You don’t have to go far back in time to find examples of data breaches in the financial services industry. One of the latest cases, that of Credit Suisse, has once again highlighted the importance of anti-money laundering (AML) checks. However, it has also sparked discussions on the importance of having a strong organizational culture in the financial services industry if money laundering is to be effectively combated.
Private bank Credit Suisse’s latest data leak, which affected 30,000 customers, revealed a flaw in customer due diligence and is believed to have provided around £80bn of funds to beneficiaries. Among these, “perpetrators of human rights violations, fraudsters and businessmen subject to sanctions”, according to the investigation carried out following the leak of information by a whistleblower.
Whistleblowing is receiving increasing protection, for example through the recent introduction of the EU Whistleblower Protection Directive in December 2021 and, in the UK, Chapter 18 of the Senior Management Certification Scheme (SM&CR) of the FCA specifically focused on internal policing and whistleblowing.
This increased protection is perhaps one of the reasons why there have recently been new whistleblower cases following the infamous Panama Papers and FinCen Files of 2016/2017, which also drew attention to the tax evasion and unfavorable conditions.
In addition to the Credit Suisse incident discussed above, the 2021 “Pandora Papers” is another example of whistleblowing in the financial services industry. They exposed front companies, tax evasion, corruption, bribery and lax anti-money laundering controls by designated non-financial businesses and professions (real estate intermediaries, game organizers, traders in stones, metals and works of art, sports agents, etc.)
Yet, it could be argued that it is not just regulatory pressure that is the main catalyst for these leaks, nor the reaction of the industry. Rather, this whistleblowing trend stems from a growing cultural recognition that financial organizations have the opportunity to make a difference in the fight against money laundering if they implement strong AML controls.
Build on cultural evolution with tighter AML controls
As people become increasingly aware of ethical, environmental and moral issues, many companies in the financial sector want to respond by strengthening their anti-money laundering controls. With the help of social media, customers and employees have a stronger voice and a more immediate and receptive audience. The public feels legitimate to question what financial companies do, how they behave, how they protect their customers and what their strategies are for the future.
In turn, financial institutions are under increasing pressure to demonstrate greater accountability in the fight against money laundering – by complying with regulations, but also by enabling cultural change to drive change. positive in the sector.
Many financial organizations continue to gain strength in AML controls, strengthening and maturing existing processes and controls.
This includes :
– More comprehensive KYC and CDD protocols on onboarding and ongoing monitoring thereafter.
– Improved visibility and AML controls by non-financial businesses and professions designated as part of this reinforcement.
– An appropriate risk-based approach responding to existing regulations and compliance requirements, while ensuring the sustainability of the framework and results.
– Ongoing technical improvements to stay current (and preferably ahead) on emerging criminal threats, cybersecurity risks and anti-money laundering solutions.
It has now been proven that internationally significant anti-money laundering vulnerabilities involving huge sums can be disclosed by a single individual. However, the practices, controls, rules and models we put in place can support ongoing corporate culture change, helping organizations better prepare for the future of finance.
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