20 August 2014

67447

Dan Barnes - Information Corporation

47 | posts 58,014 | views 8 | comments

Future Finance News Analysis

Finextra and Oracle have gathered together some of the industry's top thought leaders to assess the key trends and issues within transaction banking, regulations and retail banking. This group will analyse the latest news on upcoming regulations, new service offerings and industry issues shaping the new financial services landscape with regular blog posts, video interviews, webcasts debates and surveys.

Funny money

06 February 2014  |  1478 views  |  0

Turning down money from a potential customer who fails a test, is expensive. Building profiles of all of your customers is costly in both cash and resources. 

In fact, until HSBC and Standard Chartered cumulatively paid US$2.2 billion to US authorities in 2012 it seemed that failing to adhere to the anti-money laundering / know your customer (AML/KYC) rules could be the least expensive option. New research from KPMG’ global tri-annual survey suggests that the recent fines have woken up senior management, however concern doesn’t necessarily translate into action.

 

Q: So how have banks been dealing with anti-money laundering regulation up until now?

A: In 2011 the UK’s Financial Services Authority (then the market regulator) reported that, “Some banks appeared unwilling to turn away, or exit, very profitable business relationships when there appeared to be an unacceptable risk of handling the proceeds of crime. Around a third of banks, including the private banking arms of some major banking groups, appeared willing to accept very high levels of money-laundering risk if the immediate reputational and regulatory risk was acceptable.”

 

Q: That does not sound like clever banking…

A: …Because the regulator noticed?

 

Q: Quite. With several banks having been hit by big fines, are the banks thinking twice about such heartless profiteering?

A: Well, 88% of the KPMG’s survey respondents said that AML issues are a priority for senior management, up from 62% in 2011, while 98% said it was properly discussed at Board level. Most said that this was being done on a quarterly basis or when needed. However, the effect that this discussion is having is not clear.

 

Q: Has much else changed?

A: Cost has gone up 53% over the last three years but that is not too far from the figures reported in the last four surveys (61% in 2004, 58% in 2007, 45% in 2011). Only 32% of the majority of respondents could deliver a consistent global approach for their anti-money laundering policies. In 2004, only 50% of the respondents said that they implemented policies locally, so that appears to be a backward step.


Q: Is there any positive news?

A: Not really; where in 2011 50% of those questioned were using the new MT202COV SWIFT message that allows banks to request data on the customer, some 75% of respondents are now using it. However with 52% of those respondents allowing a MT202COV message to pass, even when it lacked some of the information that it should contain, one has to ask whether it is in the nature of banking to be suspicious about m

 

TagsPaymentsRisk & regulation

Comments: (0)

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

Latest posts from Dan

Google search: What’s my credit score?

01 July 2014  |  1778 views  |  0  |  Recommends 0 TagsRisk & regulationInnovationGroupFuture Finance

Trade finance creates a 10 billion dollar risk

11 June 2014  |  1621 views  |  0  |  Recommends 0 TagsRisk & regulationWholesale bankingGroupFuture Finance News Analysis

Bad as gold

29 May 2014  |  1577 views  |  0  |  Recommends 1 TagsRisk & regulationWholesale bankingGroupFuture Finance News Analysis

Is Bitcoin mo' money or no money?

29 May 2014  |  1198 views  |  0  |  Recommends 1 TagsVirtual currencyRisk & regulationGroupFuture Finance
name

Dan Barnes

job title

Writer

company name

Information Corporation

member since

2013

location

London

Summary profile See full profile »
Award-winning, freelance financial journalist. Specialist in many areas, including; sell-side exe...

Dan's expertise

What Dan reads
Dan writes about

Who is commenting on Dan's posts

Ketharaman Swaminathan
Dave Kershaw
Jorge Yui
Ponnusamy Selvaganapathy
Christopher Mc Carthy