As 2017 begins, the world holds its breath ahead of the impending major changes about to shake up the landscape of politics and international relations.
We live in highly unpredictable times, with pollsters and pundits seemingly wrong in their projections at every turn. However, in order to function it is nonetheless necessary for professionals and businesses to attempt to foresee likely economic and legal developments. This is especially true as regards the fight against financial crime for which, in this era of globalisation, cross-border cooperation is crucial.
In November 2016, the Financial Crime Conference was hosted by UK regulator the Financial Conduct Authority (FCA) in London, where experts made fairly run-of-the-mill and predictable assessments; namely that financial crime is a global problem, which therefore requires a global solution. However, does the new world order engendered by Brexit and Donald Trump, and any potential future unexpected developments across Europe and elsewhere, suggest a step back in this regard?
After the UK’s decision last June to leave the European Union (EU), there was widespread concern that Brexit signified that Britain was retiring from the global stage, and would therefore reduce efforts in international initiatives to tackle financial crime. However, many now feel that this immediate response was something of an overreaction, and the initial sense of doom has since been replaced with one simply of confusion.
Despite the referendum results, there are signs that the UK government intends to continue in its efforts to fight global financial crime. For example, the EU’s Fourth Anti- Money Laundering (AML) Directive is set to become part of domestic legislation by June this year.
Although the UK will still be a member of the EU at this point – and what happens after withdrawal cannot be assumed with certainty – the UK has already taken steps to exceed the Directive’s requirements. For example, the Persons with Significant Control (PSC) Register requires UK companies to publicly register the names of their ultimate beneficial owners, as well as the nature and size of their holdings.
Maintaining the crusade
In addition to these measures, in a speech given last September to the Cambridge Symposium on Economic Crime the Attorney General, Jeremy Wright, provided additional indications that the UK would maintain its robust efforts. He discussed several possible innovations, including the establishment of an International Anti-Corruption Coordination Centre, and a Global Forum for Asset Recovery, where asset recovery advisors and specialist prosecutors would aid overseas agencies.
Likely future policies can also be surmised by the legislative framework that the UK government intends to adopt to ease the withdrawal process. The Great Repeal Bill outlined last October by prime minister Theresa May that will accompany the UK’s departure is designed to bypass the legal panic that would be caused by an immediate repudiation of all EU laws two years after the triggering of Article 50.
Instead, EU laws will be directly transferred into domestic legislation, where they can then be amended or repealed at the incumbent government’s volition. This initiative is similar to the government’s previous decision in 2013 to opt out of all 133 pre-Lisbon Treaty EU policing and criminal justice measures, but to opt back into those considered beneficial to the UK. One of the measures that the UK decided to retain in this instance was the European Arrest Warrant, a measure which necessitates transnational cooperation and mutual trust.
While a ‘soft’ Brexit would likely have a minimal effect on factors such as the ability for countries to share information between themselves, it is the ‘harder’ end of the spectrum that makes people uneasy. Associated with a more populist and isolationist agenda, many feel that a more aggressive withdrawal policy may obstruct cooperative action to deal with financial crime.
The rise of populist and isolationist ideals are also causing anxiety across the Atlantic after the recent momentous inauguration of US president Donald Trump. The risks of Brexit on financial crime are dwarfed by the equivocal and contradictory statements of the new president in regards to policy. The leader of the free world is now a man who has described the Foreign Corrupt Practices Act (FCPA) as a ‘horrible law’, and whose overriding foreign policy appears to be a desire to pull back behind walls.
However, Trump has nonetheless made pledges that would require a less ardently isolationist stance to fulfil. For example, his promise to defeat ISIS would require, not only military measures, but an internationally aided crackdown on the money laundering schemes which finance terrorist activities. Whether this will be enough of an incentive to reverse his insular-looking policies is unknowable at this stage, but the Organisation for Economic Cooperation and Development’s (OECD) anti-bribery convention and sanctions based on unfavourable peer review are unlikely to be sufficient to competently combat financial crime.
Both Brexit and Donald Trump have paved the way for a new era of unconventional and unpredictable politics. In this light, expert forecasts have lost much credibility, and could only ever take us so far in any case. Where we can certain is that we must remain rational, optimistic, and trust that the desire for justice to be served will fuel international cooperation and keep initiatives intact.
In a world where connectivity is on the rise and transportation costs have been falling, it’s a paradox that over the last decade there’s been a decline in trade as a share of economic activity. At the same time, there has been a significant slowdown in technology investment across the trade finance industry – the only exception being the technology needed to support regulatory compliance and risk management.
With just over 90 days to go before MiFID II must be implemented, Laura Glynn, Fenergo Director of Regulatory Compliance, assesses the impact that this wide-ranging regulation is set to have on client onboarding and lifecycle management processes for banks in Europe and all over the world.
Only one in six US mid-sized firms are prepared for disruption, despite 80% saying they have already or expect to experience it in the next three years.
Every organisation needs to prepare for GDPR, not just those in Britain, argues Nicola Pero, chief technology officer at Engage Hub.