ReleaseWire Connect

The fight against money laundering and terrorist financing is very much a global one. Collaboration is likely to hold the key to effectively combating exposure to financial crime, which is why it's so vital for EU-wide measures to be put in place. The Finnish government is one that has come out in support of a new EU-level supervisory system to help improve AML Monitoring in the fight against financial crime. It has specifically stated its support for the EU objectives to harmonise EU money laundering rules and develop specific legislation that will make it easier to implement AML Monitoring and measures that will stop the flow of illicit funds through the EU.

It has been more than half a century since the first legislation was put in place to try to combat financial crime. Since the Bank Secrecy Act was enacted so much has changed in the financial world and it's no secret that the advance of technology in particular has made it difficult for institutions to keep up. Today, it's estimated that the volume of elicit money that is captured and stopped every year is just 1%, despite the large financial investments made by businesses across the financial services sector in trying to prevent this. However, a new era is dawning for combating financial crime, as AML Compliance Software and a swathe of new digital regulatory technology (regtech) firms are starting to change the landscape. It's possible that they may tip the balance in favor of more effective financial regulation.

Anti-Money Laundering Compliance has moved to the top of the agenda for organizations globally today. Fighting illicit finance is a key priority for enterprises across Canada and information sharing and collaboration remains a key part of making this effective. The most recent ACAMS conference, which took place in October, had a lineup of more than 40 expert speakers on this subject and focused on targeting money laundering and financial crime. It featured a range of sessions designed to improve understanding of Anti-Money Laundering Compliance, as well as the tools available to any business to combat financial crime.

The number of fines being handed out to financial institutions that are failing to implement effective AML Compliance checks continues to rise. Gatehouse Bank has become the latest recipient of a penalty, as the Financial Conduct Authority (FCA) issued a £1.5 million fine to the bank in October this year. This is despite the fact that Gatehouse had anti-money laundering policies in place - the presence of these policies did not ensure their implementation, as the standard for AML Compliance was simply not being met. The FCA cited a case at Gatehouse Bank of a Kuwait-based customer account set up without the collection of any information about the customer's source of wealth. Due to the shortfall in compliance, $62 million was received into the account over two years without any of it properly vetted for money laundering origins.

Money laundering is a crime that generates many costs, from financial losses through to human lives. In an effort to stem the tide of financial crime, financial institutions worldwide are now increasingly investing in AML Solutions. In fact, in 2020, they spent an estimated $214 billion on financial crime compliance. The potential cost to the business of extensive money laundering - as well as the penalties that are being handed out by regulators in ever higher numbers, make these investments worthwhile. However, they do still take up a significant proportion of the budget for any organisation, large or small. Technology has proven to be a game changer when it comes to implementing AML Solutions - machine learning and AI, in particular, have a lot to add when it comes to changing the way that enterprises tackle money laundering.

Banks and financial services businesses have faced an uphill battle in recent years when it comes to implementing effective AML Solutions. Many have approached this by relying on human labor and, as a result, this remains one of the biggest costs associated with compliance. However, of all the trends currently shaping AML Solutions for banks, automation stands out as having the potential to change this, as well as improve the protection that organizations have when it comes to exposure to financial crime.

Recent research has found that the cost of dealing with Compliance Risk is proving high for British banks - coming in at around £30 billion. The bulk of this spend is on people-related expenses, which tend to account for 70%. Under this heading come costs like training and hiring and retaining the staff necessary to help a bank deal more effectively with Compliance Risk. It's not the first time that research has revealed this kind of spend being racked up on people-related costs - in 2020, a study showed that the financial sector's response to financial crime is largely people-focused, with two thirds of expenditure on teams rather than technology. The implication here is that the way the industry is tackling Compliance Risk is more labour intensive than it needs to be and that a more tech-driven approach could help to bring these high costs down.

Challenger banks face something of an uphill struggle today, especially when it comes to getting the right licences in place to reach target customers. Now, one challenger bank - Bank North - has been forced into winding down operations with immediate effect after it wasn't able to raise the funds to acquire a full banking licence. North Bank, which is based in Manchester, was seeking to become a fully regulated bank able to offer a broad spectrum of banking services in competition with more established high street banks. However, it seems that the neobank was not able to raise the finances to pay for the full banking licence within the set time frame and, as a result, is now winding down.

Storytelling is one of the best ways to get a message across and now an AML Monitoring film has won an award for doing just that. The film is a collaboration between HMRC and ICAEW and focuses on three key characters - an accountant, trusted business advisors and a restaurateur in trouble - as they find themselves in a money laundering scenario. It explores the trust that exists between people in personal and professional relationships and whether this has the potential to open up vulnerabilities in the fight against financial crime. The film has received an accolade at the 2022 Association Excellence Awards, being given the gold award for Best Learning/Professional Development Programme and silver awards in other categories including Best Innovation by an Association. With AML Monitoring rising to the top of the agenda on a global level, it's crucial to explore every channel when it comes to emphasising the message that money laundering ruins lives - and this film has proven to be an effective tool.

There is a lot of talk about Compliance Risk and how to mitigate this and minimize it. In fact, 'compliance' can become a word that has such broad usage that many forget its most important meaning. That's especially so as the scope and complexity of what non-compliance means is constantly being updated. Take the new rules that came into force in June 2021 in Canada, significantly increasing the risks and complexities associated with non-compliance. The update principally concerned Know Your Client requirements - being able to verify the identity of the persons or organizations that the business is dealing with in certain circumstances - and includes obtaining beneficial ownership information. Non-compliance with these rules is likely to mean administrative penalties as well as a range of other consequences.