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Insights and trends shaping the future of compiliance

Explore spektr, insights and trends shaping compliance's future.

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spektr – Blog

Just a couple of weeks ago, we proudly announced spektr’s new ISO 42001 certification for responsible AI management, awarded by 

 – the world’s first certification body accredited to issue ISO 42001 certifications! 

Given this achievement, we wanted to take a moment to dive into what this certification means for spektr’s operations, as well as our clients. To highlight the significance of this milestone, we spoke with one of the driving forces behind spektr’s certification: 

, our Head of Business Analysis, who played an instrumental role in achieving this success.

Meeting the Highest Ethical and Operational Standards

AI adoption is exponentially increasing, with 72% of organizations reporting regular use of AI in 2024 alone, according to a 

. However, whilst AI can, and does, bring tremendous value, it does not come without risks. That’s where standards like ISO 42001 become pivotal for showcasing strong AI governance; it was created to provide a standardized foundation for organizations handling AI-related risks and controlling opportunities associated with these quickly developing technologies. This is what Grace had to say about achieving this latest ISO certification: 

Achieving ISO 42001 certification underscores spektr's dedication to responsible AI management. This certification ensures that our AI-driven solutions are developed, deployed, and monitored with the highest standards of accuracy and quality. This certification serves as a cornerstone of our commitment to transparency, quality, and ethical AI practices that align with our clients' and regulatory expectations.

So, what does ISO 42001 certification actually entail? Here are the key facets – which, in total, include 

 covering the AI system life cycle management, data management, and responsible use of AI systems:

For us, this means that our spektrAI setup (which we launched just a couple months ago) is now fully conforming to this benchmark International Standard – which should ultimately be a non-negotiable for any compliance tool within the marketplace. 

ISO 42001 certification is less about spektr, and more about instilling confidence in our clients as the primary audience of this third-party report. Being able to continuously prove that spektrAI can be leveraged to its fullest potential, whilst still complying with stringent security requirements, is the best outcome of this certification. As Grace rightly mentions: 

For our clients, ISO 42001 is more than a certification; it’s a promise. It assures that every AI-driven solution on our risk platform is crafted with precision, monitored with diligence, and improved continuously. This commitment empowers our clients to trust in the reliability and integrity of our products as they make critical decisions.

, Chief Executive Officer at Mastermind, the accredited certification body partner selected by spektr, emphasized the achievement:

Since our accreditation in July, we have had the privilege of working with some of the first organizations to adopt ISO 42001. Although this International Standard has been published for less than a year, we are already seeing a clear trend: organizations like spektr are elevating their existing management systems, originally built for ISO 27001, to also meet ISO 42001 requirements. 

The team at spektr embedded secure engineering and responsible AI principles into their products from the beginning, which made expanding their governance activities a natural progression.

 is not the end goal for spektr! We plan to continuously improve our product, ensuring that we are consistently able to meet the highest of expectations maintained by our clients– something they deserve when using our solution. As Grace remarks: 

Looking ahead, ISO 42001 certification is only the beginning of our journey towards responsible AI. With this management system in place, spektr is well-positioned to navigate the dynamic AI landscape confidently and responsibly. Our clients can expect ongoing advancements in risk management, driven by AI solutions that are not only innovative but also governed by stringent ethical and quality standards.

 for collaborating in order to make this achievement a reality! 

If you read this and thought, ‘Hey, I’d like to learn more about a platform that offers all of this’, feel free to 

 with one of our in-house pros! We’d love to get you up to speed with spektr’s industry-leading solution.

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We explore what spektr's ISO 42001 certification means for spektrAI & our clients, including responsible AI management and meeting the highest ethical standards

spektr’s ISO 42001 Certification: Responsible AI Management 

What are the biggest and most persistent challenges that compliance professionals in the fintech market are facing today? We got the opportunity to interview someone who knows the industry inside and out: 

. Lauren is a Senior Recruitment Consultant, exclusively working with risk and compliance, at QED Legal. Her years of experience have amounted to an intricate understanding of the relationship between financial institutions and compliance – which is why we teamed up with her to talk about compliance, fintech, and solutions such as spektr. 

