“ANZ Bank reveals that it is reviewing its Anti-Money-Laundering Systems amid Westpac scandal” – This headline portrays the need for reviewing the AML policies, procedures and internal controls by banks following regulator actions on rival banks.
Increased Regulator expectations and advances in technology have made it difficult for financial institutions to meet the Anti Money Laundering and Counter Terrorism Financing obligations.
As per the FATF Recommendation - 18, it is vital for financial institutions to implement programmes against money laundering and terrorist financing. Financial groups are required to implement group wide programmes against money laundering and terrorist financing, including policies and procedures, controls and an ongoing training programme for employees.
In this recent case of bank failure:
“Westpac had allegedly failed to do a lot of things including carry out appropriate due diligence on 12 of its customers "with a view to identifying, mitigating and managing known child exploitation risks".
Even worse, AUSTRAC (the Australian regulator) alleged that in 2013 Westpac had been aware of the risks associated with these patterns of transactions relating to possible child exploitation yet did nothing until 2018.
And even then, it didn’t go far enough by putting in place automated detection scenarios on the other international payment channels. This slowness in addressing problems should be a red flag to the board.
The concise statement of claim, said one Westpac customer, who had been convicted of child exploitation offences, opened several accounts. AUSTRAC alleged that Westpac identified suspicious activity on one of the accounts that indicated child exploitation but failed to "promptly" review the other accounts.”
These red flags most likely have been identified and mitigated if the bank had delivered relevant training for personnel who conduct enhanced due diligence on customers to identify links with child exploitation. If effective AML transaction monitoring training had been delivered to staff working in the transaction monitoring controls it would have mitigated these risks even further.
WHO SHOULD BE TRAINED IN ORDER TO ESTABLISH AN EFFECTIVE AML CULTURE?
The target audience of an AML training programme should include all full-time employees, part time employees including contractors, consultants, apprentice placements and individuals in branches or subsidiaries.
Specialized training should be provided to all personnel within each