IBS Journal May 2015
Guilty until proven innocent
Once a back-water and tick-box exercise, anti-money laundering (AML) is now centre stage. It has been a painful conversion for banks, with eye-watering fines and significant brand damage along the way. The debate is now centred around what constitutes best practice, particularly in light of impending new regulations.
The combination of heavy fines and greater accountability for individuals means anti-money laundering (AML) is no longer a tick-box exercise. Aside from the financial impact (and, of course, the moral imperative of getting it right), it can also have a major detrimental effect on brand. The issue isn’t now so much about trying to focus senior management attention and attract investment, it is more about how to achieve effective AML in practice. More resources and more bucks are being thrown at this area, but the complexity is increasing and it is as much a cultural challenge as a technology one. The budgets for AML and the closely
associated Know Your Customer (KYC) have ballooned, reflected in a big increase in headcount in this area in many banks (al- though a lack of expertise in the industry is an issue). There have also been some high profile appointments. For instance, Stand-
ard Chartered Bank (which was last year hit with a $300 million penalty from the New York Department of Financial Services for compliance failures) has recently signed up to its financial crime risk committee Sir Iain Lobban, the former director of GCHQ, the UK’s security and intelligence organisation. Meanwhile, new regulations are
on the way, including those related to correspondent banking from the Wolfsberg Group, which is an association of eleven global banks, and the EU’s Fourth Money Laundering Directive. With regards the former, there has been a clear detrimental effect on some correspondent banking relationships as a result of AML concerns and the issue has spawned the term ‘Know Your Customer’s Customer’ (KYCC), which is a major part of the heightened complexity of compliance. The Fourth Directive, meanwhile, puts into effect the recommendations of the
Financial Action Task Force (FATF) and is focused on four areas: o A risk-based approach, giving great-
er weight to the levels of risk associated with particular jurisdictions and sectors; o Tighter checks on Politically
Exposed Persons (PEPs), including family members and close associates; o Better consideration of beneficial
ownership, potentially resulting in public registers for companies (and, perhaps, for trusts and partnerships); o And, for the first time, the need to
include tax crimes as a predicate offence for money laundering. The way that the regulations will be
adopted by each country is unclear. In the area of beneficial ownership in the UK, for instance, it might be something that Companies House addresses or there could be some new form of register. ‘The identity of beneficial ownership has often been
‘There can no longer be the attitude,
how little can we get away with?’ Gary Wilson, CCL Compliance
22
© IBS Intelligence 2015
www.ibsintelligence.com
analysis: aml
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56
