Globex – AMLCop
Fresh off the release of their rescission software, Globex is back again with another solution for blockchain based finance. This comes in the form of AMLCop.
AMLCop is a solution which allows its user the ability to effectively enforce Anti-Money Laundering screening practices. With the United states spending roughly $25 million yearly on these practices currently, any means in which the process can be improved upon, and made more efficient at the same time, are welcome.
The AMLCop solution should benefit from immediate adoption, as Globex has entered a partnership with the National Investment Banking Association (NIBA). This partnership will see AMLCop offered to NIBA members, in addition to select U.S. broker/dealers.
4 Step Process
AMLCop was designed to be a simple-to-use, piece of software. Globex breaks this process down into the following 4 steps.
- Easy product integration with existing ‘know your client’ programs
- Screen and search individuals or custom groups
- File reviews for individuals flagged for potential AML violations
- Documentation stored, indicating flags and file clearances
For a deeper look at how AMLCop functions, check the infographic by Globex, HERE.
As the sector develops, many have noted various key hurdles that must be overcome before major adoption takes place – including the United States Securities and Exchange Commission. One of these hurdles are ‘Anti-Money Laundering’ solutions for industry participants.
Money laundering refers to intentional acts taken to obscure the origins, and transactional history, of financial assets. This process essentially makes ‘dirty’ money ‘clean’, by removing any connection with nefarious activities.
It is clear that for the digital securities sector to be recognized as a safe, regulated space, solutions that ensure money-laundering doesn’t occur, are vital. Horizon Globex has now put their best foot forward towards ensuring others now have the means for proper AML practices.
Representatives from both, Globex and NIBA, took the time to comment on this strategic partnership. The following is what each had to say on the matter discussed here today.
Brian Collins, CEO of Globex, stated,
“What we’ve found is that firms are incurring increased labor costs and exposing themselves to unnecessary AML violations…We’ve built our technology to reduce manual file reviews and follow a regulator-aligned due diligence process, and are honored to have NIBA’s stamp of approval on our solution.”
Emily Foshee, Executive Director of NIBA, stated,
“Compliance costs can be a huge burden for broker dealers, especially smaller firms which rely on manual efforts and outdated systems to accomplish AML efforts…We are thrilled to partner with Globex and offer our members best-in-class technology solutions to enhance AML efforts.”
Globex is a software-as-a-solution (SaaS) company, which was founded in 2010. They maintain operations in Zug, Switzerland. Company oversight is spearheaded by CEO, Brian Collins.
NIBA, or the National Investment Banking Association, is a non-profit body, which was established in 1982. Operations are geared towards the small-cap investment community, providing avenues of access to the financial industry.
Operations have been spearheaded since 1999 by Executive Director, Emily Foshee.
In Other News
Globex continues to make their presence known in the digital securities sector. We were fortunate to have recently spoke with Brian Collins, in an exclusive interview. Check out the article below to learn more about Globex and their various endeavours, from Brian Collins himself.
Matthew Unger, CEO of iComply Investor Services Inc – Interview Series
Matthew is the CEO of iComply (iComply Investor Services Inc.) is an award-winning Regtech platform powering the digitization of institutional finance with coverage for over 160 countries.
You have been involved in cryptocurrency for many years now. Can you share with us how you first learned about crypto?
I first heard about cryptocurrency (Bitcoin) in 2011 at a meetup in Vancouver. Before that, I spent over half a decade as a wealth manager. I saw how blockchain technology would transform capital markets. Since then we have seen a ton of innovation. To compare it to digital media – if Bitcoin was the Napster of finance, Ethereum’s smart contracts were BitTorrent.
How did you come across the concept for iComply Investor Services?
The need for iComply arose out of two major events, in 2014, the fintech I worked for was building a platform for broker dealers and asset managers to manage their entire business from an iPad. For KYC, there were a few APIs on the market but even today most of these tools do nothing more than onboarding or identity verification.
Over the past 15 years, I have gone through many regulatory audit cycles and did my first AML training in 2005. I saw a need for a toolkit that would let businesses easily manage the global variations and frequent changes to local regulations – whether for onboarding, identity verification, AML, or even disclosures and legal agreements. Today, iComply offers institutional-grade identification and risk management tools that support AML compliance for the entire customer lifecycle.
You led a 2016 project to use Ethereum smart contracts to automate the matching and fulfillment of CME interest rate swaps trading over LIBOR. How did this work and what was the outcome?
Actually, I only led the technical part of this proof of concept (POC) with a team at MIT. Our goal was to build a business case and technical POC to identify if smart contracts could be used for clearing derivatives effectively. This required that we map out the entire workflows, business and compliance requirements of the second largest clearinghouse in the world. We connected the dots between transaction counterparties, their law firms, and a whole web of proprietary software.
