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Singapore’s fintech investment, the rise in AML fines and more on Wirecard in this week’s news roundup

Wirecard continues to show flaws in financial crime investagtion processes and Singpoares new S$250 million investment in fintech all in this weeks news roudup.

Antonis Melis
August 14, 2020

The Financial Sector Technology and Innovation Scheme in Singapore will see a mass investment of S$250 million over the next three years as the country seeks to grow technology and innovation in the financial sector.

The Wirecard scandal continues to show flaws in the way Germany’s Financial Investigation Unit operates, as they failed to report multiple reports before the scandal broke loose.

A new report reveals that the total value of compliance fines issued in the first six months of this year has surpassed the entirety of last year’s totals, despite the number of fines currently still fewer than that of 2019.

Find out more on these stories below.

MAS commits S$250 million to drive innovation and build fintech talent pipeline

The Monetary Authority of Singapore (MAS) announced that it will commit S$250 million over the next three years under the enhanced Financial Sector Technology and Innovation Scheme (FSTI 2.0) to accelerate technology and innovation-driven growth in the financial sector.

MAS is also looking into strengthening the adoption of Artificial Intelligence (AI) within the financial industry and will raise the maximum funding for all qualifying AI projects under the Artificial Intelligence and Data Analytics (AIDA) Grant from S$1 million to S$1.5 million, to provide greater impetus for financial institutions to implement innovative AI solutions.

In addition, MAS will introduce a new AIDA-Lite track, providing half the funding quantum of the AIDA track. With AIDA-Lite, financial institutions will be able to obtain funding support to adopt proven AI solutions to enhance their operations.

Often businesses struggle to find resources to transform their compliance systems. With the help of the MAS investment, institutions across Singapore will be better prepared to upgrade their current systems to match that of international standards.

2020 AML fine values surpass 2019 figures

According to Duff & Phelps’s latest Global Enforcement Review, the first half of 2020 saw a rise in anti-money laundering fine values globally totalling $706m. This trumps 2019’s full-year-total of $444m.

The report also highlights the four key AML failings from 2015-2020 that regulators across the world have consistently identified through the fines they imposed:

• Customer due diligence (115 cases)

• AML management (109 cases)

• Suspicious activity monitoring (82 cases)

• Compliance monitoring and oversight (62 cases)

AML management has been the most common compliance failure this year, and when the 6AMLD comes into effect later this year for Europe, it could become more common next year as institutions continue to struggle to keep up with regulations.

Germany's anti-money laundering unit withheld incriminating Wirecard warnings

Germanys Financial Intelligence Unit (FIU) reportedly received a total of around 1,000 reports in connection with Wirecard, 97 of which were found to potentially offer information related to the Wirecard allegations. However, it only forwarded a fraction of them to the Bavarian state police and the responsible public prosecutor's office in Munich, according to the reports.

A spokesman for the Munich public prosecutor said that "only two reports from the FIU were received" before June 2020, both of which had triggered investigations.

The Financial Intelligence Unit (FIU) has repeatedly been under fire by police for delaying or withholding money laundering reports, and other politicians calling the FIU a “security time bomb” further saying that "it urgently needs to be clarified whether it withheld information that would have allowed the criminal investigators in Bavaria to recognize the scandal earlier."

The Wirecard scandal has shown us that there are many flaws in the fight against financial crime. Institutions are constantly battling the fear of fines from regulators, while intelligence units battle incompetence or perhaps overwhelm.

In order to overcome these issues all parties involved must tackle financial crime with the same sense of urgency that is instilled into financial institutions.

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