Lauren has firsthand witnessed the struggles, trends, and opportunities that define the industry. In such a fast-paced and highly regulated environment, compliance professionals are under immense pressure to meet a host of regulatory requirements, maintain data security, all whilst attempting to be as cost-effective as possible. 

How have the demands on compliance professionals changed in the last few years?

The last few years have seen such a gigantic increase in compliance regulations, from the 2018 Data Protection Act to the EU Anti Money Laundering Authority (AMLA) being enforced last year. Compliance leaders and professionals are having to continuously adapt to a vast, varied and intricate global regulatory environment. 

This means compliance roles have expanded beyond the traditional regulatory alignment; professionals must now be experts in data privacy, money laundering, whistle-blowing, fraud, cyber security and more. Compliance functions can no longer be one person, they must be a team of experts who know their niche inside out. 

On top of this, pressures aren't merely best practice anymore, but preventing extremely high fines and reputational risk, having to pre-emptively address compliance issues before they even arise.

How do you specifically think that expectations of compliance professionals in the fintech market have changed?

I think the countless global scandals across multiple FinTech's have really helped highlight just how important compliance is in the FinTech space. The Wirecard scandal going to court and the FTX collapse in 2022 - makes you see just how much compliance functions need to change.

All the regulatory changes and increased global scandals has really increased expectations of compliance professionals, having to evolve drastically, keeping up with FinTechs rapid growth and complexity of their offerings. They're expected to act as strategic partners, whilst fostering innovation and keeping regulatory risks in check. 

Often operating in gray regulatory areas, they need compliance professionals who can implement agile compliance frameworks and scalable solutions to grow and keep pace with innovation. FinTechs need incredible investment, not only in finance, but knowledge and technologies to automate compliance functions.

Fintech’s Toughest Compliance Challenges

Who better to ask about challenges in the industry than someone who knows it like the back of her hand? 

Are there any particular challenges that you have seen compliance professionals persistently struggling with?

I think the biggest element is balancing regulations and effective compliance with the pace of growth that a lot of fintechs face. They're constantly evolving, having to offer new innovative products to stay ahead of the competition, can really cause issues in compliance. Compliance teams often find themselves limited by a lack of resources and legacy systems, having to push senior leaders to understand why they need to be investing in compliance.

An overarching theme that covers all compliance challenges, is the need to really embed a culture of compliance across the business, ensuring that all teams, not just compliance, are aligned with the regulatory goals of the business. It's a never-ending task, and honestly the number 1 reason people leave their roles.

The Two Cs: Compliance and Configurability

When relying on any kind of tech to help with compliance-related activities, flexibility is paramount. Each compliance process has its own unique complexities, and solutions should be adaptable to these specific needs, rather than forcing organizations into rigid, one-size-fits-all frameworks. That’s why compliance depends on configurable solutions, and spektr goes so far as to offer 

What do you realistically think can help alleviate some of these key challenges you mention? 

I think the biggest thing that needs to be looked at is solutions that are adaptable and can grow with your business as you continue to evolve and scale. One of the biggest issues compliance functions face is old outdated tools, or tools that just don't suit their business or their team.

What do you think the future of compliance in fintech will look like? 

With the rise of AI and smart technology that works around you and your needs, I think a seamless integration of technology automation and human expertise will be the key to the future of compliance. Automation will handle repetitive tasks and real-time monitoring, whilst specialised technology can provide deep insights and adaptable frameworks. 

However, the technology needs to work fluidly with compliance teams; AI and new smart tech can't work on it's own without ethical flaws, the symbiosis between tech and humans will be essential.

 for taking the time to give her valuable observations in this exclusive interview! Her insights have highlighted both the ongoing challenges, as well as the promising role of configurable compliance tech that is highly adaptable to distinct organizational requirements (such as spektr).

Curious how spektr can reshape your compliance processes? 

 today and see firsthand how hyper-configurability can save you time, reduce risk, and automate your compliance process.

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What are the biggest hurdles in modern compliance, and what is the best solution? We interview industry expert, Lauren Eager, to get the answers to these questions, talking specifically about effective compliance in the fintech space. 

The Biggest Hurdles in Modern Compliance: Interview with an Industry Expert

What's been occupying our compliance attention lately? Here's a rundown of notable updates and regulatory happenings from the past weeks.

