JULY 2023
Finance Monthly. Editor’s Note Dear Readers, Welcome to the July edition of Finance Monthly, where we continue our journey into the ever-evolving world of finance. This month, we’ve put together a compelling blend of insights, expert interviews, and features that echo the changing rhythms of the financial landscape. At the heart of this edition, we delve into the growing trend of sustainable investing in our cover story. As we explore this increasingly popular investment approach, we aim to unravel the strategic blend of financial returns with environmental and social responsibility. Whether you’re a seasoned sustainable investor or just starting to consider it, we believe this comprehensive feature will shed light on how this movement is shaping the future of investments. As technological advancements continue to shape our world, so do they impact the financial sector. One cannot talk about financial tech without acknowledging the elephant in the room - security. In a candid interview with Corey Hamilton from IBM, we address the pressing issues surrounding banking security modernisation and potential threats. Hamilton shares his insights providing a unique look at IBM’s ongoing efforts to make our financial systems safer and more reliable. With the UK experiencing stubborn inflationary pressures, we also look at the inflation problem currently plaguing the nation. We bring together several experts who give their opinion on the Bank of England’s response and what this could mean for both individual investors and the broader economic landscape. Finally, we are delighted to feature an exclusive interview with Julia Shamini Chase, founder, and CEO at Gold Leaf Consulting based in the British Virgin Islands. Julia shares her insights into the BVI regulatory regime and her perspective on anticipated changes and upcoming trends, offering readers a comprehensive understanding of the regulatory landscape in the BVI. As always, we hope this edition provides you with the insights and analysis you need to navigate the dynamic world of finance. Whether you’re an industry veteran, a budding investor, or simply have an interest in finance, we believe this edition has something for you. Thank you for being a part of our Finance Monthly community. Mark Palmer Editor editor@finance-monthly.com Follow us on Instagram Financemonthly Find us on Facebook Finance Monthly Stay Connected www.linkedin.com/finance-monthly Tweet us @Finance_Monthly Copyright 2023 Published by Universal Media Ltd The views expressed in the articles within Finance Monthly are the contributors’ own, nothing within the announcements or articles should be construed as a profit forecast. All rights reserved. Material contained within this publication is not to be reproduced in whole or part without the prior permission of Finance Monthly. Circulation details can be found at www.finance-monthly.com Universal Media Ltd PO Box 17858, Tamworth, B77 9QG United Kingdom 0044 (0) 1543 255 537 Monthly Finance 3
Finance Monthly. Contents 4 CONTENTS THE MONTHLY ROUND-UP News You Can’t Afford to Miss 6. BANKING & FINANCIAL SERVICES Securing The Financial Future Insights from IBM on Battling Cyber Threats in an Evolving Landscape 20. 12. FRONT COVER FEATURE SUSTAINABLE INVESTING: A Guide to Making Responsible Financial Decisions
Finance Monthly. 5 Contents 28. 42. 20. Securing The Financial Future BUSINESS & ECONOMY An Interview With Julia Shamini Chase Pioneering Compliance Leader and CEO of Gold Leaf Consulting Ltd UK’s Battle Against Inflation How Much More Pain is There to Come? Investment Company Managers on Interest Rates, Inflation and Bond Markets Exploring Offshore Structures Legality, Mechanics and Corporate Advantages Exploring the Morality of Using Offshore Structures for Big Business How Can Businesses Leverage DE&I at Scale to Become Conscious Allies? Is it Possible to Lead a Business Without Empathy? 28. 34. SPECIAL FEATURE Alexia Raad Associate at Milbank LLP Finance Monthly Deal Maker Awards Winner 64. Insights from IBM on Battling Cyber Threats in an Evolving Landscape Efeso Acquires a Majority Stake in Tsetinis Consulting SiPearls €90 Million Serie A Fundraising 70. TRANSACTION REPORTS 74. 38. FINANCIAL INNOVATION & FINTECH The Unstoppable Rise of Embedded Finance: Reshaping the Fintech Landscape Why Tackling Omni-Channel Fraud is Key to Enhancing Customer Experience 56. 58. 42. 44. 48. 52. Julia Shamini Chase An Interview With... Pioneering Compliance Leader and CEO of Gold Leaf Consulting Ltd Exploring Offshore Structures Legality, Mechanics and Corporate Advantages
Finance Monthly. 6 THE MONTHLY ROUND-UP News You Can’t Afford to Miss The Monthly Round-Up FINTECH NORTH ANNOUNCES LINE UP OF SUMMER CONFERENCES FinTech North will return in force to Leeds and Newcastle this summer, with two highly anticipated conferences celebrating the best of FinTech within the two city regions. Boasting an impressive line-up of speakers, including Atom Bank, CFIT, Mastercard, Kani Payments and Leeds Building Society, the conferences will shine a spotlight on home-grown FinTech innovation, provide a platform to share ideas, and see some of the biggest hitters in national FinTech take to the stage. Kicking off proceedings on the 29th June, the Leeds conference will cover themes including financial inclusion, green finance, banking, lending and the regulatory landscape. It will be held at the University of Leeds’ Cloth Hall Court and will be delivered in partnership with Leeds Building Society, Mastercard, Axiologik, Leeds City Council and TransUnion. Leeds has experienced a boom in FinTech in recent years, with the city now home to over 100 FinTechs and the sector contributing approximately £700m per year to the regional economy, according to the latest research from Whitecap Consulting. Delegates will hear about some of the drivers behind this growth, as well as opportunities and plans to build on this further. Speakers include Ezechi Britton MBE, CEO of CFIT, Janine Hirt, CEO of Innovate Finance, Natasha Jamal, Vice President of Social Impact at Mastercard, and Vanessa Roberts, Head of Strategy & Responsible Business at Leeds Building Society. A panel discussion will focus on the initial findings and outcomes from the FinTech Challenge Leeds, a new initiative spearheaded by FinTech North and funded by the UK Government. The Challenge has facilitated greater engagement between financial services firms and FinTechs, with the latter understanding the challenges FS firms face, and FS firms being exposed to the solutions FinTechs could offer. It focuses on five core areas: homeownership; green finance; AI, banking and payments; financial inclusion; and equality, diversity and bias. The Newcastle conference will take place on the 20th July at the Common Room of the Great North, in Newcastle’s old Mining and Mechanical Engineering Institute. While the agenda is still being finalised, two of the North East’s biggest and brightest FinTech stars are already confirmed: Atom Bank and Kani Payments. They will appear alongside Invest Newcastle, Mastercard and CFIT, in a day that will explore themes including payments, open banking, AI and cyber security. Both conferences will feature the renowned FinTech showcase session, which will see FinTech start-ups from the city regions and further afield participate in a quick-fire pitching exercise – including green neobank Tred, debit card and app Sibstar which is designed to help families living with dementia, and energy efficiency platform Snugg, winner of the Scottish FinTech Rising Star Award 2022.
