Anti-money laundering: Diamonds in Dubai

Standard

Money laundering is surely one of the most persistent and pervasive risks faced by banks. The practice is said to be just as common in the Middle East as anywhere else. So how do financial institutions there train their staff to deal with this threat?

The firm’s employees eventually arrive. They explain that staff received anti-money laundering training the previous day and did not clear the table after the session. They also describe the answer one of the board members gave: “I’d convert the money into diamonds; that way it’d be easier to ship out of Dubai.” A joke, Euromoney is certain. When the tale is repeated to the chief executive of a Kuwaiti bank, he rolls his eyes and sighs. “That’s not money laundering training, that’s just basic ethics!” He is astonished anyone would need to be taught what to do in such a case.

Read More

AIB Slapped With Fine for Compliance Failures as IPO Looms

Standard

Allied Irish Banks Plc, preparing for what could be one of the biggest share sales in London this year, was fined more than 2 million euros ($2.2 million) by the Irish central bank over compliance failures in relation to anti-money laundering and terrorist financing laws.

The central bank fined AIB about 2.3 million euros and reprimanded it for six breaches of the law, which the lender has admitted to, the regulator said in an emailed statement Tuesday. AIB said separately that the settlement related to issues occurring between July 2010 and July 2014.

Read More

South Africa president signs anti-money laundering law

Standard

South African President Jacob Zuma signed the anti-money laundering Financial Intelligence Centre Amendment (FICA) [text, PDF] on Saturday to combat tax evasion and money laundering in the country. The global Financial Action Task Force (FATF) [official website] organization had threatened to oust South Africa if the amendment had not been passed before June 20. Supporters say the law is a tool against international financial crime, making it easier to identify the actual owners of accounts around the world and would apply to Zuma and other prominent figures in South Africa. The legislature passed the bill last year, but Zuma originally refused to sign it, citing concerns about its constitutionality [Bloomberg report]. In February the Legislature approved changes to the bill to meet Zuma’s concerns.

Read More

AML’s Silver Bullet

Standard

As banks and payments companies endeavor to meet anti-money laundering (AML) regulations to avoid hefty fines for non-compliance, easily identifying customers in the digital channel becomes paramount to their success. Some “old school” methods that worked in the past aren’t working anymore. Sarah Clark, GM of identity at Mitek, joined Karen Webster to discuss what process and technology can do to help meet AML requirements to truly authenticate who people are.

Though money laundering is a dangerous and enormous aspect of fraud, it’s often overshadowed by high-profile data breaches and other cybercrime activities.

However, both regulators and authorities around the globe are cracking down on businesses who are failing to adequately prevent money laundering activities. Despite the fact that many institutions are investing heavily in their anti-money laundering activities, bad guys are still slipping through.

Clark explained that many businesses continue to fall short in this area because the status quo of AML solutions are no longer cutting it.

 

Read More

Stricter anti money-laundering reforms introduced for real estate agents and lawyers

Standard

Real estate agents, lawyers and accountants will soon face tougher anti-money-laundering rules under a bill introduced to Parliament today.

The reforms will require companies to put in place systems which guard against money laundering and to carry out due diligence on customers, including identity verification.

A first tranche of reforms was passed in 2013 and covered banks, financial services and casinos.

The bill introduced today will extend anti money-laundering obligations to lawyers, conveyancers, accountants, real estate agents, the sports and betting industry, and businesses that deal in high value goods such as cars, jewellery or art.

The reforms were fast-tracked following the release of the Panama Papers last year, which raised concerns about the use of New Zealand’s foreign trusts to hide money.

Read More

Anti-money laundering law extension balances cost to businesses

Standard

Lawyers, conveyancers, accountants, real estate agents, and sports and racing betting are now subject to money laundering legislation after it was fast-tracked in the fallout from the Panama Papers last year.

The second phase of the Anti-Money Laundering and Countering Financing of Terrorism Act was introduced by Justice Minister Amy Adams on Monday.

Banks, casinos and financial service providers were already covered, but the amendment extended the law to cover more professions.

This move was accelerated last year after the release of the Panama Papers and the Government launching the Shewan Inquiry into New Zealand’s foreign trust regime.

Read More

Money laundering watchdog scrutinizes Facebook, social media.

Standard

MP calls for parliamentary committee to investigate threat to privacy

Canadians who make large cash transactions, international wire transfers or win big at the casino could end up with a federal agency scrutinizing their Facebook pages and other social media posts, CBC News has learned.

The Financial Transactions and Reports Analysis Centre (FINTRAC), the federal government body charged with monitoring financial transactions to detect money laundering and terrorist financing, has been quietly scrutinizing the social media posts of Canadians whose transactions attract its attention.

FINTRAC defends the practice, saying the rules that govern it allow it to collect a variety of information.

“FINTRAC’s mandate is to detect, deter and prevent money laundering and terrorist financing activity,” spokesperson Renée Bercier wrote in response to questions from CBC News.