Starling Bank Fined £29M for "Shockingly Lax" AML Screening Failures

The Financial Conduct Authority (FCA) has 

 for serious lapses in its anti-money laundering (AML) and financial sanctions screening processes. Despite prior warnings from a 2021 review, the bank continued to open over 54,000 accounts for high-risk customers while using an automated screening system that failed to properly monitor those subject to financial sanctions. The FCA stated that Starling’s failures left the financial system vulnerable to criminal exploitation. The bank has since taken steps to address the issues and improve its financial crime controls, earning a reduced penalty. Starling has expressed regret and issued an apology for the oversight.

Axiom Bank Faces Enforcement Action from OCC for BSA/AML Failures

The Office of the Comptroller of the Currency (OCC) has taken 

 in Florida for its failure to adequately comply with the Bank Secrecy Act (BSA), anti-money laundering (AML) regulations, and poor risk management practices. The enforcement order requires Axiom to update its BSA/AML action plan, strengthen internal controls, and enhance its risk management strategies. This comes in the wake of TD Bank's recent $3 billion fine for similar failures, signaling increased regulatory scrutiny on financial institutions’ compliance with AML laws.

Swift Launches AI-Powered Real-Time Fraud Detection for Banks

, designed to help banks detect and prevent financial crime in real-time. The service, set to be available in January 2025, builds on Swift’s existing Payment Controls Service and leverages anonymized transaction data from its vast network to identify suspicious activities. The rollout follows a successful pilot with financial institutions across multiple regions. Swift has also been collaborating with member banks to explore privacy-preserving technologies, aiming to enhance fraud detection while maintaining data confidentiality. This initiative represents a significant step in bolstering the global banking sector’s defenses against increasingly sophisticated fraud tactics.

UK Treasury Proposes 72-Hour Payment Delay to Combat Fraud

The UK Treasury has introduced a new draft regulation allowing banks to 

 to investigate suspected fraud. The amendment to the 2017 Payment Services Regulations gives payment service providers the power to temporarily halt transactions when fraud is suspected, provided they promptly inform the payer and outline the next steps. This move comes in response to the UK’s escalating fraud crisis, with bank fraud losses surpassing £1 billion last year. The regulation aims to reduce the impact of scams, particularly Authorised Push Payment (APP) fraud, which has caused significant financial harm to UK consumers.

EBA Clarifies Procedures for Classifying Asset-Referenced Tokens and E-Money Tokens as Significant

The European Banking Authority (EBA) has 

 on the procedural aspects of assessing asset-referenced tokens (ARTs) and e-money tokens (EMTs) for significance, as outlined in the Markets in Crypto Assets Regulation (MiCAR). This framework includes the transfer of supervisory responsibilities from national competent authorities to the EBA, the establishment of supervisory colleges, and the harmonization of reporting obligations and timelines. The Decision provides a clear roadmap for managing the significance classification process and smooth transition of oversight duties, ensuring effective supervision of significant ARTs (s-ARTs) and significant EMTs (s-EMTs). The EBA will supervise s-ART issuers directly and exercise dual supervision for s-EMTs in coordination with national authorities.

Germany to Develop European Digital Identity Wallet for Secure and Convenient ID Management

The German Government has announced plans to 

 that will allow citizens to securely store their national ID cards and other official documents on a smartphone app. This move aligns with the European Union’s mandate requiring all member states to implement a standardized European Digital Identity Wallet (EUDI) by 2027. The EUDI wallet will enable users to verify their identity, prove their age, and sign documents electronically across the EU’s 27 countries. By offering a secure and convenient alternative to physical ID cards, the EUDI wallet aims to simplify processes like job applications and online banking, while safeguarding privacy and promoting digital inclusion. The initiative is being developed in collaboration with the Federal Agency for Disruptive Innovation and the Federal Office of Information Security.

At spektr, we understand that keeping up with regulatory changes and maintaining compliance can feel overwhelming. 

about your compliance needs and how we can customize solutions to match your unique business requirements! 

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Keep up with the latest in financial compliance. Here's a brief look at key updates, from major AML lapses to AI-powered fraud detection. 

This Week in Compliance Vol. 9

Europe is on the brink of a new era of digital identification with the rollout of eIDAS 2.0 pending. This will inevitably have significant effects on the ways that citizens, businesses, and governments digitally interact. The eIDAS 2.O framework aims to introduce interoperable and secure digital identities across the EU, providing users with more control over their personal data. 