Finance Monthly. 7 The Monthly Round-Up JOHNSON CONTROLS DEPLOYS NEW AI TECH PLATFORM TO MANAGE COMMERCIAL DEBTS The UK and Ireland division of Johnson Controls, a world leader in smart buildings, has found an innovative way of managing a rising volume of commercial debt by engaging with a new automated cloud-based platform, Debt Register, and instantly experiencing an improvement in collections performance. The business has also experienced a surge in team morale. In tackling its debt, one of its biggest challenges was engaging with its customers and getting replies to the follow-up letters and emails being sent. The sheer volume of clients who did not respond was difficult to manage because it was hard to know whether emails had been received or read. It was therefore difficult to know whether the customer was deliberately avoiding payment and should be reported to the credit reference agencies, or whether the communication was simply never received. Debt Register is an award-winning cash recovery tool that credit and collections teams can simply plug in and set to work, freeing them to focus on more value-added activities. The team simply uploads an overdue invoice with all of the debtors’ details and the system does the rest. Automated emails inform the debtor that any non-payments will be reported to the credit reference agencies which ultimately impacts their own credit rating. Angelica Bontea, the Senior Finance Manager who runs the order-to-cash teams for the UK and Ireland division of Johnson Controls, explains: “When we learned that you have the option to report a customer, which obviously has a more serious impact because every company would like to have a good credit score, it’s easier for them to do business,” Angelica explains. “The fact that we would have the option to check if the client received and was reading the e-mail was actually another powerful element.” Crucially, the system has a layer of artificial intelligence (AI) built in to recognise errors and prevent chasing expired emails, staff that have left or even companies no longer in business. This helps Angelica address a key challenge: “Debt Register resolves the issue of not getting replies from all our clients,” she says, “and it also addresses the incorrect contacts we might have in our database.” Angelica emphasises that Debt Register has been well received by her team because it is easy to implement and has some innovative features that solve the fundamental issues of high client volumes: “We had the option to upload files with hundreds of accounts if it was needed,” she continues. “This reduced our manual work significantly, and then, obviously, this was adopted much more easily by the team. “Then there are all the reporting capabilities that we can pull out and have a better understanding of our data and analysis. It is also easy to add users or report clients in bulk; you can do many things through ancillary feeds. So, I would say it was received well because it served the purpose of covering a gap in our process.” The ease with which the Debt Register platform could be integrated within day-to-day operations was essential: “The platform is a cloud-based solution and is very user friendly,” she says. “At the beginning, we had people training with the Debt Register team. That took no more than an hour, and once the knowledge was sitting in our team, they were able to train others internally.” Debt Register is designed to complement and support the credit team, and Angelica says the benefits of the platform were realised almost immediately: “We could see the benefits after the first month,” she says. She also sees a positive effect on her team: “We started with the end goal of improving collections in mind and seeing how the tool is helping them to collect the cash better and faster is definitely having a positive impact on their morale.” Source: Raysonho @ Open Grid Scheduler / Scalable Grid Engine
8 Finance Monthly. The Monthly Round-Up GLOBAL FINANCIAL WEALTH MARKET SEES FIRST DECLINE IN MORE THAN A DECADE The value of global financial wealth shrank for the first time in 15 years in 2022, declining by 4% to $255 trillion. Drivers include spiking inflation, the resulting rise in interest rates, and poor equity market performance against the backdrop of geopolitical uncertainty sparked by the war in Ukraine. However, the decline is expected to be short lived, with a 5% rebound to $267 trillion expected in 2023. These are among the findings of the BCG Global Wealth Report 2023: Resetting the Course, the 23rd annual global wealth report from Boston Consulting Group (BCG), being released today. Bright spots in 2022 include a 6.2% increase in the value of personal cash and deposits, as a more risk-averse approach to investments prevailed. The value of real assets, ranging from real estate to art, also rose by 5.5% to reach $261 trillion. Overall, that brought total absolute global wealth to $516 trillion in 2022, a 1% increase compared with 2021. “The first downturn in the global financial wealth market since the 2008 crisis came after a 10% rise in value in 2021, which was one of the sharpest in over a decade,” said Michael Kahlich, a BCG managing director and partner, and coauthor of the report. “We expect that the improving macroeconomic outlook and rebound in stock markets will drive a return to growth in financial wealth as early as 2023, and our five-year compound annual growth rate forecast to 2027 remains a healthy 5.3%. However, the recent headwinds in the market show how important it is for industry players to future proof now for consistent longterm growth.” Domiciles and Regions Are Growing at Different Rates Financial wealth continued to grow in Asia Pacific, the Middle East, Africa, and Latin America in 2022, but declined in North America and Europe. In addition, as is often the case in the context of macroeconomic uncertainty, cross-border wealth rose by 4.8% in 2022 to reach $12 trillion globally. Against this backdrop, the year saw a shift in booking center dynamics, as follows: Switzerland remains a highly attractive wealth management and financial hub but is expected to be overtaken by Hong Kong as the world’s largest booking center by the end of 2025. Hong Kong has achieved the highest assets under management (AuM) growth rate among top
