well as additional tools to monitor the fast-growing industry.
Charles Rettig’s statement was echoed in June 2021 by Brian Nelson, President Biden’s nominee for Treasury Undersecretary for Terrorism and Financial Intelligence, who said that, if confirmed, he will implement new regulations around cryptocurrency as a matter of priority.
Other notable AML and KYC trends in 2021 include demystification of financial regulations on cloud-based solutions, a move towards a more unified Pan-Asian AML approach, continuous compliance retraining, a renewed interest in KYC utilities and digital identities.
Screena AML Solutions
To stay in compliance with the changing regulatory environment it is important to use the right tools and technology. Screena provides a suite of AI-powered AML & Fraud Management solutions.
At Screena, we understand that there cannot be a one-solution-fits-all approach for all KYC and AML requirements. Which is why we provide a flexible API-as-a-Service name screening tool that financial organizations can use to strengthen their existing processes according to their risk profile and appetite.