Looking back, our solution was a mess – we had way too much logic and potentially confidential information on-chain, and Ethereum was integrated into a customized Salesforce interface. It was early days. Shortly after the DAO disaster unfolded and the resulting hard fork killed all interest from the major institutions. Still, the results from the POC were exciting – we could take a traditional institutional process that takes 4-6 weeks and costs upwards of $10,000 per transaction and boil it down to under a dollar of gas in under a minute.
We witnessed the ICO boom in 2017 with the follow-up crash in 2019. Why do you personally feel that STOs will be different?
First, ICOs were seeking to do something very different than digitizing a security – in many ways utility tokens are a new asset class, security tokens are new technology applied to, for the most part, very traditional financial instruments. I still believe there are excellent use cases for utility tokens – but many utility tokens still need to comply with all sorts of laws and regulations outside of the securities.
In contrast, STOs are focusing on operating within securities regulation. This means they will be held to a higher standard and their tokens have to observe the securities regulation of any jurisdiction they trade in – even for peer-to-peer transfers between wallets. These regulations vary widely from one country to another, in the world of paper or digitized PDF legal agreements there is little risk of a regulator in EU catching a US issuer raising capital for a private placement in a business, fund, or real estate deal.
Putting these transactions onto a blockchain completely changes this because regulators are already able to monitor the market in a way that is simply impossible to do today. Token issuers today are still buying basic APIs for KYC and AML, and many still think of global regulation as binary – SEC vs no-SEC (i.e. Reg D and Reg S). However, when a tokenized asset is able to easily manage the jurisdictional variations of identity, privacy, data, AML, and securities regulations, including disclosures and legal agreements, etc., the old way of doing things seems insane. That would be like someone using Telex today instead of Telegram, email, or Slack.
What are some of the tokenization use cases that iComply can assist companies with?
Since we launched Prefacto in Feb 2018, we have seen a lot of really cool token projects from Cryptokitties to tokenized funds, real estate, bonds, private shares, futures contracts, and even fractional ownership in casks of luxury Scotch, whiskey, and wine.
The Prefacto toolkit makes it simple, and very cost effective, for token issuers to manage compliance requirements not just for the initial offering – but for every transaction throughout the lifetime of the asset in almost every country in the world. If your lawyer is able to write up a term sheet, purchase agreement, or licensing contract – you can probably tokenize it.
In 2018, we started to see a lot of new blockchain startups launching platforms for issuance, trading, transfer agents, and cap table management such as Polymath, Blockport, Securitize, etc.. We started getting requests from a lot of STO platforms on how to handle the cross-border AML compliance for onboarding corporate investors so we released a second product, iComplyKYC, as a toolkit that easily plugs into these types of platforms. What we were not expecting was the demand from the traditional capital markets where back offices are simply not ready for blockchain. This is a very exciting trend because we are now connecting the dots for many of our clients bridging the gaps between traditional brokers, issuance platforms, and even some exchanges.
One of your exchange clients is Motto Technologies, a UK based cryptocurrency exchange going public on the LSE. Could you walk us through what Motto does, and how iComply was able to assist them?
Motto was early to the “let’s get regulations right” game. Their platform allows users to buy, trade cryptocurrency but they also give their users a Visa card that lets you easily spend your crypto anywhere that takes via. In order to get past audits from their banking partners, Visa, and the Financial Conduct Authority.
We helped Motto find local regulatory experts, get their policies and procedures ready for audits, approvals, and go-public due diligence. Before using iComply, their bank had required them to use an API based “e-KYC” tool which might have worked if they were just doing a traditional crypto-exchange. Our iComplyKYC toolkit enabled them to build and maintain a robust compliance program that could stand up to regulatory scrutiny. Most of the other platforms are still mucking around with 10 different APIs and manual systems to try to appease regulators. We helped Motto get ahead of this curve, and as a soon to be publicly traded company their shares will be available to accredited and non-accredited investors alike – I’m not aware of another exchange in the market that can say that.
One of your software products is Prefacto, a regtech solution for tokenized assets. What problems does Prefacto solve?
Prefacto enables businesses to manage end-to-end compliance on their tokenized assets. This includes planning and structuring, launching smart contracts, developing and implementing a compliance program, issuance and distribution, and finally ongoing token management. Compared to what many issuers are doing today, our clients can save time, money, and a whole lot of pain if they talk to our team early on.
iComply also offers KYC services. What are some of these services?