9 Finance Monthly. The Monthly Round-Up booking centers over the last five years, with a compound annual growth rate (CAGR) of 13%. However, it is facing strong competition from Singapore, which is increasingly perceived as a safe-haven gateway to the Asia Pacific region. Finally, the United Arab Emirates attracted assets from across regions, including Asia Pacific and Eastern Europe, growing its AuM faster than any other booking center. Its financial wealth is expected to continue to grow over the next five years at a healthy 10% rate. Profits Under Pressure Margins in the industry had been eroding for a while, but wealth managers were buffered by the favorable climate in the financial markets and rising client business volumes. However, the latter registered an 11% decline in 2022. In addition, costs rose across the industry, driven by larger front-office teams, wage inflation, and technology spending, and are expected to remain high as inflation persists at levels above the previous decade. Pre-tax profit margins for wealth managers decreased by an average of 2.3 basis points (bps) globally. Players in the Asia Pacific and North America regions saw the steepest declines, with 5.5 bps in Asia Pacific and 3.1 bps in North America, compared with a 2.5 bps rise in Europe, and 0.3 bps increase in Latin America. STRONG GROWTH LEADS TO A ROUND OF PROMOTIONS AT ALBERT GOODMAN A strong set of financial results for 2022/23 has led to the promotion of 16 senior staff members at regional accountancy firm Albert Goodman as revenue tops £18 million for the first time, paving the way for future leaders. Albert Goodman has reported a growth in turnover of 12% and reported a record year for new business wins which has allowed for 10 director and six senior manager promotions from within the firm’s audit, tax, farms and estates, financial planning and HR teams. This record number of promotions is due to the sustained growth which is creating new opportunities for its people based in Taunton, Weston-super-Mare, Weymouth, Yeovil and newly opened Bristol office. This announcement comes at a time Albert Goodman has been voted by Best Companies as the best accountancy firm to work for in the UK, securing this title for a second year running. Iain McVicar, Managing Partner at Albert Goodman, commented: “I’d like to say a huge congratulations to those individuals who have been recognised for all their hard work and commitment. By promoting the next generation of leaders, this will help support our growth and fulfil our key strategic ambition of remaining an independent accountancy and financial planning firm in the South-West.” Iain McVicar Managing Partner at Albert Goodman
10 Finance Monthly. The Monthly Round-Up CASTLEFORGE APPOINTS NEW CHIEF FINANCIAL OFFICER Castleforge has announced the appointment of Neil Smith as Chief Financial Officer. An ACA chartered accountant, Neil joins Castleforge having held senior finance and operational positions at both The Carlyle Group and Bridgepoint. Neil joins from Invest and Fund Limited, where he was responsible for business operations and fundraising from institutional lenders. At Bridgepoint, Neil was Head of Fund Finance and Operations and led the fund operations team through a period of material AUM growth and the firm’s initial public offering. Prior to this, Neil was an Associate Vice President within the European funds team at The Carlyle Group. In his new role as Chief Financial Officer at Castleforge, Neil will be responsible for the operational and financial management of the firm, including developing successful commercial, operational, and financial initiatives to ensure the delivery of Castleforge’s strategic objectives. Neil will oversee all financial aspects of the business and work with senior stakeholders to accelerate growth of the business across the UK and Europe, which will include further developing Castleforge’s in-house capabilities and operating platforms. Since its inception in 2010, Castleforge has invested approximately £1bn, gaining a strong reputation for value-add investment in office, residential and hotel real estate across the UK and Europe. The company recently announced the acquisition of Winchester House, the former HQ of Deutsche Bank, in one of the City’s most significant deals since the pandemic. Michael Kovacs, Founding Partner of Castleforge said: “Neil brings a wealth of experience not just guiding a finance function but serving as a strategic business partner. He joins Castleforge at an ideal time following our growth and expansion across the UK and Europe. We look forward to welcoming Neil to the team.” Neil Smith, incoming CFO at Castleforge said: “It is fantastic to be joining Castleforge as the firm grows from strength to strength. I’m excited about the business’s focus on research-led investment and operational real estate, and I’m looking forward to working with the team to deliver on the firm’s strategic goals.” Neil Smith Incoming CFO at Castleforge
11 Finance Monthly. The Monthly Round-Up Experian has today announced the launch of 4D Credit - a new suite of services designed to help lenders better manage their commercial lending portfolio and provide valuable support for small businesses as they look to battle economic uncertainty. For the first time, commercial lenders have access to Experian’s market-leading credit risk data and analytics capabilities all in one place. 4D Credit provides a ‘full picture’ view of affordability, growth, survivability, and risk by sourcing and analysing a range of relevant data sources, including credit consumption, payment behaviour, and current account turnover. Recent research from Experian, which surveyed over 200 lenders, found that 33% said current affordability processes and data aren’t sufficient enough to meet the requirements of Consumer Duty. 59% said their data and technology needs updating for them to be fully confident that they are ensuring the good customer outcomes that Consumer Duty demands. Further Experian research found that over half (58%) of small businesses agree Consumer Duty regulation will help protect businesses as well as consumers. James McGarva, Managing Director of Business Information Services at Experian, said: “Our new suite of services comes at an important time as, not only are we seeing significant changes being driven by the Consumer Duty regulation, many UK small businesses are also looking to push on against a backdrop of rising inflation and the strain of high energy costs. “By providing lenders with the relevant tools, it allows them to offer a highly personalised approach to risk assessments and affordability, and gives valuable insight to support new and existing customers when access to finance is most needed. Getting this level of understanding provides a much better foundation to help their customers thrive and survive in this increasingly difficult environment.” 4D Credit helps lenders make the most informed credit decisions, whilst managing risk effectively. It also allows a far more accurate lending process by using a wider set of criteria to segment customers and prospects and identify new cohorts that may sit just outside risk appetite but have mitigating factors. Lenders also have access to Experian’s unique Survivability Score, a measure of the longterm life expectancy of a small business, and High Growth Score, which identifies small businesses with considerable growth potential based on their financial profile, performance to date, and the track-record of the individuals running the business. EXPERIAN LAUNCHES 4D CREDIT TO HELP LENDERS BETTER SUPPORT SMALL BUSINESSES THRIVE AND SURVIVE
