Securefact Round Ups are published once a month and feature summaries and opinions from our in-house experts on select handpicked articles that caught their eyes in the areas of Fintech, Compliance, Know Your Customer, Secured Lending, AML, and Fraud.

NDP propose task force on fraud and money-laundering in Metro Vancouver housing market

The rising prices of real estate properties in Canada, particularly Vancouver, and the belief among politicians that it’s largely due to speculative investment from offshore money may provide some explanation for launching a task force of experts to investigate fraud, money laundering and tax evasion proposed by B.C.’s NDP leader, John Horgan. In light of the Panama Papers, many people may assume that investments in real estate via offshore money will inevitably include the proceeds of crime. While this is not inconceivable, the emphasis should be on implementing a well-regulated real estate industry in Canada, which may decrease the temptation for foreign investors to go to less well-regulated provinces.

It seems obvious that foreign investors will continue to choose real estate as investment vehicles so long as regulatory standards and supervision is deficient. However, it is important to note that very large foreign investors contribute positively to the Canadian economy directly or indirectly. They create jobs for real estate agencies, lawyers, accountants and developers among others.

Perhaps it’s time to address the root cause of the problem with a focus on a well-regulated real estate industry as well as a robust criminal justice system to disincentives illegal activities in which criminals and others contrive to take advantage of weaknesses and vulnerabilities in the systems throughout the chain of responsibility, from the level of an individual to the governing body. Moreover, real estate agencies, in particular, will need to understand the importance and utility of know your customer (KYC), where risk have to be assessed and mitigated more accurately and carefully in relation to their business models. Otherwise, they may suffer reputational risk and regulatory fines.

Read full article here.

Sector-wide ‘sweep’: Money service firms say banks are giving them the boot

In light of the disruptive and innovative financial technology providers coupled with tougher regulatory environment has made banks to think about compliance risk management in a different way. Those innovative banking offerings such as payment transfers, foreign exchange and currency hedging (known as ‘MSB’ Money Services Business) are creating services at a substantially lower prices than banks. More importantly, regulators are continuing to expand their scope and focus on areas such as anti money laundering and third party risk management among others. Even though banks have tremendous talent and state of the art risk models, they have been slow in moving away from the traditional model.

With this view in mind, banks need to design and adopt a more modern risk management framework to make it more effective and resilient to changes over time. They should also develop specific guidelines for MSBs and engage in dialogues with peers in the industry, regulators and compliance experts.  Further, banks should consider alternative options such as establishing partnerships with MSBs and leverage on MSBs proprietary technologies and digital talent to turn innovative ideas into customer solutions that is affordable to consumers.

For example, JPMorgan Chase recently formed a partnership with OnDeck, a leading small-business lending platform that allows Chase to leverage on OnDeck’s sophisticated credit model which will potentially give the bank an advantage over others. In summary, implementing a modern risk model that is designed for the current environment, embrace technologies and partnership will outperform their slower moving peers in the industry.

Read full article here.

Banks Turn to Software to Ease Stress as Regulations Tighten Around the Globe

Banks and financial services firms in Canada concerned about regulatory compliance must tighten checks, controls and more effectively police customer data. Recent amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its associated Regulations, the fallout from the Panama Papers and a $1.1 million dollar fine to a Canadian bank are all contributing factors that are leading executives to look at technology to help them comply with AML related regulatory requirements.

A key consideration, especially for Canadian financial services firms, is reviewing their compliance policies, processes and potential exposure given changes to regulations by FINTRAC. We think it’s important that people and processes come first and from there look at what technologies exist that can simplify, standardize and automate these processes. Working with companies that provide advisory services and regulatory technology software, such as Securefact, help financial services firms better understand the role people, processes and technology can play in order to have a compliance program that fits with the company and the various regulatory regimes they are required to follow.

Read full article here.

WATCH DEMO VIDEOSee how Securefact’s Attestanet helps Banks and Credit Unions digital onboard clients & comply with PCMLTFA regulations 

Perfection is Critical to Maintaining Priority Over Judgment Creditors

In a study of a recent case taken to the Ontario superior court, McMillan LLP sheds light on the criticality for secured lenders to protect themselves from undue risk. This case highlights the serious financial impact that a seemingly small oversight in knowing their customer can have on a business’ bottom line.

In a world where banks and financial institutions are seeking to reduce risk exposure and protect against potential losses, we are once again shown the importance of a well executed and monitored loan securitization program.

In addition to a robust know-your-customer regime helping to inform lending decisions at the front-end, we are now seeing customers expressing concern over knowing these clients throughout their life cycle. By understanding where your institution’s loan stands within a debtor’s priority and developing strong understandings of their other creditors, FIs can better protect against and prepare for risk and potential financial loss.

If you want to discuss how to protect your own loan portfolio against these same kinds of losses, we would be happy to chat.

Read full article here.


Various members of the Securefact team contributed to this post.

The Payments Canada Summit 2017

Securefact is proud to be a silver sponsor at The Payments Canada Summit 2017 taking place this Tuesday through to Friday in Toronto. Come visit us in booth #34 and discuss the five ways you can turn compliance obligations into your competitive advantage. 5 Ways to...