Steven Bisoffi

🚨  FCA fines Starling Bank £29M for Major Sanctions Failures 🚨 The FCA has fined Starling Bank £28,959,426 for serious failures in its financial crime controls, notably around sanctions compliance and onboarding high-risk customers during a voluntary requirement. 🔍 Key Issues: 1️⃣ Starling failed to stop onboarding 49,183 high-risk customers despite a VREQ (Voluntary Requirement) imposed in 2021 to prevent this. This comes on the heels of a similar fine against Coinbase earlier this year. 2️⃣ Sanctions Screening Failure: Between 2017 and 2023, Starling’s automated system only screened customers against a fraction of the required sanctions lists, posing a significant risk of enabling financial crime. One Designated Person managed to open an account as a result. The FCA labelled the bank's sanctions controls as "shockingly lax," with systems that screened customers just once every 14 days. 3️⃣ Risk Assessment Weakness: Starling’s firm-wide risk assessment failed to appropriately assess its sanctions risk. They rated the risk as low, not considering key high-risk factors such as payments from crypto-related platforms and multi-currency accounts. ⚖️ Fine Breakdown: 💹 £1M of the fine relates to onboarding high-risk customers. 💹 £28M is tied to severe sanctions screening failures, which the FCA deemed a breach of Principle 3, which requires a firm to take reasonable steps to ensure that it has organised its affairs responsibly and effectively, with adequate risk management systems. 📚 A must-read for compliance officers and financial crime professionals! #FinancialCrime #Sanctions #AML #Compliance #StarlingBank #FCAPenalty 🔗 Full FCA notice: https://lnkd.in/ewyw-5Dc

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🔍 Amid the recent sound and fury over timelines and thresholds of reimbursing victims of authorised push payment fraud, the most significant issue around is being overlooked: preventing the scam in the first place, writes Nicky Goulimis of Tunic Pay. 💡 The debate sparked by the UK regulator’s decision to slash maximum fraud reimbursements from £415,000 to £85,000 represents an opportunity, I believe, to align incentives to reduce losses with an improved customer experience. 💸 What has been under-reported is that banks and fintechs will still have to pay a not-insignificant bill. Research by the Payment Systems Regulator has found that the lower threshold will still cover more than 99 per cent of APP fraud cases by volume, and the remainder of cases will simply be redirected to the Financial Ombudsman Service for further remediation. 🤝 Rather than finger-pointing, the UK sector should focus on how information sharing can benefit both the industry and consumers, reducing fraud likelihood. Read more https://lnkd.in/emGQxQZH #APPFraud #AuthorisedPushPayments #Banking

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With less than 1 month to go until the new regulations go live it is important for firms to take measures to mitigate risk and safeguard their future. #SD20 #FinCrime #InsurTech #APPFraud #RegTech #DigitalFraud

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🕵️‍♂️ New fraud rules coming into force today have been condemned for failing to make banks report fraud to UK law enforcement agencies, writes Ellesheva Kissin. ⚠️ The controversial rules, which require all payment providers to reimburse victims of authorised push payment fraud, are a missed opportunity to compel banks to provide intelligence to agencies with the power to prosecute, say leading industry players. 📢 The issue was aired at a Labour party conference fringe meeting last month, at which politicians were grilled on how the new rules would work. 🔍 “All fraud is going to go dark…If there’s no intelligence, are we not actually just making it much easier for them?” asked one participant, who did not give their name. They warned that law enforcement agencies were deeply critical of the rules. 📉 Fraud is already significantly underreported. Law enforcement figures currently estimate that only 14 per cent of frauds are reported to them, according to Kathryn Westmore, a senior research fellow at the Centre for Finance and Security (CFS) at RUSI. 🚨 A prominent law enforcement official, who did not wish to be named, agreed the rules are “a problem” for failing to loop in the police. 📋 “Many from law enforcement circles would probably prefer to mandate reporting to police before reimbursement, just like you’d have to have a crime number if burgled before reporting to your insurance company,” the official said. 👀 Read more below https://lnkd.in/dhdgNqwe #APPfraud #fraud #APP

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📢 Last week CB Payments Limited (CBPL), a UK-registered E-Money was fined £3.5m The Financial Conduct Authority issued a Final Notice to CBPL, highlighting areas for improvement in their financial crime compliance processes. This serves as a valuable case study for all #fincrime professionals. The key points: ❌ Penalty: CBPL received a £3.5m fine, reduced from £5m due to early settlement. ❌ Breach of Requirements: CBPL breached a Voluntary Requirement (VREQ), an FCA supervisory tool that restricts certain business activities to mitigate risk while the firm enhances its compliance framework. Over three years, CBPL onboarded 13,416 high-risk customers against VREQ restrictions, leading to $24.9m in prohibited deposits and $226m in crypto transactions. ❌ What Went Wrong: The FCA identified significant gaps in CBPL’s automated onboarding systems and financial crime controls. Key issues included inadequate pre-implementation testing, incomplete requirements given to the tech team, and ineffective ongoing monitoring, resulting in repeated non-compliance. Lessons Learned: ✅ Strengthen Controls: Ensure financial crime control frameworks are effective and regularly updated. ✅ Testing: Conduct thorough pre-implementation testing for new controls and continuously monitor their effectiveness. ✅ Record-Keeping: Maintain comprehensive records of all compliance efforts, including design, testing, and implementation steps. ✅ Continuous Monitoring: Implement effective monitoring systems to quickly detect and address any breaches. Utilise dashboards and other tools for real-time compliance tracking. ✅ Timely Remediation: Address any identified weaknesses promptly. For further details, review the full Notice here https://lnkd.in/e9ZMtc_2 #FinancialCrime #MLRO #Compliance #FCA #Crypto #AML #Regulation #effectiveness