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SUSTAINABLE INVESTING A Guide to Making Responsible Financial Decisions What is Sustainable Investing? Sustainable investing, also known as socially responsible investing or impact investing, is the practice of investing in companies and funds that align with your personal values and beliefs. The aim is to not only generate financial returns but also to contribute to positive social and environmental outcomes. Investing in sustainable companies and projects can have a significant impact on the world. By investing in companies that prioritize sustainability, investors can help drive positive change and encourage businesses to adopt more sustainable With climate change and issues such as social inequality being at the forefront of our minds, more and more people are looking to make ethical and sustainable investment decisions. However, navigating the world of sustainable investing can be overwhelming, with multiple approaches and criteria to consider. This guide will help you understand sustainable investing, the different approaches, how to assess companies, and how to build a sustainable investment portfolio. Finance Monthly practices. This, in turn, can lead to a healthier planet, stronger communities, and a more equitable society. The Importance of Sustainable Investing The need for sustainable investing has grown over the years, as individuals and businesses alike are becoming UNDERSTANDING SUSTAINABLE INVESTING Finance Monthly. Front Cover Feature 13
more conscious of the negative impacts of unsustainable practices. Climate change, social inequality, and environmental degradation are just a few of the issues that have highlighted the need for a more sustainable approach to investing. Investing in sustainable companies can help address these issues by promoting positive social and environmental outcomes. For example, investing in renewable energy companies can help reduce greenhouse gas emissions and combat climate change. Similarly, investing in companies that prioritize fair labor practices can help promote social equality and reduce exploitation in the workplace. The Evolution of Sustainable Investing Sustainable investing has evolved from merely avoiding “sin stocks” (such as tobacco or weapons companies) to a broader set of criteria that takes into account environmental, social, and governance (ESG) factors. As the demand for sustainable investing has grown, investment options have expanded, with more funds and companies promoting their sustainable practices. Today, sustainable investing encompasses a wide range of strategies and approaches. Some investors focus on companies that are leaders in sustainability, while others seek to invest in companies that are making significant progress in improving their sustainability practices. Some investors prioritize social impact, while others prioritize environmental impact. Regardless of the approach, sustainable investing has become an increasingly popular way for investors to align their investments with their values and contribute to positive change in the world. The Different Approaches to Sustainable Investing As more and more people become aware of the impact that their investments can have on the world, sustainable investing has become increasingly popular. There are several different approaches to sustainable investing, each with its own unique set of criteria and goals. Environmental, Social, and Governance (ESG) Criteria One of the most common approaches to sustainable investing is to use ESG criteria to assess potential investments. ESG criteria are used to evaluate a company’s adherence to environmental, social, and governance policies. This approach takes into account factors such as a company’s carbon footprint, labor practices, and board diversity. By using this information, investors can determine if a company is a good sustainable investment option. For example, a company with a high carbon footprint may not be considered a good sustainable The need for sustainable investing has grown over the years, as individuals and businesses alike are becoming more conscious of the negative impacts of unsustainable practices. 14 Finance Monthly. Front Cover Feature
investment option, as it could contribute to climate change. On the other hand, a company with strong labor practices and a diverse board may be seen as a more sustainable investment option. Socially Responsible Investing (SRI) Another approach to sustainable investing is to use socially responsible investing (SRI) criteria. This approach takes into consideration a company’s social and ethical practices when making investment decisions. Investors who follow this approach look for companies that have strong employee rights and labor practices, as well as a positive impact on society. For example, an investor who follows SRI criteria may look for companies that have a strong commitment to diversity and inclusion, or that have a positive impact on their local communities. By investing in these companies, investors can support businesses that are making a positive impact on the world. Impact Investing Impact investing is another approach to sustainable investing that has gained popularity in recent years. This approach involves investing in companies or funds that have a positive impact on society or the environment. Impact investors often look for projects that are tackling issues such as climate change or poverty reduction. For example, an impact investor may invest in a company that is developing renewable energy technology, or in a fund that supports microfinance initiatives in developing countries. By investing in these projects, impact investors can support initiatives that are making a positive impact on the world. Green Bonds and Climate Bonds Green bonds and climate bonds are another option for investors who are interested in sustainable investing. These are debt securities that investors can buy to fund environmentally friendly projects. These bonds typically have a lower risk of default and can provide a stable source of income for investors. For example, a green bond may be used to fund the construction of a wind farm, while a climate bond may be used to fund a project that helps to reduce carbon emissions. By investing in these bonds, investors can support projects that are making a positive impact on the environment. A green bond may be used to fund the construction of a wind farm Finance Monthly. Front Cover Feature 15
