On Friday, Japans Kanto Local Finance Bureau issued a business improvement order against Revolut Technologies Japan, Inc., which is the local subsidiary of the London-headquartered fintech.
The order came after the Financial Services Agency (FSA) conducted an on-site inspection of the company, finding serious problems in the firms control environments for governance, management of outsourced contractors, and money laundering
Money Laundering
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Read this Term and terrorist financing risk management.
The regulator elaborated that the Japanese subsidiary of Revolut failed to fully establish proper governance for providing funds transfer services in a proper and steady manner. Further, the Japanese arm did not check the primary services, like funds transfer services in a proper and steady manner, it outsourced to its London-based parent.
Additionally, Revolut Japan did not develop proper checks on money laundering and terrorist financing risk management
Risk Management
One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firms exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent.
One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firms exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent.
Read this Term. In addition, it lacked a system for strict transaction verification and had no rules for determining suspicious transactions.
Improvement Orders
To rectify the issues, the Japanese regulator provided a series of business improvement orders to Revolut Japan.
The company needs to establish a controlled environment to ensure proper governance, legal compliance, management of outsourced contractors and money laundering and terrorist financing risk management.
Also, the Japanese firm needs to submit a business improvement plan to the regulator by October 3, mentioning the specific measures it is going to take based on the order and implement them immediately after the submission.
Moreover, the company has been ordered to report its progress and implementation status quarterly to the regulator until the completion of all the necessary implementations.
Meanwhile, Revolut has been aggressively expanding its global footprint. Most recently, it gained approval from the regulator in Cyprus for offering cryptocurrency services.
On Friday, Japans Kanto Local Finance Bureau issued a business improvement order against Revolut Technologies Japan, Inc., which is the local subsidiary of the London-headquartered fintech.
The order came after the Financial Services Agency (FSA) conducted an on-site inspection of the company, finding serious problems in the firms control environments for governance, management of outsourced contractors, and money laundering
Money Laundering
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Read this Term and terrorist financing risk management.
The regulator elaborated that the Japanese subsidiary of Revolut failed to fully establish proper governance for providing funds transfer services in a proper and steady manner. Further, the Japanese arm did not check the primary services, like funds transfer services in a proper and steady manner, it outsourced to its London-based parent.
Additionally, Revolut Japan did not develop proper checks on money laundering and terrorist financing risk management
Risk Management
One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firms exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent.
One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firms exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent.
Read this Term. In addition, it lacked a system for strict transaction verification and had no rules for determining suspicious transactions.
Improvement Orders
To rectify the issues, the Japanese regulator provided a series of business improvement orders to Revolut Japan.
The company needs to establish a controlled environment to ensure proper governance, legal compliance, management of outsourced contractors and money laundering and terrorist financing risk management.
Also, the Japanese firm needs to submit a business improvement plan to the regulator by October 3, mentioning the specific measures it is going to take based on the order and implement them immediately after the submission.
Moreover, the company has been ordered to report its progress and implementation status quarterly to the regulator until the completion of all the necessary implementations.
Meanwhile, Revolut has been aggressively expanding its global footprint. Most recently, it gained approval from the regulator in Cyprus for offering cryptocurrency services.
