James Saunders
Far from a victimless white-collar crime, money laundering is a crucial enabler of corruption, drug smuggling, human and wildlife trafficking, terrorism, and other organised criminal activities. The role that banks, lenders, and other Financial Institutions (FIs) play in identifying suspicious financial transactions is thus vital to the integrity of economic systems and the security of societies.
That’s why leading companies no longer consider compliance with Anti-Money Laundering (AML) regulations as an exercise in administrative box-checking. They face higher expectations from regulators, who see FIs and large corporations as impactful investigators who must do more to bolster their AML processes.
If they fail to identify suspicious transactions or sanctioned people and entities, they can face severe reputational damage as well as material crimes and penalties. On a wider scale, nations that fail to implement and enforce stringent AML regulations may find it challenging to attract domestic and foreign investment.
There’s a worldwide responsibility to safeguard finance at every level. Here are five ways each regulated organisation can play its part.
1. Follow the rules and regulations
The financial world has to keep pace with clever criminal techniques. Global recommendations from the Financial Action Task Force (FATF) and local jurisdictional rules assist compliance teams at FIs in understanding what’s required of them, where they need more guidance, and how realistically they can grow while closing loopholes that launderers routinely target. In an increasingly digital world, change is inevitable, so a closer, coordinated, proactive response to fincrime is needed between regulators and FIs.
2. Increase partnerships
Closer relations between governments and the private sector should grow to instil confidence in their sharing of customer data (albeit sensibly) to improve AML across the board. In South Africa, for instance, the Revenue Service, the FIC, and the police have seen better cooperation to prosecute wrongdoing – an example of how an anti-fincrime community nationally (and across borders) can strengthen and standardise processes for AML and economic security.
3. Focus on culture
Company culture should include AML education, with diversified ways to assist this understanding. Guided training sessions, incentives, and insightful keynote talks can all help boost awareness of the impact of business values on everyday life. Compliance officers and HR teams should foster inclusive, transparent discussions around how workplace and compliance processes could work better together.
4. Invest in technology
RegTech looks to solve challenges around due diligence, data handling, risk reporting, watchlist screening, and payment monitoring. Digital-first, automated responses to fincrime can be flexible to evolving criminal methods and level the playing field for FIs to maintain robust and efficient Know-Your-Customer (KYC) and AML strategies that regulators expect.
Rethinking the genuine threat of fincrime, encouraging open discussion, adopting creative strategies and technology, and fostering collaboration can help prevent close gaps in the business’s armour. FIs must build a secure network of people, processes and technology to keep laundering at bay. In doing so, they can solidify a financial future that is less prone to crime and economic worries everywhere.
5. Clean up your data constantly
Incomplete or outdated customer data opens gaps for criminals to exploit. In addition to the upfront gathering of essential details, like the source of funds, the nature of business dealings, the transaction rationale, and expected account activity, it is critical to periodically re-screen customers to detect changes and keep data current.
James Saunders, co-founder and CTO at RelyComply. He writes in his personal capacity.
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