Working together to improve AML effectiveness | A RiskScreen roundtable

On 13th July 2021, we brought together key persons from the financial, insurance and legal sectors to discuss how various industries can come together in the fight against serious financial crime.

Joining our founders Stephen Platt and Tom Devlin in the hour-long virtual debate we were delighted to welcome:

  • Andy Dobber, Head of Financial Crime Compliance at Santander International;
  • Sarah Lynch, Global Head of Compliance at Harneys, a global offshore law firm; and
  • Suneeta Padda, Director of Padda Consulting, a global consulting firm that focuses on ensuring the insurance industry maintains and achieves compliance.

The key takeaways from the roundtable were that:

  1. There is a lack of association between anti-money laundering and the crimes it prevents
  2. Increased awareness and education can help fight financial crime
  3. We need to embrace digital change
  4. Smart technology is key to improving AML effectiveness

 


1. There is a lack of association between anti-money laundering and the crimes it prevents

One of the key takeaways from the roundtable was that anti-money laundering obligations are all too often regarded as a compliance burden, rather than a serious global issue that businesses have a moral obligation to tackle.

There is an evident gap in understanding how money laundering ties into broader criminal activity, which often results in the failure to investigate suspicious transactions or accounts beyond what’s required from a compliance perspective – even when there’s enough evidence to suggest that they may be associated with criminal activity, despite passing initial checks.

Part of the reason for this complacency comes down to money laundering being regarded as an abstract issue in society – often the people working to prevent it will never experience first-hand the consequences of failing to mitigate it.

Unfortunately, grotesque crimes like human trafficking, people smuggling, and terrorism are often financed via the laundering of funds gained through illicit activities – so by failing to investigate suspicious activity thoroughly, companies can unwittingly become complicit in financing these crimes.

“I think people can see tax evasion quite easily… Money laundering and terrorist financing is much, much harder to spot. So, it’s not an obvious issue that people can really get their heads around.”

Sarah Lynch, Global Head of Compliance at Harneys
Increased awareness and education can help fight financial crime

All our panellists argued that this lack of understanding can be tackled with proper training.

“When I used to work for the financial services authority at the time of 9/11, we had a number of people that were coming in and giving us talks and presentations on how these crimes were actually funded.”

Suneeta Padda, Director at Padda Consulting

According to Padda, understanding the structural framework that enables illicit funds to move through the financial system is effective in helping drive change. Education can help build a stronger cognitive connection between the work that compliance professionals do and the crimes they are preventing.

“Those little pockets of money [coming from the sales of counterfeit goods] ended up in little bank accounts that then all collectively came together and that’s how that [the terrorist attacks in the US in 2001] was funded… people then thought twice before buying counterfeit goods because that makes (them) an associated party with all of this [terrorism financing].”

Suneeta Padda

According to Tom Devlin, Senior Director at RiskScreen, in order to help have a significant impact on fighting money laundering on a global scale, the challenge is to shift societal perceptions around it.

“… If we succeed in putting the fight against money laundering in that category (a moral obligation rather than a legal one), the problem will solve itself… if we don’t… it just remains an abstract thing.”

Tom Devlin, Senior Director at RiskScreen

This societal issue, where the consequences of money laundering are not truly felt, also lends itself to an organisational one within various regulated industries. Due to a lack of motivation, many private entities are reluctant to take on the financial burden of working on the structural and infrastructural changes that are needed to combat money laundering across sectors.

2. We need to embrace digital change

While there’s infinite amounts of data being collected, legacy infrastructure and siloed data sources make it difficult to monitor suspicious transactions and persons across various industries and jurisdictions. By pooling existing intelligence together that currently exists in isolation, suspicious activity could be more thoroughly monitored and investigated.

“We hold lots of information on customers, but it’s often disparate and it’s pulling that all together (that will help make it easier to tackle money laundering).”

Tom Devlin

While it is true that building out the infrastructure to share intelligence across sectors can be costly and time-consuming, industries have proven that these challenges can be overcome when interests align, and the benefit is clear for all parties.

However, the challenge does not fall on private companies alone, as Devlin pointed out. Governments and regulators are also responsible for helping to drive transformational change and innovation in anti-money laundering compliance.

“Our friends on the regulatory side (need to be educated) to try and embrace technological change.”

Tom Devlin

3. Smart technology is key to improving AML effectiveness

As was pointed out during the roundtable, the reality is that money laundering schemes are becoming more sophisticated.

“…And actually, whilst you’ve done the checks… something [money laundering] has come through because the criminal is quite sophisticated. So those are the ones where you have criminal sophistication, but then you also have [those] where there are poor systems and processes…”

Andy Dobber, Head of Financial Crime at Santander International

On the other hand, regulators are often slow to embrace technological change that would greatly help compliance professionals across sectors work together to detect threats, and streamline manual, time-consuming activities that leave room for error that’s potentially deadly.

By digitising the screening and onboarding journey and processes, industries can limit the amount of manual labour their compliance personnel have to do. By leveraging the latest technology, it’s possible to identify duplicate accounts and forged documents with great accuracy, dramatically reducing the chances of something suspicious being overlooked.

“If you invoke the power of AI and machine learning (for client identification and onboarding checks) … you end up not only with a much better customer experience, but also a much higher chance of detecting those sophisticated attacks on your institutions than you would have had with the traditional process.”

Tom Devlin

To sum up the discussion, enhancing AML effectiveness begins with proper education and training. Having a deep understanding of what money laundering actually looks like, as well its predicate crimes and the atrocities it can facilitate, will be the ultimate driver in accelerating the adoption of new, more impactful, solutions.


Fighting financial crime with the right technology, processes, and people.

Learn more about how RiskScreen can help you streamline your screening and onboarding journeys so that you can make better risk-based decisions, faster.

Visit riskscreen.com

Share this post with your network

Share on linkedin
Share on twitter
Share on whatsapp
Share on email

RECENT POSTS

Danske Bank: What went wrong?

It is hard to imagine that a bank is capable of laundering hundreds of billions of euros in just eight years. The Danske Bank scandal

Any screening technology is only as good as its underlying data. That’s why work to find the best providers, ensuring you get screening matches you can trust.

Resources

The latest news, commentary and events from RiskScreen. For industry insight, visit our AML insight hub, KYC360.

Used by over 30,000 compliance professionals for AML news & analysis. Free CPD wallet.

Company

RiskScreen was founded by experts in financial crime. It’s because of this unrivalled subject matter expertise that companies choose to partner with us.