In late 2018, we started reaching out to other token issuance platforms, transfer agents, etc in the security token market to offer them demos and the opportunity to share knowledge and collaborate rather than compete. Several players took us up on the offer and we all learnt a lot. One of the key takeaways for iComply was that, while we thought Prefacto was cool, our compliance tech was a key missing piece to these other platforms.
At the time, none of the other platforms could manage compliance for corporate investors, distributed broker networks, or multi-jurisdictional variations in regulation. This led us to refocus our business on what we are known to be best at – intelligent compliance automation. It took about a year to refactor our platform and launch the current version of iComplyKYC, a suite of tools that makes it easy to build and maintain a robust global AML compliance program.
We built our own KYC tech because we knew the APIs on the market would not meet regulatory requirements – there is a reason you do not see these tools being used today by firms such as HSBC, Santander, Vistra, etc. After launching iComplyKYC, we discovered that the institutional players were very interested in using these tools because they were built to the current standards and frameworks of traditional compliance – we just do it for 95-98% lower cost per transaction than current mid and back office systems.
Where do you see the industry five years from now?
In 5 years from now – if you’re familiar with the concept of Gartner’s hype cycle – we’ll see security tokens start to take off in mainstream adoption. Right now, if you look at the digital media as an example, right now security tokens are for the people that would have used Napster or Kazaa. In five years we will have an iTunes, maybe even a Netflix.
Traditional firms will be past POCs and MOU press releases. Like the Netflix pivot from mail order DVDs to digital delivery, some of the big guys will have made public blockchains a core to their business strategy like EY has already done with Ethereum. Others will go the way of Blockbuster.
Simultaneously, the security token startups will be more collaborative and more interoperable. The cost of launching a token will be at least 90% less than it is today. The platforms who chose public blockchains, rather than proprietary private or purpose-built chains will start to see the benefits of this long term thinking.
Finally, over the next 1-3 years I believe we will see and hear a lot about private chains with the rational of scalability, security, etc. This is a last-ditch effort to protect their business model from being cannibalized by decentralization and democratization in finance. The early members of the R3 Consortium spent millions to learn this, Salesforce and S&P scrapped their Hyperledger project, JP Morgan recently gave up on Quorum – the truth is we have had DLT in finance for over 30 years, systems such as CDS are incredibly efficient and secure.
There is nothing innovative about a private blockchain or mesh network in finance. Look at Java and C#, they won the race to build the internet. Public cloud solutions such as Google, AWS, and Azure won the race for shared public server architecture. For digital finance, public blockchains enable full transparency which builds trust and reputation in a way that a private chain cannot. Within 5 years you will see SIX, ASX, GBX, and similar players will have scrapped their current infrastructure in favour of lower costs per transaction and lower cost of technology ownership, to adopt public blockchain infrastructure.
Is there anything else that you would like to share about iComply?
Our focus at iComply is to ensure companies can easily build and maintain a robust, global, and institutional grade compliance program. The problem we see in the market is that the institutional grade tools are too manual and expensive to enable digital transformation. Meanwhile, in the fintech, startup, and security token markets we see a lot of players that have a lot of deep experience in securities or finance – usually only in one market – but no real world experience in what happens in the mid and back office, much less compliance on an international level. They simply don’t understand that when you sell a Reg S to someone in Germany there are compliance requirements from BaFin, the European Commision, etc.. For the sake of this whole industry, I would urge token issuers to look at compliance holistically, and as early as possible.
Our clients realize very quickly that we’re offering a holistic approach. We support our clients through audits from regulators, banks, and financial partners – they need this in order to become successful. The eKYC API built for Uber and AirBnb don’t do this because they know their tech will not pass an audit – once they close the sale that’s it. This is what is unique about our focus at iComply, we are here to help our clients do business – we have aligned our business model with our client’s success.
BitGo Works Towards ‘Full-Stack Solution’ with Harbor Acquisition
With roots in custodial services surrounding digital assets, BitGo has established themselves as an industry mainstay since their 2013 launch. In the time since, the team behind the Californian company has managed to expand their offerings, growing with the industry it serves.
BitGo has clearly recognised a major shift in the world of blockchain, as digital securities have captured the interest of investors and companies, alike. Not content with complacency, BitGo has just announced the acquisition of digital securities tokenization platform, Harbor.
On the surface, this move may have caught some by surprise. When looking closer, however, this isn’t necessarily the case. BitGo has shown a proclivity for acquisitions in the past, which have each expanded their services in a direct manner. The pairing of BitGo and Harbor is one that dates back multiple years, as the companies have long worked with one another.
Through their complimentary services, pre-existing relationship, and past actions, the deal looks closer to obvious than a surprise.
