The Monday Roundup: what we are watching this week | April 17th

By Puja Sharma

The Monday Roundup sets the scene for the week’s biggest news stories, industry deals, and upcoming events. For Prime subscribers only.

Fraud prevention

As part of its efforts to combat fraud in SEPA direct debit transactions, BNP Paribas has extended its partnership with paytech Worldline.

SEPA direct debit (SDD) is an automated payment method that is used in the Single Euro Payments Area to pay one-off or recurring invoices through a signed mandate. BNP Paribas Cash Management will deploy Worldline’s Account Validation solution within its white-label EasyCollect direct debit product to offer a “secure and low-risk payment method” and an improved user experience for its customers.

Worldline’s offering combines the electronic signature of SEPA mandates with open banking-based account validation to “eliminate” the risk of IBAN misuse during the mandate signature process.

✂️Financial Conduct Authority orders closure of WealthTek; joint special administrators appointed. In response to “serious regulatory and operational issues”, WealthTek was ordered by the UK’s Financial Conduct Authority (FCA) to cease all operations.

As soon as the unspecified concerns were discovered, the regulator applied to the High Court for an urgent order to shut down WealthTek’s regulated activities on 4 April. Following the FCA’s application, the UK’s High Court appointed Shane Crooks, Mark Shaw, and Emma Sayers of BDO LLP as joint special administrators of WealthTek, which also trades under the names Vertem Asset Management and Malloch Melville.

Northumbria Police also arrested a man aged 48 in connection with the FCA’s concerns, who the regulator says it later interviewed “under caution”.

Scale-up funding

The Indian payments app PhonePe continues to raise funds as it reaches its goal of $1 billion in financing. Investors General Atlantic and co-investors provided the funding. With this latest tranche, PhonePe has now raised $750 million.

With the new funding, PhonePe plans to expand its business into insurance, wealth management, lending, stockbroking, shopping, and account aggregators, according to FinTech Futures. The company has raised a considerable amount over the last few months. Back in January, PhonePe entered the Deacorn Club following the closing of a $350m funding round, which doubled its valuation to $12bn.

In February, PhonePe raised another $100m in primary capital as the company continued its funding spree. The funding was raised by Ribbit Capital, TVS Capital Funds, and Tiger Global. Then in March, the company raised $200m in primary capital investment from Walmart. The company quipped that it was looking to build and scale new businesses, including insurance, wealth management, lending, stockbroking, ONDC-based shopping, and account aggregators.

In an effort to instill investment habits in young people, Deciml, a fintech platform in the city, has hit a turning point in terms of membership growth and is seeking funding to expand.

In November, the business raised $1 million in its pre-seed round, which was primarily composed of content producers and angel investors. Rounding off user payments received over the Unified Payments Interface (UPI), which are then invested in mutual funds or a lending platform, allows the company to invest on behalf of its users.

In June-July, we plan to pursue a new round of investment. The last round was quite strategic, but now we will turn to institutional investors, according to the creator Satyajeet Kunjeer.

The company has now been operating for 100 days, during which time the money spent on behalf of its consumers has increased from just INR 9,000 per day when the platform was first launched in November of last year to INR 8 lakh per day. The company now has plans to increase that figure to INR 60-70 lakh every day in the following 60-70 days. According to Kunjeer, the platform’s scalability is the cause of the increase. Users’ bank accounts are connected to the site, and whenever there is a debit, the round-up amount is automatically debited and invested.

What is the buzz

‍ The financial sector and the companies within it are constantly evolving, so understanding Know Your Business (KYB) is more important than ever.  In a recent post by Flagright, the company outlined what businesses need to know about KYB and how it can benefit their companies.

KYB is a process through which businesses verify the identity and legitimacy of their corporate or business customers. This process helps financial institutions, including fintech and neobank companies to mitigate the risks of money laundering and terrorist financing by ensuring that they are dealing with legitimate entities. KYB is a critical component of AML and CFT compliance.

Underlining why KYB is important, Flagright said, “KYB is essential for businesses because it helps to identify potential risks associated with transactions and business relationships. Financial institutions are under increasing regulatory pressure to implement adequate KYB processes to prevent money laundering and terrorist financing. KYB helps businesses to ensure that they are dealing with legitimate entities, and it helps to protect their reputation and financial stability.”

The history of the KYB dates back to the early 2000s when the Financial Action Task Force (FATF) introduced the first set of international standards for AML and CFT. These standards required financial institutions to implement customer due diligence measures, including verifying the identity of their customers, conducting ongoing monitoring of their transactions, and reporting suspicious activities to the authorities.

Back at that point, KYC was the primary focus of these regulations, as financial institutions were required to verify the identity and address of their customers. However, it soon became clear that businesses were also vulnerable to money laundering and terrorist financing, and the need for KYB emerged.