This saying sounds familiar, doesn’t it? It is instilled in many from a young age that we should strive for constant improvement. Why is this you say? What will it achieve? On many occasions, improvement means changing with the times, it means developing and enhancing various aspects of our lives in order to achieve a more desirable outcome.
How is it then, (and more than ever) that news outlets are reporting a near ever-constant stream of big banks, and large corporates that are failing to do so themselves? Swedbank is a prime example. The bank has recently been investigated by the Swedish and Estonian financial supervisory authorities for their significant shortcomings with respects to their AML process and controls.
Swedbank noted that many of the key observations made by the two financial supervisory authorities correspond to the bank's own conclusions regarding the deficiencies in its AML controls.
"In the past, the bank has not allocated sufficient resources and competence to adequately manage the risk of money laundering by clients and third parties," Swedbank said. "The division of responsibilities within the bank has not been clear enough, and the bank has not always complied with internal policies. Know Your Customer and risk assessment are areas where Swedbank has had, and still has, shortcomings”
Earlier this year, Standard Chartered Bank was fined over £100 million by the FCA for poor AML controls. Notably, these failing exposed SCBs risk of breaching basic sanction legislation and aiding the possible flow of proceeds of crime. One example of this was their willingness to open an account with 3 million UAE Dirham in cash, (approximately £500,000), carried in a suitcase, with little/no evidence of source of funds, or that the bank had requested such information prior to the opening of the account.
Today, US authorities have also acted against the Standard Chartered group for significant violations of US sanctions laws and regulations.
So what are the takeaways here?
No short cut embedding a fit for purposes AML regime;
Any under investment now will cause issues in the future;
A constant need to review, test and enhance the programme.
At Lysis, we work with Financial Crime compliance functions to review their firm’s financial crime provisions and to design and implement improvements.
We can review and enhance AML policies, proceduralise them and provide training on those policies and procedures and on general AML themes.
Lysis can also work with AML Operations departments to develop operating procedures based on the firm’s AML policies ensuring that the procedures accurately reflect the requirements of the policies and also follow best-practice operating methods.
By Lauren Parmenter, Consultant at Lysis Group