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The FCA Practitioner Panel has published its response to the FCA's Call for information (CfI) on big tech and digital wallets, noting: 👉That digital wallets are becoming a critical part of payments infrastructure 👉The implications of the prevalence of big tech 🧐 The need for the regulator to provide consumers with appropriate understanding, protection, and choice 👉Clarification of proper apportionment of responsibility when things go wrong between digital wallet providers and individual payment providers would be welcome Access the full response here - https://pimfa.cc/bljaL #digitalwallet #regulation #technology

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Finally - a FREE EOY KRI Template built by financial crime professionals for financial crime professionals 😊 Our CEO & Co-Founder, Natasha Vernier, who served as the Head of FinCrime at Monzo Bank, knew all too well how time-consuming an End-of-Year KRI report can be, especially when juggling dozens of other responsibilities 🫠. So she did the obvious thing and created a template that can be used to easily communicate to key stakeholders how well the KRIs are performing that year 😎 Just click the link below to download our End-of-Year KRI Template and streamline your compliance processes! 🚀 https://hubs.ly/Q02DzLhJ0 #Compliance #FinancialCrime #KRIs #RiskManagement #FreeTemplate #Cable #CableTech

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Monzo has introduced three new security controls-Known Locations, Trusted Contacts, and Secret QR codes—to protect customers from fraud. These opt-in features require customers to use at least two controls for bank transfers or savings withdrawals above a set limit, adding layers of verification based on location, trusted contacts, or QR codes. Digital financial services have brought remarkable advancements, making payments more convenient, inclusive, and efficient. However, these benefits come with challenges such as security risks, regulatory hurdles, technological barriers, and privacy concerns. The controls introduced by Monzo are straightforward solutions that traditional players can adopt to enhance consumer trust. #dfs #tech #digitaltransformation #innovation #controls #fintech

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Fintechs and banks have blasted a UK regulator’s handling of new incoming fraud rules, warning they will sow “chaos” and slow down instant payments. The Payment Systems Regulator will force banks and payment companies to reimburse fraud victims up to £415,000 from October 7, with costs shared between both the sending and receiving banks. The new rules aim to tackle authorised push payments fraud, an increasingly sophisticated financial crime that tricks victims into sending funds directly to fraudsters’ accounts. According to UK Finance’s Annual Fraud Report, APP fraud cases jumped 12 per cent to 232,429 in 2023. But Pay.UK, the interbank operator building the claims management system most of the industry will have to use, will likely not have it ready by the go-live date, four industry sources tell Banking Risk and Regulation. Story by Ellesheva Kissin. Read more below👇 https://lnkd.in/eKwgaj3y #banking #fraud #APPfraud

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A welcome easter egg 🥚 in today's Bank of England piece on innovation in money and payments, is confirmation that the new Government 👉 will 👈 take forward the National Payments Vision 🛣 That's another tick in the box ✅ for open banking payments, after the Government also brought back the Smart Data Bill, key for underpinning open banking standards. Now if only we could see some progress on VRP from the Payment Systems Regulator and acknowledgment of the risk APP fraud rules pose to growth in the payment sector... Read our piece on the National Payments Vision: https://lnkd.in/eTTiGwNR The Bank of England's Approach to innovation in money and payments: https://lnkd.in/eiFKmxTE #progress #growth #payments #openbanking

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THE WEEK IN FINANCIAL CRIME The UK’s Payment Systems Regulator (PSR) has proposed a new reimbursement cap for victims of APP fraud to enhance consumer protection and incentivize financial institutions to “implement enhanced fraud prevention tools.” The proposed cap would be reduced from £415,000 to align with the Financial Services Compensation Scheme limit of £85,000. After considering responses to the consultation, the regulator plans to finalize the approach by the end of September, with the implementation date for the protections remaining unchanged on October 7. The Ministry of Home Affairs (MHA) in Singapore has proposed a new bill allowing the police to instruct banks to limit the accounts of individuals suspected of being targeted by scams. This comes in response to the city-state seeing a 50% increase in scam and cybercrime cases in 2023, with job scams, e-commerce scams, fake friend call scams, phishing scams, and investment scams being the top concerns. Under the Protection from Scams Bill, the police would have the authority to issue Restriction Orders (ROs) to banks to temporarily prevent people from sending money to scammers. The MHA has announced the bill will soon become law and has called for public feedback by September 30. On August 28, FinCEN issued a final rule imposing AML and KYC obligations on registered investment advisers (RIAs) and exempt reporting advisers (ERAs). The rule aims to help safeguard the investment adviser sector from illicit finance activity. It follows a February 2024 risk assessment highlighting numerous cases where sanctioned persons, corrupt officials, fraudsters, and other criminals have exploited the investment adviser industry to access the US financial system and launder funds. The deadline for compliance with this rule has been extended from the date originally set out in the NPRM to January 1, 2026.

