KYC – Fighting financial crime

Published: September 30, 2016

For banks globally, complying with KYC, AML and official trade sanction requirements brings growing pressures, which will be added to with the EU’s fourth AML Directive. Liz Salecka interviews leading tech industry consultants on what policies and procedures bank’s need to implement to meet these growing requirements.

For banks involved in trade finance, fighting financial crime, guarding against inadvertently supporting terrorist networks, and complying with official trade sanctions, represent major challenges to their business and require substantial investments and robust risk management processes. 

A recent survey by LexisNexis Risk Solutions found that banks are now at the tipping point when it comes to these business and compliance challenges. This comes at a moment when the regulatory burden is escalating, and personal liabilities are being placed on compliance professionals. The criminals aren’t making things any easier either, they continue to gain in sophistication and look to employ technology against the banks as well.

“This report makes it clear that financial crime cannot be eradicated through strategic investment alone,” says Chrisol Correia, director, global AML compliance, LexisNexis Risk Solutions. 

“Efforts to combat money laundering that are based on limited understanding and knowledge of the industry and risks will exacerbate the problem in the future. To combat financial crime, banks and law enforcement must work together to understand the future risks to adopt a proactive, rather than a reactive approach.”

For many banks, trade finance has come to the fore in the fight against financial crime, and it is an area of finance that is increasingly attracting the interest of regulators worldwide.

According to Tom Golding, head of risk and compliance at solutions provider Accuity, trade finance is now recognised as a major vehicle for money laundering - and banks can no longer take “just a baseline approach” to compliance. 

“There have been huge fines imposed on banks for not ensuring compliance and regulators are taking this to task at board level,” he says pointing out that fines have increased in both scale and number.

“Banks are also starting to recognise that ensuring effective compliance could provide them with a competitive advantage if they do it efficiently.”

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