As such, this guide has been built to break down the components of eIDAS 2.0, offering a comprehensive overview of what this regulatory framework will mean for citizens, public administrations, and private companies. The guide will also unpack the regulatory and social significance of eIDAS 2.0, looking into its potential impacts in the coming years. 

 was published on the 30th of April 2024, entering into force on the 20th of May. This means that EU member states will be required to provide 

 to citizens shortly after the Implementing Acts have been adopted, with execution expected by 2026. The Implementing Acts will offer specifications, procedures, and standards for ensuring uniform implementation of the European Digital Identity Wallet. eIDAS 2.0 is an acronym for Electronic Identification, Authentication, and Trust Services 2.0. This update aims to offer a standardized framework for digital identities and trust services in order to lay the foundation for more streamlines and secure cross-border transactions. 

 "on electronic identification and trust services for electronic transactions in the internal market" (the “eIDAS Regulation”). The amendment pertains to expanding the scope of the original eIDAS Regulation to include a framework for the European Digital Identity Wallet, focusing on two key aspects: trust and interoperability. This amendment aims to introduce a secure, user-controlled digital identity wallet that citizens, residents, and businesses can use to access both public and private digital services across the EU by 2026. We will break down the some of the key facets of eIDAS 2.0 in subsequent sections:

eIDAS 2.0 is expected to bring a plethora of benefits for citizens, listed below. 

Opening a new bank account or submitting a job application can involve lengthy and complex processes. The EU Digital Identity Wallet aims to simplify access to public and private services, reducing the time and administrative effort needed. With a single click, users will be able to securely verify their identity or share important documents, such as a university diploma, making interactions more efficient and straightforward.

You remain in control of your data, with the ability to decide what to share and limit it to only what is necessary. For instance, you can share your age without disclosing your full date of birth, or confirm your driver’s license validity without revealing your address. 

This approach, known as selective disclosure of attributes, helps minimize the risk of your data being used for profiling. In certain cases, you will have the option to verify your identity completely anonymously, providing an additional layer of privacy and security.

eIDAS 2.0 aims to bring several benefits for public administrations, broken down subsequently. 

EU Digital Identity Wallets will offer public authorities cybersecurity-certified solutions, rigorously tested across Europe, to ensure safety and privacy in all transactions. These wallets are supported by robust technical standards, providing a high level of trust and security in every exchange.

The EU Digital Identity Wallets will expand the availability of digital public services, as all citizens will have access to electronic identification upon their launch and adoption. Their broad range of private sector applications will further encourage widespread use, creating a large user base that may drive greater engagement with digital public service offerings.

The adoption of EU Digital Identity Wallets will strengthen fraud prevention efforts. With every citizen and resident having access to a secure and private form of digital identification, identity fraud and impersonation will become significantly more challenging.

Lastly, eIDAS 2.0 will bring advantages to private companies in a myriad of ways. Here’s how:

Verifying customer identities can be expensive, but EU Digital Identity Wallets will offer a secure and reliable way to authenticate users across the entire EU. This will enable businesses to conduct a wider range of online transactions more efficiently, potentially increasing sales whilst lowering the cost of each verification.

With EU Digital Identity Wallets being secure and compliant with cybersecurity standards, businesses will be able to handle more sensitive customer transactions entirely online. This opens up new opportunities for digital services and expands the scope of secure business operations.

EU Digital Identity Wallets will serve as a neutral public sector authentication solution, removing the need to rely on private third-party providers. This reduces the risk of user data being used for profiling or other commercial purposes by external entities.

At the core of eIDAS 2.0 is interoperability, enabling qualified trust service providers (QTSP) and digital identities to be recognized and used across EU member states. Interoperability involves several components in the context of eIDAS 2.0.

Arguably, the cornerstone of eDIAS 2.0 is ensuring that eID systems from each EU member state are recognized and trusted by other member states. This also applies to accessing both public and private services across borders, meaning you can use your national eID anywhere in the EU. 

Interoperability isn’t limited to eIDs functioning across borders, it also includes guaranteeing that all national systems, platforms, and interfaces can effectively communicate with each other and exchange information through trustworthy means. This inevitably includes setting common technical standards, procedures, and formats (which will be outlined in the Implementing Acts). 

