Combating money laundering is no longer a choice but a must for banks. But the effort that must go into fighting it is daunting. How can technology, especially artificial intelligence and machine learning, battle the costs and drains on monetary and human resources required for AML compliance, making the whole process a lot easier and more effective? Can AI be trusted to do the job right?
Banks are spending $20 billion on compliance in an effort to combat money laundering, yet only one per cent of illicit financial flows are seized by authorities every year. While regulations have been introduced to crack-down on money laundering, so far they have had a limited effect.
As customers age, their vulnerability to abuse, especially financial, increases concurrently. Elder financial abuse is not a new crime but is becoming more prevalent with the current senior boom. Where does the bank’s responsibility to ensure safe banking for elderly customers begin and end, and what steps can it take to ensure the financial well-being of all clients, especially its most vulnerable?
It’s not news that many economies of the developing world face barriers to financial inclusion, making it difficult for citizens to both borrow and save; but the good news is that help has arrived in the linking of mobile payments with remittances. From sub-Saharan Africa to Latin America and the Caribbean, mobile money is bringing the previously underbanked into the fold.
The penalties for not complying with ever-evolving anti-money laundering and sanctions regulations are steep and have caught the attention of bank boards and senior management, already besieged by an assortment of other competing challenges. AlixPartners surveyed a variety of institutions to uncover the top AML and sanctions-compliance concerns that financial firms must address, and to discover some of the solutions they are implementing.
On November 15, the Commonwealth Bank of Australia (CBA) held its annual general meeting (AGM), during which a small but notable protest vote emerged against the bank’s board appointments and executive remunerations.
The details matter when it comes to sensitive banking data, especially relating to payments. Regulators are clamping down on banks in response to the threats posed by ever-increasing criminal and terrorist activities and are requiring specific information about not only the sender but also the recipient of a payment; fortunately solutions exist in the form of MT structured message formats.
Many bank managers are grateful that they do not live and work in war-torn countries; but guess what, hardline terrorists are bringing the battle close to home. Within the current world climate, banks, small and large, have a responsibility to participate in the war against domestic terrorism by implementing vigorous anti-money-laundering/counter-terrorist-financing programs.
An ounce of prevention is worth a pound of cure, particularly in the sphere of AML-compliance in the banking industry. Yes, it is costly to establish an effective AML-control structure, but non-compliance costs can be much more taxing—so how do financial firms institute cultures of compliance throughout their operations that ultimately minimize risks to all parties involved and increase enterprise value?
Banks continue to unwittingly act as laundromats for dirty money, but hopefully never again on the same scale as the recent operation dubbed Laundromat, which saw billions of dollars pass from Russian sources through numerous banks around the world. Authorities are still working to unravel the tangled trail and uncover those who were complicit in carrying out the shockingly successful operation.