At the time of writing, financial details surrounding this acquisition have not been made available.
As stated, BitGo has shown a proclivity for strategic acquisitions. Each of their past acquisitions have provided the company access to new capabilities, which are then able to be offered to clientele in an increasingly comprehensive platform. This acquisition is no different.
Following this development, this list touches on just a few designations now held by BitGo.
Clearly, as made evident from this comprehensive list of designations, BitGo is well on their way to achieving their goal of offering what it calls a ‘full-stack solution for digital securities’.
Upon announcing BitGo’s acquisition of Harbor, representatives from each company took the time to comment.
Mike Belshe, CEO of BitGo, stated,
“Our vision has always been bigger than wallets and custody and acquiring Harbor furthers BitGo’s vision of building a new digital infrastructure for financial services…We believe participants will ultimately need trusted, full-stack solutions for digital currencies and now BitGo is well positioned to address institutional requirements as the market develops.”
Josh Stein, CEO of Harbor, stated,
“BitGo has been an important partner since Harbor inception. We’ve worked closely together to integrate BitGo Business Wallets and BitGo Custody into Harbor’s services…Harbor provides BitGo with a complementary technology stack for the lifecycle of digital securities, as well as important service capabilities through our digital assets broker-dealer and transfer agent subsidiaries.”
Founded in 2013, BitGo maintains headquarters in Palo Alto, California. The company has developed into a full spectrum service provider for the blockchain industry. The company indicates that its operations now span over 50 countries. Furthermore, they facilitate over $15 billion in crypto-transaction on a monthly basis.
CEO, Mike Belshe, currently oversees company operations.
Founded in 2017, Harbor is a United States based company, which specializes as a tokenization platform. The team at Harbor, notably, developed the ‘R-Token’ standard – tailor built to serve digital securities.
CEO, Josh Stein, oversaw operations prior to acquisition. It is believed that BitGo will retain Stein in some capacity.
Changing of the Guards
The development discussed here today marks, not the first, but one of several major acquisitions seen in the blockchain industry over the past few months.
Only days ago, we were reporting on the potential upcoming sale of SeedInvest – a crowdfunding platform operated and owned by Circle. This expected sale is taking place after Circle made the decision to re-focus their efforts, specifically on stablecoins, rather than exchanges, tokenization, etc.
Custodial Specialists ‘Copper’ Draws $8M in Investments through Series A
Custodial specialist, Copper, has recently announced the successful completion of their Series A round of funding.
The team at Copper has indicated that the funds raised during this event will be put to use in two key areas.
- Global expansion
- Specifically North America and Asia
- Product development
- Investment options targets towards institutional clients
The completion of their Series A came in to the tune of $8 million. These funds bring the total raised, to date, by Copper up to, roughly, $9.3 million.
In order to raise the $8 million, Copper saw the participation of multiple companies with high hopes in what they look to achieve. Contributors are as follows:
- Target Global
- MMC Ventures
Upon announcing the results of their Series A, Dmitry Tokarev, CEO of Copper, took the time to comment. He stated,
“Copper was always designed to be a global offering. Since 2017, we have seen many crypto custody solutions emerge that don’t fully meet the needs of institutions. Instead, they have built for an institutional framework that doesn’t exist yet, and is unlikely ever to, leaving institutions discouraged…Our Walled Garden and Prime Brokerage infrastructure truly looks after the security and trading needs of institutions, regardless of their investment strategies and goals. We are seeing volumes increase as our clients see the advantage of our prime brokerage solution, which allows them to make transactions across many trading venues securely and efficiently.”
“This venture funding round is a real vote of confidence from investors. Their support will allow us to accelerate our scale up, hiring teams in key regions and introducing new products and services to better meet their needs.”
As the digital securities sector grows, an increasing amount of participants will require secure, trusted, services for storing their assets. As a result, the custodianship of digital assets has been noted as an important area in which development must take place.
While Copper remains one of the more promising outfits looking to tackle the issues surrounding custody, there remain various competitors developing alongside them. For example, the following article takes a brief look at some of the leading offerings in the market today, including Coinbase, TokenSoft, Anchorage, Unbound Tech, and of course – Copper.
Founded in 2018, Copper, maintains operations in London, United Kingdom. Above all, Copper specializes in offering services tailored around the custodianship of digital assets.
CEO, Dmitry Tokarev, currently oversees company operations.
In Other News
There is a clear growing interest in digital assets, and the services surrounding them. This has been made obvious by multiple successful Series A raises in recent months – Demonstrating a strong belief in the future of blockchain based endeavours. The following are just a few examples of these successful capital generation events.