Overall, there are many different approaches to sustainable investing, each with its own unique set of criteria and goals. By considering these different approaches, investors can make informed decisions about how to use their investments to support a more sustainable future. Assessing Companies for Sustainable Investment Sustainable investing has become increasingly popular in recent years, as investors seek to align their financial goals with their values. One of the key ways to assess a company’s sustainability is by evaluating its environmental, social, and governance (ESG) performance. Evaluating ESG Performance ESG performance analysis involves looking at a company’s impact on the environment, its relationship with society, and its governance practices. Environmental factors include a company’s carbon footprint, water usage, waste management, and resource consumption. Social factors include labor practices, human rights, and community engagement. Governance factors include board diversity, executive compensation, and anti-corruption policies. Investors can use resources such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB) to assess a company’s ESG performance. These organizations provide standards and guidelines for sustainability reporting, making it easier for investors to compare companies’ sustainability performance. Identifying Greenwashing Greenwashing is a common practice in which companies promote themselves as environmentally friendly, but their practices do not match their claims. This can make it difficult for investors to identify truly sustainable companies. To avoid investing in companies that engage in greenwashing, investors need to evaluate a company’s ESG performance and look for third-party certifications and ratings. These certifications and ratings provide independent validation of a company’s sustainability performance. The Role of Ratings and Certifications Third-party certifications and ratings can help investors identify sustainable companies and projects. These certifications and ratings assess a company’s sustainability performance and provide independent validation. For example, the Leadership in Energy and Environmental Design (LEED) certification is a widely recognized standard for green buildings. The Carbon Trust Certification is another certification that helps companies measure, manage, and reduce their carbon footprint. By using these resources and evaluating a company’s ESG performance, investors can make informed decisions about sustainable investing and contribute to a more sustainable future. Building a Sustainable Investment Portfolio Investing in a sustainable portfolio not only helps the environment but also provides investors with a sense of social responsibility. A sustainable investment portfolio is a collection of investments that aim to generate financial returns while also having a positive impact on the environment and society. Diversification and Risk Management Diversification is a key strategy for managing risk in any investment portfolio. A sustainable investment portfolio should be diversified to manage risk. Investors should look for a mix of assets, including equities, bonds, and alternative investments such as renewable energy projects. By diversifying investments, investors can spread their risk across different asset classes and reduce the impact of any one investment on their portfolio. Alternative investments, such as renewable energy projects, can provide an additional layer of diversification and can also provide a stable source of income. Renewable energy projects, such as wind and solar farms, can provide investors Contents 16 Finance Monthly. Front Cover Feature
CONCLUSION Sustainable investing is not only a way to contribute to positive social and environmental outcomes but also a way to generate financial returns. By understanding the different approaches to sustainable investing, assessing companies for sustainable investment, and building a sustainable investment portfolio, investors can make responsible financial decisions that align with their values and beliefs. with a steady stream of income through long-term power purchase agreements. Selecting Sustainable Investment Funds Investors who are interested in building a sustainable investment portfolio should consider investing in sustainable investment funds. These funds invest in companies that are committed to sustainable practices and have a positive impact on the environment and society. Selecting sustainable investment funds involves looking at a fund’s investment strategy, its holdings, and its track record. Investors should look for funds that align with their values and have a history of positive returns. It is also important to consider the fees associated with the fund and the fund manager’s experience and track record. Investors can use online tools and resources to research sustainable investment funds and compare their performance and fees. They can also consult with a financial advisor who specializes in sustainable investing to help them select the right funds for their portfolio. Incorporating Sustainable Investments into Your Existing Portfolio Investors who already have a portfolio can incorporate sustainable investments by reallocating their assets and selecting sustainable funds. A financial advisor can help investors identify which assets to reallocate and which sustainable funds to invest in. When reallocating assets, investors should consider their investment goals, risk tolerance, and time horizon. They should also consider the tax implications of selling investments and buying new ones. Investors can also consider investing in exchange-traded funds (ETFs) that track sustainable indices. These ETFs provide exposure to a diversified portfolio of sustainable companies and can be a cost-effective way to incorporate sustainable investments into an existing portfolio. In conclusion, building a sustainable investment portfolio requires careful research and planning. By diversifying investments, selecting sustainable investment funds, and incorporating sustainable investments into an existing portfolio, investors can generate financial returns while also making a positive impact on the environment and society. This article does not constitute financial advice. Selecting sustainable investment funds involves looking at a fund’s investment strategy, its holdings, and its track record. Finance Monthly. Contents 17
Banking Financial Services 20. Securing The Financial Future Insights from IBM on Battling Cyber Threats in an Evolving Landscape
Banking & Financial Services 20 Finance Monthly.