“It is important to remember that the perpetrators of these crimes oftentimes have an online presence and actively use the web, including social media, to connect with associates, facilitate their activities and, in the case of terrorism financing, even raise funds.”

Read More

FinCEN Seeks to Extend AML Requirements to All Banks

Standard

The U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, proposed a rule that would require banks lacking a federal regulator to establish an anti-money laundering compliance program.

The proposal would eliminate what FinCEN called a “gap” in anti-money laundering coverage between banks with and without a regulator. The rule would require unregulated banks to have essentially the same compliance programs as regulated financial institutions, and unregulated banks could use their existing policies and procedures to fulfill the new obligations, FinCEN said in a brief statement.

“Banks without a federal functional regulator may be as vulnerable to the risks of money laundering and terrorist financing as banks with one,” the proposal said.

FinCEN said Thursday it estimated the proposal would affect a total of 740 banks across the country, most of which are private banks, as well as certain trusts and credit unions. Although these banks haven’t historically haven’t been required to establish anti-money laundering programs, they are required to comply with many other aspects of the Bank Secrecy Act, including the filing to FinCEN of suspicious activity reports and currency transaction reports.

Read More

Where next for anti-money laundering regulation?

Standard

The UK’s actions surrounding the EU’s Fourth Anti Money Laundering Directive will be a key indicator of its planned approach in the period following the referendum

When it comes to anti-corruption legislation, the United Kingdom is considered a world leader. Its tough UK Bribery Act is viewed as one of the ultimate global standards for tackling bribery. Indeed, in relation to anti-money laundering (‘AML’) regulation, the UK has a reputation of going above and beyond the recommended standards. For example, it has adopted an ‘all crimes approach’ to current European AML governance meaning there is no minimum level of predicate offence below which acts need not be reported.

Yet in a post- Brexit world, it is fundamental that the ability and will of the UK to maintain such tough standards doesn’t waiver, with the country eager to attract new foreign investment and sustain current levels of growth. As the European Commission urges member states to bring forward the implementation of the Fourth Money Laundering Directive (‘4MLD’) to the end of 2016, this could prove a significant test for exactly which direction the UK will head once it exits the EU. Will the UK introduce the Directive given that Prime Minister, Teresa May, has indicated that she’s unlikely to trigger Article 50 until 2017, or will it press pause and take a completely new stance?

Tackling terrorist financing

As part of a series of Anti-Money Laundering Directives, the EU 4MLD aims to tackle tax evasion, terrorist financing and money laundering. This fourth directive introduces several key changes to the 2007 UK Money Laundering Regulations and includes provisions to introduce a Beneficial Ownership Register for legal entities, trusts and companies. The 4MLD also implements harsher requirements for both Simplified and Enhanced Due Diligence and advocates bigger responsibilities for senior managers as well as extending the definition of politically exposed persons (‘PEPs’). While until recently EU member states were given until June 2017 to introduce the 4MLD into national legislation, the European Commission in its action plan against terrorist financing, urged member states to bring forward the date of implementation to the end of 2016 and improve the exchange of information between countries.

Of course, post referendum it remains unclear whether the UK will continue to implement new EU regulation, particularly once Article 50 has been triggered and latterly the European Communities Act repealed. While it may eventually still choose to maintain equal standards, any reluctance to implement similarly strict principles in the next two to three years could prove problematic. Hesitancy from the UK to continue to be part of any enhanced practices implemented by EU member states could have a knock on effect on the success of the 4MLD and significantly hinder the ability to investigate international money laundering.

Whether the 4MLD is adopted or not, it will be vital that the UK maintains its tough stance and does not feel commercial pressure to relax its financial controls in order to encourage investment in the UK. Continuing its membership of organisations formed to combat financial crime, such as the FATF (Financial Action Task Force), will play a fundamental role in ensuring this is the case, as will continuing to follow guidance and standards set by such organisations.

Read More

US claims anti-money laundering policy is ‘not zero tolerance’

Standard
The US Treasury has sought to soften the perception of its enforcement of an anti-money laundering (AML) regime against international banks, by emphasising that its policy is not one of “zero tolerance”.
US claims anti-money laundering policy is ‘not zero tolerance’

The regime it operated was “fair and effective”, the US department said in a statement and factsheet, with about 95% of anti-money laundering (AML), countering the finance of terrorism (CFT) and sanctions compliance problems getting corrected through cautionary letters or other guidance without the need for an enforcement action or penalty.

The statement is aimed at countering moves by international banks to withdraw correspondent banking services from jurisdictions or certain regions for de-risking reasons.

“The rare but highly visible cases of large monetary penalties or settlements for AML/CFT and sanctions violations have generally involved a sustained pattern of reckless or willful violations over a period of multiple years and a failure by the institutions’ senior management to respond to warning signs that their actions were illegal.  These large cases did not represent small or unintentional mistakes,” it said.

The fact sheet also dispelled “certain myths” about US supervisory expectations, “notably that there is no general expectation for banks to conduct due diligence on the individual customers of foreign financial institutions”.

Read More