Opinion – Collaboration essential to AML success


By Sanjay Samuel

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The fight against financial criminals goes back decades. International coalitions such as the Financial Action Task Force, created in 1989, have taken anti money-laundering (AML) efforts one step further, yet criminals seem to always be a step ahead.

And they’ve now managed to take their crimes beyond the banks’ walls. Money laundering affects our financial institutions, but also businesses in the legal, real estate, transport, healthcare and education industries, and society as a whole.

It is estimated money laundering is the equivalent of the fifth largest global economy. More than $1.5 trillion of illegal funds are laundered worldwide each year, with around $4.5 billion laundered in Australia.

In order to build winning AML and compliance strategies, Australian organisations, regulators and governments need to understand the new generation of financial criminals they’re up against and move from a regulatory-led to a proactive approach.

The vital first step in building an effective AML strategy is to understand who money launderers are, their motivations and modus operandi.

There are a number of common personas that are likely to attempt money laundering, including professional fraudsters or cybercriminals, legitimate business owners helping their clients to profit from crime, those who build legitimate-looking businesses catering specifically to criminal elements, or even highly placed individuals, such as government ministers or civil servants.

By understanding these profiles, financial institutions can become better at identifying suspicious behaviours and take a tailored approach to stopping them from committing further crimes. However, knowing the enemy is only one piece of a complex puzzle when it comes to fighting financial crime.

Helped by the digitisation of our economy and inspired by the work of hackers, criminals are expanding their reach and building highly sophisticated laundering chains. Not only are they multiplying the channels used to launder money, they have become very good at covering their tracks by hitting industries outside of the core financial system and spreading their crimes across countries.

In a world where cyber and financial crime converge, AML and compliance specialists cannot work in silos. It is important they collaborate with each other and other departments within their organisation, including cybersecurity teams.

But these aren’t the only stakeholders who need to be involved in the fight against financial criminals.

As they have become first-line targets, business leaders in the legal and real estate industries, for example, have a responsibility to actively participate in the AML fight, joining forces with banks, regulators and governments.

These stakeholders can collaborate by sharing information and actionable intelligence across departments, industries and countries.

To successfully set up these collaboration efforts, there needs to be a balance between strong control and reporting processes, which remain of utmost importance, and an open data mindset and borderless approach to AML intelligence sharing.

It is important we build a regulatory framework that allows industry bodies and organisations, especially multinationals with entities spread around the globe, to easily share AML intelligence for better prevention and mitigation.

The use of next-generation technologies will be instrumental in achieving this collective effort. Money laundering is constantly morphing.

Being able to identify patterns, suspicious behaviours and take actions in real time is what’s needed to design truly efficient AML strategies.

The use of technologies, such as machine learning and analytics, is what will allow financial institutions, in collaboration with other industries, regulators and governments, to become better at developing an integrated view of risk, fraud and compliance, as well as uphold best practice in tackling financial crime.

A collaborative approach built around smart technologies is what will empower us to be one step ahead of criminals. Only this concerted approach and data sharing mindset will prevent financial crime expanding and diversifying further, as well as hitting more businesses.

Sanjay Samuel is Japan and Asia-Pacific managing director for BAE Systems Applied Intelligence.

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