Caleb Hawkins, head of our compliance and legal desks, speaks to Dev Odedra, Independent AML Expert & Writer.
Throughout this ‘Compliance During Covid-19’ series, Caleb interviews a number of compliance professionals and experts around the market to get their insight around the compliance market during Covid-19.
In Episode 3, Caleb speaks with Dev Odedra - Independant AML Expert & Writer. Dev previously worked as an AML SME for DB, Barclays, HSBC & Santander.
Despite the government initiatives of financial packages, this situation has the potential for a much greater impact than the 2008 financial crisis as more and more businesses face liquidity problems, job losses for individuals and uncertainty on the time it will take businesses and markets to rebound. The difference in this case is that it is not only a global credit problem, it is a societal, commerce (e.g. movement of goods) and political problem also, which may be made worse depending on the time it takes to reduce the infection rate and some level of normality to return, even with the current government financial injections.
This may be me personally from what I am seeing but I have a definitely seen a higher number of 'Senior Manager'/'Head of’ roles advertised in the AML and Compliance space in the last month in the UK - it is difficult to say with certainty if it is linked to the COVID-19 situation though.
Although I haven’t focussed on this element much, I am aware that that following a statement by ESMA that they do not expect regulators to prioritise SFTR reporting obligations, the FCA aligned itself with the message and stated they would not prioritise supervision of the reporting requirements until at least early/mid-July 2020. I expect other supervisory requirements, such as regulatory visits etc. to also be non-priority activity, with the expectation of financial institutions to continue focusing on core activities.
Given the source of the virus is believed to have been from wildlife, if there isn’t then there certainly should be extra focus on AMLD6 - namely, the Directive names 22 offences categorised as ‘criminal activity', one of them being ‘Environmental Crime’ [Article 2,1.(l)] which I understand includes the protection of wildlife. In my view, the trade in wildlife in general for both food and medicinal use requires both consideration and discussion on effective regulation because to ban it would only drive it underground.
It should certainly be an increasingly hot topic for FATF. In November 2019, FATF stated they had made it a priority to help countries go after the money involved in the illegal wildlife trade and as recently as February 2020, they had combatted the laundering of proceeds of the illegal wildlife trade as one of its other strategic initiatives.
Outside of this, another area I see this affecting is e-KYC, many regulators (e.g. FCA in the UK and AUSTRAC in Australia) have issued press releases informing financial institutions on consideration to use tools such as video calls and ’selfies’ given face-to-face interaction may not currently be possible. In my view, remote onboarding may always be prone to fraud therefore further focus/tools that could be used in this space would be of benefit to financial institutions.
Some peers I have spoken to, working in compliance, who had secured roles pre-UK lockdown have seen no changes (e.g. no removal of role or no change in start date) since the situation has unfolded. They have been informed that their employment will press ahead as normal with working from home upon starting.
From a compliance perspective, what I found (in one firm at least) recently was that as well as remote training, other areas of the business were more open to talking. Whereas the front line / sales, may typically have not sought out the compliance team unless required, it was noted that they did spend more time talking and understanding risk and compliance. This can be particularly beneficial for the longer term, it builds a stronger relationship with those at the forefront able to highlight risks and keeps the compliance function relevant - especially at a time where both business and compliance are facing new risks and a new way of working.