2021 has the potential to be a defining year in the fight against global financial crime. The COVID-19 pandemic has exposed widespread vulnerabilities as compliance teams seek to manage remote employees spread across the world; regulators and governments are tightening restrictions; and technology is advancing at breakneck speed in a bid to keep pace with the increasingly sophisticated methods being used by financial criminals.
Financial Institutions are often deliberate targets and unwitting participants in crimes, from money laundering to market manipulation. A relatively recent addition is Green Crime, which includes transgressions against the planet’s natural resources, such as environmental and wildlife crime. Fortunately, Refinitiv’s recent survey results show that the majority of those surveyed want to end ecocide atrocities such as illegal wildlife trafficking, recognizing the risks to not only to the health of the environment but also the financial system.
It’s not easy to be stuck in the middle, a position that banks inhabit as they process the financial activities of others. Most transactions passing through their systems are honest, but some are illicit, often involving money laundering. Are banks innocent victims of criminals who exploit their processes or knowing participants in crimes? The case has not been tried, but public sentiment leans toward the latter. Can banks come clean?
While banks are easy targets to blame, the recent leaks of suspicious-activity reports—revealed by BuzzFeed News in September—instead confirmed that they are fulfilling their roles in the fight against international money laundering. Rather, it is the whole system that is on the verge of collapse and needs to be rethought.
The COVID-19 pandemic has not released financial institutions from their obligations to deal with money-laundering and terrorist-financing risks within their operations. In mid-April, the US FFIEC released its updated BSA/AML Examination Manual, geared for examiners who are assessing a bank’s compliance. Even though the Manual was not written directly for them, banks would be wise to familiarize themselves with its standards and requirements to ensure they are up to speed.
The European Union has put up a brave front against financial crimes such as money laundering, but the criminals still manage to get away with a way too much ill-gotten gain. Progress is being made with the new AMLD5 framework, but much more needs to be done to achieve resounding success. What are some of the steps the EU should take to finally grab this brazen bull by its horns?
Financial institutions spearhead a variety of activities, from approving college loans to setting up retirement funds, but they also play an important role in bringing terrorists to justice. By partnering with law enforcement, FIs are able to complete the puzzle by exchanging information on terrorism-financing-related transactions. These public/private partnerships are countering terrorist activities effectively, especially in the UK and the US, and creating CTF models for other countries to follow.
It may seem to bankers that they have been unfairly targeted by increasing compliance requirements recently. One directive after another has flowed down the pipe from regulators. But as firms have discovered, building and maintaining a culture of compliance and integrity brings with it many business rewards. What are the five best ways that financial institutions can weave compliance, business integrity and corporate social responsibility into all aspects of their operations?
Money-laundering activities should have received a fatal blow from the scandals revealed in such documents as the Panama Papers, but recent events paint a different picture: the offshore finance industry and money laundering continue to be alive and well! Financial institutions that find AML compliance an escalating struggle are not alone, but the costs of non-compliance are even more taxing. It’s past time for banks to take a closer look at their client portfolios.
On April 5, Lars Idermark resigned from his position as the chairman of Swedbank, headquartered in Sweden. Idermark stepped down from his position only a week after the chief executive officer, and previously the supervisor of Swedbank operations in the Baltic states, Birgitte Bonnesen, was fired.