FINANCIAL FUTURE SECURING THE Insights from IBM on Battling Cyber Threats in an Evolving Landscape Corey Hamilton Global Financial Services Leader & Partner, IBM Security Services As the Global Financial Services Leader at IBM Security Services, could you share your insights on cybersecurity in the financial industry? The financial services sector is undergoing a period of prolonged and far-reaching change – a digital transformation that has been in progress for some time but which was accelerated by the pandemic. The wide-spread adoption of hybrid working, often supported by the implementation of cloud-based systems, reduced or constricted budgets, daunting technical debt are just some of the more obvious developments; adaptations that are uncovering new vulnerabilities and opening up new routes of attack for cybercriminals and hostile states. In recent years, we have seen increased cyber threats targeting the financial sector, including state-sponsored threats. What are some emerging trends or techniques that cybercriminals employ, and how can financial institutions stay ahead of these threats? One of the most worrying trends is the rise of increasingly sophisticated ransomware attacks. The days of simply locking someone’s data and then demanding a payment in return for the encryption key are long gone. Attackers have largely replaced that model with a more damaging two-step approach that simultaneously paralyses a target’s system while surreptitiously extracting its data. Finance Monthly. Banking & Financial Services 21
Cybercriminals are always looking for the next development. As a result, things are about to get even more complicated: triple extortion has arrived. This takes the twostep approach and adds in ransom demands directed at a victim’s supply chain, a common source of vulnerability as the security maturity of each part of a supplier network won’t necessarily be the same. How does IBM Security Services help financial organisations develop robust cybersecurity strategies? Are there any specific frameworks or methodologies that you follow? The financial services sector needs to take a ‘zero trust’ approach to security – a methodology that abandons the idea that you can trust anyone as far as security is concerned. Everyone needs to be re-evaluated and re-authenticated and then given the lowest set of system privileges required for them to operate. This approach also assumes the worst – that a breach is happening – it’s about spotting it rather than thinking, ‘I can’t see an attack, I’m therefore okay’. Zero trust argues that every organisation is under attack – it’s just a matter of how bad it might be. Data breaches and data privacy are major concerns for financial institutions. What steps should organisations take to ensure the security of customer data and comply with regulatory requirements and avoid being hacked in the first place? The burgeoning digitisation of the financial services industry, including the widespread adoption of hybrid cloud, has rightly attracted the attention of regulators and policy makers. As a result, financial institutions need to balance innovation with increasingly stringent compliance and security requirements. For example, the Bank of England is looking at ways to facilitate greater resilience and the adoption of cloud-based services and other new technologies – an approach that combines support for innovation with regulatory oversight. With the rise of cloud computing and remote work, how can financial institutions effectively manage cybersecurity risks in these environments? What are some best practices for securing cloud-based systems and remote access? Financial institutions are among the top targets for cybercriminals because of the wealth of valuable data they hold, which make them a very attractive to cybercriminals. This hasn’t gone unnoticed – businesses are waking up to the notion that standard security measures are not enough in the cloud. To keep customers and proprietary data secure and private, enterprise-grade security innovations, such as confidential computing, are essential. Of course, security in the digital domain isn’t new; protecting internet communication with HTTPS is well established, as is the use of SSL, which was initially applied to credit card transactions but has since become ubiquitous. Confidential computing has the potential to become equally as pervasive due, in part, to the widespread adoption of cloud technology. By ensuring that data is processed in a shielded environment confidential computing makes it possible to securely collaborate with partners without divulging proprietary information. It makes it possible for different “The days of simply locking someone’s data and then demanding a payment in return for the encryption key are long gone.” Banking & Financial Services 22 Finance Monthly.
