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IBM
JULY 2013
Tackling Money
Laundering to safegaurd reputation
Richard Collard, transactional Fraud, AML & Risk Expert, IBM
“As the financial services sector comes under increasing scrutiny, banks need to demonstrate that full measures have been put in place to prevent financial crimes”.
Global threat of Financial Crimes and Fraud Rife Despite the introduction of tougher legislation over recent years, money-laundering and financial scandals continue to dominate global news with key stakeholders continuing to lose faith in the financial services industry. To regain trust, financial institutions need to prioritise measures to counter financial crime with more than a simple compliance tick-box exercise and demonstrate to stakeholders that they have the procedures and solutions in place to detect and prevent financial crimes.
It has now been five years since the global financial crisis of 2008, and the conversation in the City has shifted from ‘what can we do to save our banks?’ to ‘what can we do to restore trust in our banks?’. As a result, it is imperative that the industry takes positive steps to address the key concerns of its stakeholders.
The fight against money laundering and terrorist financing (TF) has become an extremely high priority for financial regulators around the globe. The recent, very public, admonishments of poor operational practices at some of the
best known global banking institutions have served to highlight the fact that anti-money laundering (AML) processes, procedures and protocols must be improved to ensure compliance with evolving regulatory requirements. The cost of failing to do so can be astonishing – with settlements ranging from $619 million to $1.92 billion. These record- breaking settlements made the headlines for the financial services sector in 2012 and will continue to do so if firms fail to take extra measures needed to ensure absolute compliance with existing and future AML and TF regulations.
The UK regulator, the Financial Conduct Authority (FCA), itself declared last year that ‘Although we identified some examples of good AML risk management, we found serious weaknesses common to many firms, particularly in relation to, and quality of, enhanced due diligence and monitoring of high-risk relationships; and the weighting given to AML risk as considered against profitability of accounts and reputational or regulatory risk’.