Tying together cross-border and technical interoperability, legal interoperability refers to the building of a framework that legally recognizes digital identities and trust services across borders – entailing that once a digital identity or trust service is accepted in one member state, it must be recognized and accepted in all other without the need for further validation. 

The list goes on, but these three points were mentioned simply to elucidate the significant changes made to eIDAS 2.0. 

eIDAS 2.0, particularly through the European Digital Identity Wallet, will significantly streamline processes in the banking and payments sector – two use cases are elaborated on below to give an idea of what this might practically entail. 

eIDAS 2.0 will simplify online transactions by empowering users to authenticate their identity and authorize payments directly within the wallet. This will hopefully not only simplify online transactions, but also make them more secure, as users are able to control which personal details are shared. 

Online identity verification when opening a new bank account 

When opening a new bank account, users will be able to verify their identity via the European Digital Identity (EUDI) Wallet. This removes the need to physically visit a bank or handle multiple documents simultaneously, as the wallet is able to store verified personal identity information and electronic attestations of attributes.

Why is Everyone Talking about eIDAS 2.0 Right Now?

Many experts are arguing that the rollout of eIDAS 2.0 is helping with the democratization of credentials, adding measures of privacy that you wouldn’t otherwise have access to. Combined with the focus on interoperability, this makes the new eIDAS 2.0 framework a strong tool in securing cross-border digital trust. Some also argue that, when it comes to the conduct of business, eIDAS 2.0 brings the focus back into Europe, and away from larger U.S. organizations that typically tend to dominate, signaling more independence. 

eIDAS 2.0 also signifies efforts being made to enhance the accessibility of digital credentials, with each EU member state mandated to provide at least one eID solution for its citizens. This development can be seen as influenced by the concept of self-sovereign identity, whereby users have full control over their personal data and credentials. Whilst eIDAS 2.0 may not fully realize this vision, it marks a clear shift towards greater user control compared to existing eID solutions, emphasizing the principle of user empowerment and sovereignty in digital identity frameworks.

eIDAS 2.0 will facilitate smoother cross-border digital business operations, allowing companies to easily verify identities and provide services across EU markets. However, businesses need reliable, scalable solutions to manage this increased interoperability effectively.

For companies in sectors such as banking, insurance, and telecom, the requirement to adopt digital wallets will create immediate pressure to ensure systems are compliant. However, this mandated change also presents a strategic opportunity to enhance customer engagement, reduce friction in identity verification processes, and offer more seamless, secure transactions.

Under eIDAS 2.0, certain companies, particularly those in highly regulated sectors like finance, telecommunications, and healthcare, will be required to implement the EUDI Wallets. This will pose both a challenge and an opportunity – businesses will need to ensure they meet compliance requirements, while also leveraging these wallets to streamline customer interactions, improve security, and offer more personalized services.

The new framework encourages the use of digital identity solutions that reduce manual identity checks and streamline KYC (Know Your Customer) processes. Businesses investing in compliant, automated digital identity systems can lower operational costs while increasing speed and accuracy in user verification.

As eIDAS 2.0 boosts trust in online transactions, companies that adopt advanced digital identity solutions will unlock new growth opportunities. By leveraging a secure digital identity ecosystem, businesses can expand their reach, attract new customers, and operate confidently in a digitally secure environment.

For businesses that integrate these new digital wallets, there’s potential to turn compliance into a value-added service. Companies that successfully integrate the EUDI Wallets can enhance customer experiences by offering secure, one-click access to services across borders, ensuring convenience while protecting user data.

eIDAS 2.0 enhances security, the complexity of integrating high-level identity verification with existing infrastructures may challenge businesses. Those that invest in adaptable, future-proof identity solutions will be better equipped to prevent fraud and ensure ongoing compliance as the digital landscape evolves.

While some businesses will be required to implement digital wallets, the challenge lies in managing this transition efficiently. Companies will need flexible, scalable solutions that not only comply with eIDAS 2.0 but also integrate smoothly with existing systems, minimizing disruption while maximizing customer satisfaction.