organisations to amalgamate data sets for analysis – such as fraud detection – without getting to see each other’s information. Artificial intelligence and machine learning are being increasingly used in cybersecurity. How is IBM incorporating these technologies into its security solutions, and what benefits do they offer regarding threat detection and prevention? IBM Cloud for Financial Services is designed to help clients mitigate risk and accelerate cloud adoption for even their most sensitive workloads. Security controls are built into the IBM Cloud to enable financial institutions to automate their security and compliance behaviours and make it easier for clients to simplify their risk management and demonstrate regulatory observance. The IBM X-Force Protection Platform augments our cyber security experts with AI and automation at global scale, resulting in more effective, efficient and resilient security operations. We have successfully helped clients proactively identify, protect, detect, respond and recover faster from attacks due to the unique capabilities of the platform. Our platform’s AI is used on top of what vendors provide within their off-the-shelf tools. The platform learns and incorporates the intelligence from 100s of analysts across thousands of our clients. It provides guidance on policy recommendations and reduces the noise, so critical items can be addressed immediately. The services platform promotes effective, efficient, and resilient security operations, at global scale, connecting workflows across our different services. It provides a method for integrating all of an organization’s security technologies cohesively within our open ecosystem. What this means is that the services platform is IBM’s end-to-end integrated approach to Security Services. This includes a combination of software, services and methodologies which are integrated in a centralized platform providing the clients with a unified experience. IBM’s services platform integrates across people, processes and tools using open standards and best practices. IBM Cloud for Financial Services is designed to help clients mitigate risk and accelerate cloud adoption for even their most sensitive workloads. Finance Monthly. Banking & Financial Services 23
Looking ahead, what do you see as the future of cybersecurity in the financial industry? Are there any emerging technologies or trends that will significantly impact how financial institutions approach cybersecurity? Highly regulated industries are feeling pressure to transform with an ever-increasing rate and pace. However, they must not lose focus on security, resiliency and compliance on their mission to modernise. This is especially important for financial services where regulations are rapidly changing and exposure to cyber threats has escalated to unprecedented levels. And it’s about to get even more complex. Financial institutions need AI tools that are accurate, scalable and adaptable can keep up with the evolving threat landscape. IBM has been a leader in the work of foundation models – and watsonx is part of IBM’s push to put state-of-the-art foundation models in the hands of businesses. Furthermore, IBM is thinking bigger -- building and applying foundation models for entirely unexplored business domains such as geospatial intelligence, code and IT operations. Financial institutions also need to be crypto-agile in order to protect themselves from attack by quantum computers. Quantum and crypto agility can help financial institutions to improve their cybersecurity posture. The aim is to combine the performance of current processes that use classical and AI solutions in fraud management, risk management and customer experience, with that of the latest quantum technology, with the goal of achieving a quantum advantage. This is where AI comes in. It can help cybersecurity teams by automating protection, prevention, detection and response processes. Paired with human intelligence, financial services companies can extend their visibility across a rapidly expanding digital landscape of applications and endpoints. Banking & Financial Services 24 Finance Monthly. IBM has been a leader in the work of foundation models – and watsonx is part of IBM’s push to put state-of-the-art foundation models in the hands of businesses. Image Source: Clockready
Business Economy. 28. An Interview With Julia Shamini Chase Pioneering Compliance Leader and CEO of Gold Leaf Consulting Ltd UK’s Battle Against Inflation How Much More Pain is There to Come? Investment Company Managers on Interest Rates, Inflation and Bond Markets Exploring Offshore Structures Legality, Mechanics and Corporate Advantages Exploring the Morality of Using Offshore Structures for Big Business How Can Businesses Leverage DE&I at Scale to Become Conscious Allies? Is it Possible to Lead a Business Without Empathy? 34. 38. 42. 44. 48. 52.
Recently, Finance Monthly was delighted to speak with Julia Shamini Chase, the Founder and CEO of Gold Leaf Consulting Limited. Julia Shamini is a highly respected figure in the BVI regulatory law and compliance arena. With an exceptional track record and unwavering dedication to excellence, Julia Shamini has positioned Gold Leaf as the gold standard in the compliance industry. She is a highly sought-after authority in the British Virgin Islands regulatory and compliance regime and beyond. Julia Shamini brings a wealth of expertise and experience to compliance consulting. In this article, we delve deeper into Julia Shamini’s insights into the BVI regulatory regime and explore her perspective on anticipated changes and upcoming trends, offering readers a comprehensive understanding of the regulatory landscape in the BVI. Business & Economy Finance Monthly. 28
How would you describe the current regulatory environment in the BVI, and how has it evolved over the years? The BVI business company (BVI BC) and the broader BVI financial services industry are widely recognized as essential enablers of global commerce, establishing the BVI as a prominent international financial centre. With the evolution of its financial services landscape, the BVI has progressed from primarily facilitating company incorporations to offering valueadded services encompassing corporate, commercial, fund management, and succession planning products. The BVI BC JULIA SHAMINI CHASE An Interview With... has gained popularity as an assetholding vehicle and secured listings on international stock exchanges. To support its sophisticated offerings, the BVI has developed a robust regulatory framework to prevent misuse of its products, services, and jurisdiction for illicit activities such as money laundering, terrorist financing, and proliferations financing. Compliance with the FATF recommendations and OECD guidelines is a priority for the BVI, demonstrated through its ongoing good standing ranking and membership in the Caribbean Financial Action Task Force. Building upon its solid foundation, the BVI introduced comprehensive legislation for virtual asset service providers in February 2023, following the establishment of the BVI Fintech Sandbox regime in 2020. The Sandbox regime allows eligible fintech service providers to test their innovative products and services in a quasi-regulated environment. Investors have consistently shown interest in leveraging the BVI’s exceptional financial landscape to facilitate their trade. In summary, investors recognize the BVI as an allencompassing business environment emphasizing a harmonious blend of innovation, usability, and regulation. Gold Leaf has been an active observer and stakeholder, witnessing and participating in the evolution of the BVI’s regulatory landscape. Our deep-rooted relationship with relevant stakeholders and regulators has enabled us to foster a strong Pioneering Compliance Leader and CEO of Gold Leaf Consulting Limited Finance Monthly. Business & Economy 29
