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The future of Open Banking: Compliance & AML





Interview with IRIS Solutions AML Expert – Milen Minev 

Who is Milen Minev?


Milen Minev holds a Master's degree in Finance from the D.A. Tsenov Economic Academy in Svishtov and has accumulated over 15 years of experience in the banking sector. He has served as a Sales Specialist in various banks and companies, including Alianz Bank Bulgaria, "MKB Unionbank," "Emporiki Bank - Bulgaria," "Credit Agrocol Bulgaria," and TB "Victoria" AD. Milen is among the first employees of "IRIS Solutions," where he currently holds the position of Head of Compliance and Prevention of Money Laundering and Terrorist Financing. With his distinguished career and diverse experience in different areas of the financial sector, Milen Minev is recognized highly-respected profes-sional and an invaluable expert in the field of banking services and financial operations. 


What role do you see emerging technologies, such as artificial intelligence and blockchain, playing in the future of AML compliance within the Open Banking ecosystem?  


In the fast-moving technological world, it is essential to be able to keep pace by applying innovative methods to prevent money laundering and terrorist financing. With the help of blockchain, banks and financial institutions can ensure transparency and security of financial transactions. This is precisely what makes it one of the most promising technologies for anti-money laundering purposes. (in English "Anti-money laundering - AML").


On the other hand, anti-money laundering and anti-terrorist financing software based on machine learning (from English “Machine Learning”) can immediately identify money laundering patterns and schemes, detect any suspicious activities in large volumes of data and prevent even the most inventive methods used by criminals. I believe that both blockchain and artificial intelligence are the future of AML and only those who can implement them in their daily work will prosper.


How can businesses keep up with changing AML rules in Open Banking?

  

In order to stay abreast of the changes in anti-money laundering (AML) regulatory rules in the field of Open Banking, companies should take several proactive steps:


First and foremost, they should be alert to any changes in anti-money laundering regulations by regularly checking for updates to relevant regulations, subscribing to regulatory newsletters from trusted sources, and keeping up to date with emerging trends and best practices. To stay abreast of the latest regulatory developments, AML professionals should attend AML-focused conferences, seminars, and workshops—the places where the latest regulatory compliance techniques and technological innovations in the sector are discussed.


These events often include expert seminars with speakers who share the latest news around upcoming regulations, policies and new laws. I should mention that it is also worth keeping a close eye on the actions taken by the European Commission and local regulatory authorities regarding AML regulations to ensure compliance with official guidelines and requirements. Secondly, active participation within the local AML and fintech communities in the region is required. Building contacts in such environments often provides valuable opportunities to share experiences and can lead to new partnerships.

Third, but not least, is investing in the AML team by providing access to AML-related courses, training programs and educational materials.


How will PSD3 affect AML practices in Open Banking in 2024? 

 

The main aim of PSD3, or the Third Payments Directive, is to revolutionize the way payments are made and managed across Europe. PDS3 is based on the previous directive but with a much broader scope, aiming to address key issues in the payments industry such as transparency, accountability and the growing concept and capabilities of open data and thus Open Banking.


One of the main tools of the directive will continue to be Strong Customer Authentication (SCA), which adds an additional layer of security to transactions, but the new directive clearly spells out additional tools that will improve the security of payments. Such are, for example, the obligations of the supplier servicing the accounts to apply the so-called "transaction risk monitoring", i.e. monitoring transactions with certain parameters and how risky they are.


It also introduces a requirement when a customer-initiated Internet Banking transfer checks with the recipient's bank to match the account ID and the person behind that account, i.e. this is an additional safeguard to avoid threats, which are related to the replacement of an IBAN number. All this will significantly increase security.

 

Open banking is another major focus of PSD3. It has gained momentum in recent years, incentivizing banks to share customer data with third-party providers (with the customer's consent), making many new innovative financial services available. PSD3 seeks to improve Open Banking by addressing issues related to data sharing and interoperability, ultimately fostering greater competition and innovation in the financial sector.


As for AML, PSD3 introduces measures to fight financial fraud more effectively and enables regulators to enforce the rules more strictly. It also aims to give people more control over their financial data by ensuring they have the right to determine who can access their information and for what purposes.


Overall, PSD3 represents a significant step forward in the regulation of payment services in Europe. By creating a single legal framework and encouraging innovation and competition, it aims to improve the efficiency, security and accessibility of payments for both consumers and businesses.


Looking into the future, with all these new tools and instruments, what will be the role of AML specialist? 

 

Regardless of the availability of new tools and technologies, AML specialists will always be in demand and needed, because only they can develop and understand complex rules, detect new risks and make sure that the "letter of the law" is followed.


While machines can greatly assist in combating money laundering and terrorist financing, AML professionals will continue to be valued for their expertise in solving problem cases, as well as their ability to probe deeply and adjust strategies if and where necessary. AML professionals will continue to work closely with banks, regulators and supervisors, with good communication between all being key.

Ultimately, I believe that AML professionals and people in general will continue to use their knowledge to keep our money safe and compliant with the law, but now with the implementation of more and more technology. 

 

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