You x spektr: Future-Proofing Your Business

As eIDAS 2.0 unfolds, compliance professionals need to start preparing their organizations for the adoption of the new European Digital Identity Wallet and the integration of trust service providers. That’s where spektr steps in. 

spektr is committed to being at the forefront of eIDAS 2.0 compliance by fully integrating the necessary solutions for onboarding directly into our platform. We help organizations future-proof their approach by ensuring that the moment eIDAS 2.0 goes live, businesses can immediately utilize these solutions.

Our platform already supports a wide range of eID integrations, e.g. MitID and BankID, allowing businesses to decrease risk and increase onboarding conversion rates. As eIDAS 2.0 progresses, we will continue to integrate local digital identity services into onboarding flows, giving our clients immediate access to these tools as they become available. 

Interested in learning more about how spektr can help future-proof your organization in preparation for eIDAS 2.0? 

 with one of our pros. If you’re also just interested in learning more about how your business might be affected by eIDAS 2.0, our in-house legal team can 

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Discover how eIDAS 2.0 enhances digital identity and trust services across the EU, enabling secure cross-border transactions and electronic identification. 

eIDAS 2.0 Guide: The Essentials 

We’re excited to share what feels like our biggest milestone yet. Since launching in February, we’ve listened closely to what compliance teams really need, and we’ve been working behind the scenes to deliver. 

client onboarding, continuous compliance 

—solutions we’ve built after seeing firsthand how rigid processes slow things down in this fast-moving industry. With this update, we’re giving you the flexibility to design compliance processes that fit your business like a glove, making it easier for you to focus on what matters most.

One of the biggest frustrations we’ve heard from professionals in the industry is how one-size-fits-all compliance tools don’t actually fit anyone. Every business is different, and so are your compliance needs. That’s why we’ve made spektr hyper-configurable, giving you control over every step of the process. Whether it’s deciding how often you run KYC checks or adjusting AML reviews based on your risk tolerance, spektr lets you design processes that make sense for your business—to match your operations, regulations, and even your budget.

“spektr’s granularity and testing capabilities were game-changers for us. It’s crucial to show minimal false positives, and spektr’s platform excels in this,” said Adrian Vella, Head of Compliance at Fyorin.

Onboarding: Fast, Customizable, and No-Code

Onboarding new clients is often the first big hurdle in compliance, especially when it involves multiple systems and manual steps. With spektr, you can 

 that suit your business model, without needing to code a single line. Everything is embedded directly into your processes—compliance checks, document verification, and risk assessments—so you can avoid delays and the hassle of switching between tools.

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, you can trust that your onboarding processes are built with the highest security standards in mind.

Continuous Compliance: Real-Time, Event-Based Monitoring

Build processes that cover all your risk and compliance needs, from ongoing monitoring to timely client reviews. Once set up, you can track important changes in real time, so you’re always ahead of potential risks without having to scramble.

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Case Management: All in One Place, No Loose Ends

Sometimes, compliance issues don’t fit into neat, automated processes. That’s why spektr’s 

 pulls together all the tricky, non-standard cases, making sure nothing gets lost or overlooked.

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Here’s how we help you stay on top of things:

Compliance AI: Letting You Stay in Control

With AI being such a hot topic, it’s tempting to think it can handle everything—but in compliance, there are tasks too important to fully automate. That’s why we designed 

 to work the way you want it to. Rather than taking over, spektrAI supports where you need it most. From monitoring negative news to processing documents or checking sanctions, you decide how AI fits into your process. This way, you stay in control, reducing false positives and avoiding missed risks. Whether AI suggests actions or handles specific tasks, the final decision always remains in your hands.

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Your compliance process shouldn’t feel like an obstacle—it should move at your speed, and adapt as your business grows. With spektr, you’re in control of how compliance fits into your process. Whether it’s automating the repetitive tasks or fine-tuning risk assessments to fit your specific needs, spektr helps make compliance simpler and smarter, without taking over.

 and see firsthand how hyper-configurability can save you time, reduce risk, and automate your compliance process.

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With our hyper-configurable solutions for client onboarding, continuous compliance, and case management, you take charge of your compliance processes. Instead of being limited by rigid systems, you can adapt workflows to fit your specific needs.