Business & Economy Finance Monthly. 30 understanding of expectations and priorities. Through my appointment as a member of the BVI FSC’s Fintech Steering Committee, we have actively contributed to shaping the virtual assets regulatory landscape in the BVI. Through these collaborations, we have provided valuable insights and perspectives, ensuring that the BVI’s regulatory framework remains robust, transparent, and responsive to the needs of businesses and investors. In September last year, the BVI Financial Services Commission approved the Territory’s first investment business license, which authorizes the holder to operate a cryptocurrency exchange. Can you tell us more about it? The approval of the BVI’s first cryptocurrency exchange license marked a momentous occasion for the jurisdiction and Gold Leaf as the regulatory counsel behind the successful licensing application. We take immense pride in having played a pivotal role in preparing and overseeing the application on behalf of our client, ensuring compliance with the stringent regulatory requirements. Our client was also the inaugural participant in the BVI Fintech Sandbox license. Through strategic planning, we successfully navigated the licensing process. We utilized the Sandbox regime to facilitate our client’s operational familiarity within the BVI’s regulatory landscape, fostering innovation and a secure virtual asset ecosystem. During the Sandbox phase, as regulatory and compliance consultants, we assisted our client in developing and enhancing their policies, controls, and procedures to ensure compliance with BVI regulatory requirements. Once our client was confident operating within the BVI’s regulatory framework, we applied for their full Category 7 license under the BVI Securities and Investments Business Act 2010 (SIBA) specifically for cryptocurrency exchange platforms. We continue to act as regulatory counsel and as the approved compliance officer for our client, through Gold Leaf Corporate Compliance Services Ltd., the licensed corporate compliance service provider arm of Gold Leaf’s business. The enactment of the BVI’s Virtual Assets Service Providers Act, 2022 has expanded the regulatory regime for BVI entities and legal arrangements involved in virtual assets. This legislation complements the existing regulatory framework, supports fintech development, and aligns with international standards for virtual asset regulation. This has not only bolstered investor
Finance Monthly. Business & Economy 31 confidence but has also attracted a new wave of entrepreneurial ventures to the BVI, positioning the jurisdiction as a favorable destination for cryptocurrency-related activities. What makes BVI so attractive to institutional investors in the crypto industry? When discussing the attractiveness of the BVI to institutional investors in the crypto industry, it would be remiss of me to not only highlight the jurisdiction’s favorable regulatory environment which I will discuss in more detail, but also its natural beauty. The BVI’s unique combination of regulatory excellence and breathtaking surroundings contributes to its appeal as a preferred destination for institutional investors in the crypto industry. In addition to its stunning beauty, the BVI offers the following key elements that make it attractive to institutional investors in the crypto industry: 1. Regulatory Clarity – which the BVI has established with a clear and well-defined regulatory framework specific to virtual assets, through the passing of the BVI Virtual Assets Service Providers Act, 2022 (VASP Act). The VASP Act addresses the licensing and supervision of persons and entities engaged in virtual assets activities. It establishes a framework for compliance, risk management and reporting obligations which enhance consumer protection and investor confidence in the virtual assets space. 2. Investor Protection – the VASP Act implements robust investor protection measures, such as custody and safekeeping requirements, capital adequacy, testing, auditing, and, robust money laundering, terrorist and proliferation financing, and fraud detection measures, to ensure overall investor protection. 3. Compliance and Reputation – The BVI has, and continues to maintain, a stellar reputation as a compliant and robustly regulated jurisdiction. The VASP Act and the BVI Anti-Money Laundering, Counter-Financing of Terrorism and Proliferation Financing (AML/ CFT/PF) legislative framework imposes a risk-based approach on virtual assets providers, to demonstrate that their AML/CFT/ PF policies and procedures remain adequate and effective to combat their inherent money laundering, terrorist financing and proliferations financing risk exposures. Such robust compliance measures are attractive to institutional investors who prefer investing in jurisdictions that actively combat financial crime, as it reduces the risk of their investments being involved in illicit activities inadvertently. 4. Stable and Political Environment – The BVI Government has demonstrated its support to help develop a robust virtual assets sector, which reduces uncertainties and risks associated with sudden regulatory changes or sudden policy shifts. It has also established a strong and stable economy, which is reflected in its fiscal policies, sound financial structure and proactive measures to mitigate risk. What other trends do you expect to see around regulation and compliance in the British Virgin Islands? The BVI has consistently demonstrated its foresight and tenacity to evolve and adapt as a leading offshore finance centre. At Gold Leaf, my team and I actively engage in monitoring and analyzing emerging trends that shape the regulatory and compliance landscape in the BVI. As a forwardthinking and commercially minded consultancy firm, we anticipate several key areas of focus in the BVI’s future regulatory and compliance landscape: 1. Embracing Regtech Solutions – The BVI has always been a forwardthinking jurisdiction, as evidenced by its embracing of Fintech. This has allowed the jurisdiction and, moreover, the BVI FSC as a regulator, to foster innovation while ensuring robust and transparent regulation. I foresee the BVI adopting more regulatory technology solutions to streamline compliance processes, automate reporting, and improve data analytics capabilities. Regtech adoption will enable more efficient compliance management while reducing costs and increasing accuracy. The BVI AML Legislation already permits the use of electronic or digital verification (ED) provided that such ED satisfies certain prescribed criteria within the legislation. “The approval of the BVI’s first cryptocurrency exchange license marked a momentous occasion for the jurisdiction and Gold Leaf as the regulatory counsel behind the successful licensing application.”
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