£600 billion in the pockets of criminals

 

Connor previously worked for a leading Credit Reference Agency where he supported companies to make informed decisions with data.

Most recently Connor managed a New Business and Account Management team.

His interest in fast moving innovative business, meant he spotted the need for better automation within the industry. Leading him to make the move to TruNarrative in early 2019.

 

 

 

Meet Connor at the Prepaid International Forum AGM and Summit on the 18 – 19th of September.

 

In the reign of Pablo Escobar, when he was supplying up to 80% of the US cocaine trade, he didn’t have access to crypto-currency or electronic money to move around his drug funds.

TruNarrative Claims Fraud

In fact, rumour has it, his accountants would write off up to 10% of cash due to water damage or being destroyed by rats.

 

So, how are criminals working now?

 

Well, the FBI has stated that one of the most common ways for crooks to launder money nowadays is through prepaid cards.

In fact, this was a very popular method used by Joaquín Guzmán Loera, more commonly known as ‘El Chapo’ (1).

Estimates suggest that criminals have used cryptocurrency to launder over $2,500,000,000 worth of Bitcoin (2).

 

However, with the coming 5MLD amendments, certain industries will need to make changes to comply by January 2020, which means companies have less than 6 months to get their processes up to speed, if they haven’t done so already.

It’s easy to forget why we have high levels of regulation but without it, criminal activity like the above would increase exponentially.

 

TruNarrative AML MonitoringMoney Laundering Has Evolved

 

Globally, an estimated £658.52 billion to £1.65 trillion is laundered annually (3). In the UK alone, reports of suspicious activity increased by 10% in 2018 (4).

That statement is worrying.

 

Despite intense ongoing developments within the industry to decrease criminal activity, it’s pretty explicit. Overall, things are getting worse.

 

Like most forms of financial crime, money laundering, and the way criminals operate, is constantly evolving.

As we adapt and reinforce our security measures, they find ways to slip through the cracks, or in more certain terms, create new cracks.  Because of this, the Fifth Money Laundering Directive (5MLD) is coming into force within the EU in 2020.

 

What does the 5th Money Laundering Directive mean to you?

 

The 5MLD is a series of amendments to the 4MLD. Where the 4MLD had a far-reaching effect across multiple industries with a risk of money laundering, the 5MLD is a more focused series of changes but we can still expect disruption. 

Industries having to make changes for 5MLD include;

•     Electronic money/Prepaid cards – The 5MLD will lower the requirement for customer verification from €250 to €150, and even to €50 for some        remote transactions.

•     Cryptocurrencies – Virtual currencies will have a legal definition. Virtual currency platforms and wallet providers will also become                                 FCA regulated entities. And, although many already conduct due diligence, the 5MLD will make it a legal requirement.

•     Art intermediaries – art dealers, auctioneers, anyone trading in works of art valued at €10,000 or more, will have to abide to the latest                          amendments.

•     Lettings Agents – Agents who facilitate rent transactions of €10,000+ each month will now have to apply the same diligence as they do for              sales.

 

What Does This Mean Post-Brexit?TruNarrative Transaction Fraud

 

Before we continue, let’s clarify one thing – yes, the UK will still adopt this legislation post-Brexit.

The UK has been heavily involved with the formation of the 5MLD, so there’s no reason why we wouldn’t adopt it; especially as part of the 5MLD states e-money/pre-paid cards issued outside of the EU, which do not have legislation equivalent to the 5MLD, are prohibited.

So, if the UK didn’t adopt 5MLD, any UK company offering e-money would be prohibited to trade with the EU, if we didn’t adopt something equivalent. And, the ramifications that would have are huge.

 

A Stress-Free Solution – Here’s How TruNarrative Can Help

 

We all know how vital it is to have effective controls in place to reduce money laundering.

The reason is obvious: to prevent criminals from cleaning dirty money.

 

But, while that’s explicit, there’s also the genuine customer to consider. Inefficient controls lead to high false positives, friction in the customer journey and abandoned applications, which results in lost revenue and increased costs.

 

With these new regulations quickly approaching, it can be stressful knowing where to turn.

However, TruNarrative’s easily configurable financial crime platform will give you the agility to respond to the changing regulatory environment. So, whether you’re a cryptocurrency exchange or prepaid card provider our platform lets you build a robust 5MLD strategy, which adapts to different risk levels and different journeys depending on country or value.

The capability to configure the whole financial crime strategy within natural language, delivered via a single platform, enables our clients to reduce false positives, on-board genuine customers faster and stop fraudulent applications in their tracks.

 

 

Fill out the form below to book a demo with Connor or to meet him at the Prepaid International Forum AGM and Summit on the 18 – 19th of September.

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)  https://www.pymnts.com/aml/2019/prepaid-debit-cards-el-chapo-drug-trafficking/)

(2) https://thenextweb.com/hardfork/2018/10/10/bitcoin-money-laundering/

(3) https://www.europol.europa.eu/crime-areas-and-trends/crime-areas/economic-crime/money-laundering

(4) https://www.ft.com/content/15aebf9e-0548-11e9-99df-6183d3002ee1

(5) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/795670/20190415_Consultation_on_the_Transposition_of_5MLD__web.pdf)