New to spektr: Client Onboarding and Continuous Compliance, Now Hyper-Configurable

Client Onboarding and Continuous Compliance, Now Hyper-Configurable

Wells Fargo to Revamp AML Practices After Regulatory Directive

 with the Office of the Comptroller of the Currency (OCC) to remedy significant deficiencies within its anti-money laundering (AML) protocols and broader financial crimes risk management framework. This move comes without a financial penalty but resulted in a four percent drop in the bank’s stock. The regulator highlighted gaps in the bank's procedures for monitoring suspicious activities, reporting currency transactions, and conducting customer due diligence. As part of the agreement, Wells Fargo has pledged to accelerate its compliance enhancements to meet these regulatory expectations.

Klarna Bank Faces Scrutiny from Swedish FSA Over AML Practices

Klarna Bank has come under fire from the Swedish Financial Supervisory Authority (FSA) due to 

. The critique, detailed in a letter addressed to CEO Sebastian Siemiatkowski, points out shortcomings across several areas of compliance with the Money Laundering Act, including general risk assessment and customer due diligence protocols. This regulatory scrutiny raises questions about the potential impact on Klarna's prospectus initial public offering slated for the next year.

Global Governments Commit to Council of Europe's AI Framework Convention

The Council of Europe's newly established Framework Convention on Artificial Intelligence, aimed at safeguarding human rights, democracy, and the rule of law, has 

 including the UK, US, and EU. This agreement focuses on the responsible lifecycle management of AI systems, ensuring they respect privacy, prevent discrimination, and protect against misinformation threats. The convention, which also emphasizes regulatory measures for AI technologies, has been endorsed by a total of 46 member states and 11 non-member states, highlighting its potential for widespread international influence and rapid implementation.

Macquarie Asset Management Settles for $80 Million in SEC Fraud Charges

Macquarie Investment Management Business Trust (MIMBT), part of Macquarie Asset Management, has agreed to 

 to settle charges from the U.S. Securities and Exchange Commission (SEC). The SEC accused MIMBT of overvaluing assets and conducting illegal cross trades that benefited certain clients over others. The settlement addresses practices from 2017 to 2021 involving inflated valuations of illiquid collateralized mortgage obligations (CMOs) and preferential cross trades that resulted in losses for retail mutual funds. As part of the resolution, MIMBT will undertake comprehensive compliance reviews and reinforce its risk management protocols.

Singapore Banks Introduce Facial Verification for Enhanced Security

 (SFV) into their security systems to fortify the digital token (DT) setup process for retail banking customers. Over the next three months, SFV will be employed in high-risk scenarios to confirm customer identities against national records before DT activation. This technology aims to prevent unauthorized account access by ensuring that DTs cannot be activated on new devices with stolen or phished credentials. This step is part of broader efforts to enhance customer protection against financial scams, complementing other initiatives like phasing out one-time passwords (OTPs) and introducing a Money Lock feature for securing specific funds.

European Credit Sector Associations Advocate for Enhanced Fraud Prevention

The European Credit Sector Associations, including the European Association of Cooperative Banks (EACB), the European Banking Federation (EBF), and the European Savings and Retail Banking Group (ESBG), have endorsed the Euro Retail Payments Board (ERPB) Working Group Report on 

. The report, reflecting inputs from various stakeholders, outlines four "gamechanger" actions aimed at amplifying fraud prevention efforts across Europe. These actions encompass fostering cross-sectoral collaborations, sharing fraud insights, enhancing EU-level supervisory cooperation, and prioritizing consumer protection in product design. Additionally, the report offers a compilation of best practices for public and private entities to effectively counteract fraud, emphasizing a comprehensive regulatory approach beyond traditional payment regulation to tackle the complexities of digital fraud

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Stay up to date with key developments in the world of compliance. Here’s a snapshot of top news, from AML upgrades to global fraud prevention.

This Week in Compliance Vol. 8

TD Bank Prepares for AML Penalties with $2.6 Billion Provision

In August 2024, TD Bank Group proactively addressed ongoing U.S. investigations into its anti-money laundering (AML) program by 

 in provisions. This provision anticipates the monetary penalties expected as part of a global resolution with U.S. regulators, including FinCEN and the DOJ, which TD Bank expects to finalize by the end of the year. Additionally, TD Bank reduced its stake in The Charles Schwab Corporation by selling 40.5 million shares, which will positively impact the bank's Common Equity Tier 1 (CET1) ratio in the fourth quarter, offsetting some of the provision's negative effects.