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Financial Conduct Authority Confirms Anti-Greenwashing Guidance and Proposes Extending Sustainability Framework Sacha Sadan, Director of Environmental, Social and Governance, FCA, said: “Confirming the new anti-greenwashing guidance and our proposals to extend the Sustainability Disclosure Requirements and investment labels regime are important milestones that maintain the UK’s place at the forefront of sustainable investment. Our good and poor practice anti-greenwashing examples will help firms market their products in the right way. We continue to work closely with the ASA and CMA to address greenwashing. “Consumers care about investing in products that have a positive impact on the planet and people. That’s why we want to boost the integrity of the market and ensure people can make informed decisions about how to invest their money.” https://lnkd.in/efFqsgrR #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

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On September 25, the UK Financial Conduct Authority (FCA) announced new proposed rules aimed at better protecting customers of payments and e-money firms, particularly in cases where these firms go out of business. Key Highlights: - The FCA observed ongoing poor safeguarding practices in the payments sector, leading to concerns about customer funds in the event of firm failures. - Under the new proposals, the current e-money safeguarding regime would be replaced with a client assets (CASS) style regime, more suited to payments firms' business models. - The FCA plans to introduce strengthened interim safeguarding rules by mid-2025 and has opened supervisory cases for around 15% of firms to address these concerns. Firms are invited to respond to the FCA's consultation by December 17, 2024, as the regulator aims to ensure customers receive their funds promptly if a firm collapses. For more updates on financial services and regulatory actions, follow Global Regulatory Insights now. #FCA #PaymentsIndustry #E-Money #CustomerProtection #FinancialServices #RegulatoryUpdates #GRI

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📰 Both challenger and traditional banks must do more to prevent fraud. With fraud now accounting for 36% of reported crime and costing UK customers over £1.17bn in the past year, it's clear that financial institutions face growing challenges. In her latest article in FT Adviser, our Head of Economic Crime, Laura Eshelby, explores: 💳 The increasing threat of authorised push payment (APP) fraud 💳 How banks can prepare for new regulatory scrutiny 💳 The vital role of collaboration, partnerships, and disruption in fighting financial crime 💳 Lessons for challenger banks from recent enforcement actions Read the full article to learn what more needs to be done to protect customers and uphold integrity in the face of rising fraud: https://lnkd.in/eKXxqFJq

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💡 Identity Crisis: Consumer and corporate verification in a state of flux. 🚨 In the UK alone, there were 1664 recorded money laundering events last year, and 55% of businesses experienced known or suspected fraud attempts. 📄 FullCircl's latest guide provides a comprehensive overview of developments in the identity verification space, including an actionable 4-step framework to approaching the market. 👇 Download today to transform your compliance efforts. https://hubs.li/Q02CbPwr0 #identityverification #IDV #ID&V #compliance #regtech

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Regulations to Slow payments - Sunday musings In the interest of delivering to high expectations (err, shouldn't my payments be as fast as an email !) payments have become faster and faster. Everyone is on this, banks, fintech's, providers all promise delivery of payments in seconds if not minutes. The stated objective is we can do anything faster and quicker and dare I say cheaper. What happens though is rampant fraud where the gullible - young and old alike become victims of fraud From experience, once money moves out of your account, it takes well-meaning entities an enormous effort to recall payments. There are kill switches installed and providers like SWIFT have GPI which can potentially stop a payment. There are some victory stories of monies being recovered and the unwitting remitter made whole. But there are many who lose the money to malicious actors. God save you if this payment goes cross border. I am an advocate of slower payments ! Enough time to check and recheck payment instructions before moving money. So, happy to see this now coming in a regulation. Other countries will follow suit for sure. UK payments could be delayed up to three days to prevent fraud This draft regulation would act as an amendment to the 2017 Payment Services Regulations, which requires PSPs must execute a payment within a maximum time limit. This move comes after findings that UK bank fraud losses topped £1 billion last year. Authorised Push Payment (APP) scams take up a large part of this cost, with APP reimbursement legislation coming into effect on 7 October from the Payment Systems Regulator (PSR). The PSR recently confirmed it would be cutting the reimbursement limit of this legislation to £85,000. https://lnkd.in/gDMEtYKk Thoughts ?

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