War against money laundering being lost

The global system for financial crime is hugely expensive and largely ineffective according to The Economist.

The international weekly newspaper and online publisher concludes in an article that the war against money-laundering is being lost.

NatWest proceedings

The article responds to the news last month that the UK’s Financial Conduct Authority (FCA) has commenced criminal proceedings against NatWest in respect of offences under money laundering regulations enacted in 2007.

This is the first criminal prosecution under the act by the FCA and the first prosecution under the act against a bank (Trade-based Financial Crime, 29 March 2021).

The FCA alleges that it failed to properly scrutinise a gold-dealing client allowing around £365 million (US$504 million) to be paid into the customer’s accounts, of which around £264 million was in cash.

Heavy fines

The article notes that financial institutions worldwide were ordered to pay penalties of more than US$10 billion in fines for non-compliance with anti-money laundering (AML), know-your-customer (KYC) and sanctions regulations in 2019 according to a recent report.

The report by Fernergo, which includes AML, KYC and sanctions events in the client lifecycle management processes it provides for financial institutions, says penalties for money-laundering violations increased by more than 80 per cent in 2020 compared with the previous year (Trade-based Financial Crime, 11 March 2021).

Capital One and Danske Bank

The article comments on the US$390 million fine imposed on the US bank Capital One for failing to report thousands of suspicious transactions.

It also comments on failures by Danske Bank that lead to more than US$200 billion in suspicious funds possibly laundered through the Danish lender’s Estonian branch.

The Economist article, The war against money-laundering is being lost, can be found here.


Categories: Trade Based Financial crimes News

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