As part of its efforts to strengthen its U.S. AML program, TD Bank has been investing in compliance enhancements, including hiring industry experts and upgrading technology and processes. The bank's CEO, Bharat Masrani, reaffirmed the organization's commitment to resolving these matters and emphasized the importance of building a stronger foundation for its U.S. business. TD Bank is working closely with regulators to achieve a resolution, aiming to provide further clarity to shareholders and stakeholders in the coming months.

European AI Act Comes into Force: Setting Global Standards for AI Regulation

, the world's first comprehensive regulation on artificial intelligence. The Act introduces a risk-based framework, categorizing AI systems into minimal, specific transparency, high, and unacceptable risk levels. High-risk systems, such as those used in recruitment or loan decisions, face strict regulatory requirements, while AI applications deemed unacceptable, like certain manipulative technologies, are banned.

The AI Act also establishes rules for general-purpose AI models and sets up enforcement mechanisms, including significant fines for non-compliance. Member States have until August 2025 to appoint authorities to oversee compliance, with full implementation expected by August 2026. To ease the transition, the EU has launched the AI Pact, encouraging companies to voluntarily adopt key obligations ahead of time.

CFPB Comments on AI in Financial Services, Emphasizes Consumer Protection and Regulatory Consistency

On August 19, 2024, the Consumer Financial Protection Bureau (CFPB) 

 addressing the use of artificial intelligence (AI) in the financial services sector. The CFPB emphasized that AI, while a key element of emerging technologies in finance, must comply with existing federal consumer protection laws. The agency highlighted its role in ensuring that new technologies do not bypass regulatory requirements, stressing that firms must adhere to legal mandates, even as they innovate. The CFPB also noted the importance of clear regulatory guidelines to foster innovation while protecting consumers.

The CFPB’s initiatives include ensuring no exemptions for AI or other technologies from consumer protection laws, requiring accurate reasons for credit denials regardless of AI use, and promoting fair competition. The Bureau is also focused on combating anticompetitive practices and ensuring companies are accountable for the AI algorithms they deploy in lending decisions. Through these efforts, the CFPB aims to balance innovation with rigorous enforcement of consumer rights.

ECB and EBA Report Uncovers EUR 4.3 Billion in Payment Fraud Across the EEA

A joint report by the European Central Bank (ECB) and the European Banking Authority (EBA) revealed that payment fraud in the European Economic Area (EEA) amounted to 

, with a reduction to EUR 2 billion in the first half of 2023. The majority of fraudulent activities were associated with credit transfers and card payments, particularly card fraud, which accounted for the highest volume of incidents. Fraud rates were notably lower for other payment methods like credit transfers.

The report highlighted the effectiveness of Strong Customer Authentication (SCA) regulations under the revised EU Payment Services Directive (PSD2). Transactions authenticated via SCA showed reduced fraud rates, particularly in card payments, compared to non-SCA transactions. However, fraud rates were higher in cross-border transactions, especially where SCA compliance is not mandatory, underscoring the uneven distribution of fraud losses across different payment methods and regions.

Singapore Passes New Law to Strengthen Anti-Money Laundering Efforts

On August 8, 2024, Singapore's Parliament approved the Anti-Money Laundering and Other Matters Bill, which strengthens regulations to 

. The Bill lowers the threshold for casino due diligence checks on transactions over USD 3,013 and allows courts to sell seized properties under specific conditions without all parties' consent. It also expands the definition of money laundering to include foreign environmental crimes and enhances data-sharing between government agencies to improve financial oversight. Despite concerns about data sharing and impacts on casinos, the Bill was widely supported.

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Stay informed about the latest compliance news. Read on for coverage of the biggest stories in the industry, from new AML efforts to payment fraud. 

This Week in Compliance Vol. 7

AI has been a major focus this year, with many seeing it as a breakthrough while others are cautious about its use. In compliance and risk management, the tasks are too important to leave entirely to AI. While AI can handle complex tasks like understanding text and summarizing information, it’s essential to use it carefully to avoid mistakes.

That’s why we’re introducing the spektrAI step. This feature lets you decide exactly how AI fits into your work. Rather than automating everything, it gives you control over where and how AI assists, ensuring it supports your specific needs without overstepping its role.

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