17 April 2014

FraudWorld

Mike Rhodes - SAS

11 | posts 32,572 | views 8 | comments
A post relating to this item from Finextra:

Standard Chartered agrees $340m Iran settlement

15 August 2012  |  922 views  |  0
Benjamin M. Lawsky, New York Superintendent of Financial Services, issued the following statement today.

Regulation Revolution: Let's Get Proactive

15 August 2012  |  2765 views  |  1

With the public accusation of money laundering against Standard Chartered, and its subsequent settlement with the New York State Department of Financial Services, it got me thinking – how do the regulators ensure banks are playing by the rules?

Without infinite resource at their disposal, regulators currently have to focus their attentions on a select number of cases. If we look at the UK industry for example, with 250,000 or so Suspicious Activity Reports raised every year, and millions of Suspicious Transaction Reports, this is one big challenge! Given they can’t realistically inspect every single transaction, the regulators have to allow some degree of trust in the banks that report into them whether they like it or not. This creates an uncomfortable, but necessary, relationship between the poacher and gamekeeper. Ultimately the gamekeeper must trust the poachers not to go and shoot millions of protected species off-season, bagging large profits whilst rendering the ecosystem unstable. They certainly wield a large stick in the form of fines and possible legal action, but with potentially large gains, and the chance of it going unnoticed, how resilient is this approach? 

Ultimately, I’m not convinced things are going to stay this way forever. Governments all over the world have seen the dangers of letting the banking sector self-regulate, and are eager not to let this happen again. They’ve given the regulators the power to punish, but this doesn’t necessarily equip them with the ability to detect erroneous (intentional or otherwise) compliance reports submitted by the banks that hide the true picture. In my world, I would love to see the regulators independently looking at the transaction data from each of the banks for anomalies, and patterns predictive of fraud, money laundering or criminal networks operating intra or inter-bank. Yes, the banks already largely do this, but a second independent and consistent layer of corroboration is a necessity in my view. It would also provide an opportunity to compare and contrast the aggregated activities of banks in similar peer groups – a very common fraud detection practice. Eventually the regulators will become centres of analytical ‘best-practice’, providing hands-on advice to the banks on their watch, and be able to disseminate the knowledge they’ve amassed across the financial services industry. At the very least, this would allow them to better prioritise the unworkable number of cases they are receiving at the moment.

If the US accusations are correct, this hands-on approach would have yielded alerts worthy of investigation years ago, reducing the negative impact not only for Standard Chartered but also the banking sector as a whole.

TagsDealing roomsRisk & regulation

Comments: (1)

Neil Crammond - evoi - london | 28 August, 2012, 09:23

"bank  robbers " never plead  guilty until there is enough evidence against them  !  The market sadly is suffering from its highest "market abuse" rate in decades , partly due to the fact that the regulators / mkt supervisors have neither the funds , resources or ability to catch the cheetahs .  

  Self regulating exchanges have to be abolished and independent regulators installed to monitor the markets .  Exchanges  expecting their members to install their own market supervision was very short sighted and has not worked but increased manipulation and caused lost confidence

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Latest posts from Mike

The e-Criminal, a serious threat to a safe society

22 May 2013  |  2155 views  |  0  |  Recommends 0 TagsSecurityRisk & regulation

Secure Authentication: Biometrics and Behavioural Analysis

28 March 2013  |  3821 views  |  0  |  Recommends 0 TagsCardsSecurity

When is a horse not a horse?

20 February 2013  |  3343 views  |  1  |  Recommends 0 TagsRisk & regulationRetail banking

Five step fitness for fraud monitoring in 2013

08 February 2013  |  2630 views  |  4  |  Recommends 0 TagsSecurityRetail banking

Real-time Analytics of Social Media, Comms, Markets and More

31 October 2012  |  3297 views  |  0  |  Recommends 0 TagsSecurityRisk & regulation
name

Mike Rhodes

job title

Senior Fraud Consultant

company name

SAS

member since

2012

location

LONDON

Summary profile See full profile »
Experienced & certified Consultant in all aspects of Fraud, Money Laundering and Identity Managem...

Mike's expertise

What Mike reads
Mike writes about

Who is commenting on Mike's posts