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Innovation to combat money laundering – Industry roundup: 31 May

RBI raises digital payments awareness while aiming to reduce cybersecurity risks

With the growing popularity of digital payments, the Reserve Bank of India (RBI) stated that their main focus is to raise awareness of digital payments and to expand the scope of the payment systems nationwide.

RBI is expected to implement a geo-tagging framework that provides users with the exact location of existing payment touchpoints and facilitates the implementation of targeted literacy programs and intervention strategies. The central bank reportedly deployed UPI123Pay promoting digital activation of more than 40 million feature phone users in the country. RBI said in its annual report that the potential to connect India's payment system to other jurisdictions, will improve its cross-border payment arrangements, including remittances.

The central bank said that the increased use of technology has raised concerns about cybersecurity with the emerging risks in the fintech sector. Additionally, big Tech's involvement in the banking, financial services and insurance (BFSI) segments also poses systemic risk, stated RBI, adding that the central bank mitigates such risk through careful technology and framework selection.

HSBC Bangladesh unveils instant payment collection solution

Hongkong and Shanghai Banking Corporation Limited (HSBC) in Bangladesh has recently launched Instant (real-time) Collection feature.  According to the press release, the bank continues to focus on continuous innovation by the addition of a real-time collection capability that is expected to significantly improve the customer experience and make banking operations easier, secure and efficient.

The Instant (Real Time) Collection was reportedly developed with the support from the National Payment Switch of Bangladesh (NPSB), which is backed by the country’s central bank. Reports indicate that NPSB is an electronic platform aimed at achieving real-time interoperability between scheduled banks. With the launch of this product, HSBC Bangladesh's corporate and retail customers should be able to receive immediate funds from any other local NPSB IBFT (Internet Banking Fund Transfer) participating bank. It is said that this will further enhance the HSBC’s digital transformation and the simplification of collection services for their clients. Customers such as Bureau Veritas (Bangladesh) Private Limited and Continental Traders (Bangladesh) Limited claim they are benefiting from this product rollout currently.

Kevin Green, Country Head of Wholesale Banking, HSBC Bangladesh, commented that their “digital transformation brings along a host of benefits for our customers and their supply chains. The ability to receive payments in real-time will reduce administrative time in Accounts Receivable reconciliation and help our customers to increase productivity and manage their cash flow more efficiently.” 

Effective anti-money laundering techniques via Fintel Alliance and ANZ

ANZ Bank New Zealand Limited (ANZ), has been recognized for working with Australian Transaction Reports and Analysis Centre (AUSTRAC), to combat serious and organised criminal groups. As part of the AUSTRAC-led Fintel Alliance, ANZ's financial crime team has launched a project to share complex algorithms to help detect money laundering activity across Australia's ATM network.

Reports indicate that the project led to targeted operations in 2020 and 2021, including significant law enforcement outcomes across Australia and seizure of cash, drugs, firearms, luxury cars, and encrypted communication devices. Furthermore, the International Compliance Association has awarded the Fintel Alliance the Best Collaboration of the Year Award for efforts to identify and disrupt organized crime syndicates through these activities.

ANZ has reportedly made significant investments in improving financial crime data and analysis capabilities, including the development and deployment of dynamic algorithms that help detect and prevent criminal activity quickly and accurately. The Fintel Alliance is an AUSTRAC-led initiative in which government and private sector organizations work together to develop shared intelligence and work with innovative solutions to detect, thwart and prevent serious crime. Yesterday’s CTMfile report Westpac NZ strengthens liquidity risk management highlights improved liquidity risk management processes.

US Treasury to drive AI Innovation to combat money laundering

According to a strategic document by the US Treasury Department released last week, the US Treasury will focus more heavily on technical solutions to the country's growing and constantly changing money laundering challenges.

Since 2020, the Treasury has been focused on the regulatory and operational aspects of the fight against money laundering and terrorist financing. This year, more effort has been placed on technological innovations such as developing a digital currency, virtual assets, and establishing secure safe harbors for AI-driven products that assist in the detection of money laundering and terrorism financing.

Data analytics and AI are increasingly more important in providing key information to legislators about illicit financial threats and vulnerabilities. According to the Treasury’s strategy document, the technology should enable authorities the ability to examine and integrate vast amounts of data generated during financial crime investigations and analysis.

The US Treasury has faced scrutiny from regulators over its anti-money laundering efforts amid heightened sanctions on Russia, in addition to the rising financial crimes allegedly caused by the rise in cryptocurrencies. The strategy has been set to a two-year implementation timeline due to these concerns.

Bank of Thailand (BoT) slowing the progress on CBDC rollout

The Bank of Thailand (BoT) has reportedly paused progression for a Central Bank Digital Currency (CBDC) due to existing online payment options.

Reports indicate that Thai central bank governor, Sethaput Suthiwartnarueput, is satisfied with the existing online payment methods and various QR code payments options.

Thailand government is actively promoting mobile technology in a campaign called "Thailand 4.0". However, many of the new QR code-based solutions have not been successful due to the limited or lack of smartphone use by the elderly population.

Regarding crypto, the Bangkok Post reported that the Thailand government plans to exempt crypto trading from 7% VAT by the end of 2023. All transfers of cryptocurrencies and digital assets on approved digital asset exchanges will be tax exempt until December 31, 2023.

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