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Failings, fines and pressure – June’s headlines reflect global AML struggles

Julian Dixon
June 30, 2020

June has brought with it a mixed bag of headlines while we grapple with our new futures mid-and post-pandemic.

In terms of the struggle against financial crime and keeping regulators happy, it has been disappointing to read of not just one, but two European banks hitting the headlines for AML failings this month, while in other parts of the world, the industry is still reeling from the Wespac scandal.

With SEB the latest bank to fall foul of the rules, and Commerzbank slapped on the wrist for having poor controls, there are still so many questions about why AML processes are failing.

Read on for a snapshot of what’s been going on.

Too little, too late… Swedish FSA fines SEB 1 billion crowns

Sweden’s financial watchdog has fined Swedish financial group Skandinaviska Enskilda Banken (SEB) 1 billion crowns (£86 million) for AML compliance and governance failures in the Baltics.

The fine is around one third of SEB’s first quarter operating profit and is the second biggest to be imposed by the Financial Supervisory Authority (FSA). 

FSA head Erik Thedeen, said: “…the bank has reacted too late and too little in both identifying the [money laundering] risks and in taking sufficient measures to reduce them.”

The bank will now analyse the decision.

AML failings land Commerzbank with a £38m fine

Commerzbank is the latest bank to be slapped with an AML fine from the FCA for non-compliance. But is the headline-grabbing figure enough? Why did the failings continue for so long? And how can we move forward from yet another case of inexcusable failings?

I looked at some of these questions and more in a blog published recently. If you haven't seen it yet, you can find it here.

Westpac identifies causes of its serious AML/CTF failures

In April we shared in our news roundup how Westpac is expecting a fine in the region of $1.03 billion for its serious AML/CTF failures. This month, the Australian banking giant has shared the results of its investigation into these issues.

The bank has identified three primary causes of its failures: 1) It did not sufficiently understand some areas of AML/CTF risk 2) Its end-to-end accountabilities for managing AML/CTF compliance were unclear 3) There was insufficient AML/CTF expertise and resourcing.

Westpac CEO, Peter King, acknowledged the need for cultural change within the Bank.

“We recognise we need to change. We completely accept that some important aspects of Westpac’s financial crime risk culture were immature and reactive, and we failed to build sufficient capacity and experience in some important areas,” Mr King said.

“We have learned from this and are absolutely committed to making amends for this event.”


UAE banks face compliance pressure after AML report

Following an April 2020 report from the Financial Action Task Force (FATF) into money laundering in UAE, an article from S&P Global reveals UAE banks may face greater scrutiny of their AML measures, and therefore greater pressure to improve compliance, according to Chris McLeese, Strategic Director at Dow Jones Risk and Compliance in Dubai.

Katerina Pagoni, Head of Anti-Money Laundering and Sanctions at KMPG Lower Gulf, adds that bank’s sanctions screening systems may also be under scrutiny. Read more here.


FCA: Covid-19 is a moment for RegTech to prove its value

The  FCA has published an interesting piece entitled ‘RegTech – a watershed moment?’ which looks at the current RegTech market, its key opportunities, and the challenges faced during the Covid-19 crisis, “suggesting that the crisis may prove to be a pivotal moment in the RegTech story and a chance for both firms and regulators to take a leap forward”.

It’s an interesting read if you are keen to learn the FCA’s views on how firms and regulators can take a leap forward and unlock the potential of technology to streamline regulatory activity.


SRA to ramp up AML visits

The Solicitors Regulation Authority (SRA) is to expand its AML visits to all high-risk firms on a three-year rolling basis, along with visiting a sample of lower risk firms.

The initiative was revealed in the SRA’s draft Business Plan and Budget, which sets out its planned work for the first year of its Corporate Strategy 2020-23, commencing November. Read more details here.


Almost 10% of UK firms failing to declare ‘persons of significant control’

Nearly 400,000 of the UK’s approximately 4 million firms are not declaring who their beneficiaries are, despite an order dating back to 2016 for companies to identify who controls them. Campaigners believe a legal loophole could be facilitating crime, corruption, money laundering and tax evasion through anonymously owned shell companies. Read more here.


AML and Brexit: agreeing on nothing

As Covid-19 pushed Brexit brusquely from the 2020 agenda, it is understandable that the ramifications of the deal and how it relates to the future fight against financial crime have taken a back seat.

Tom Keatinge, Director at RUSI’s Centre for Financial Crime and Security Studies, published  a detailed and informative insight into the disputes surrounding Brexit negotiations and financial crime, reminding us that this is an issue still looming large.

About Napier

To learn more about what we do, or see how our technology can help you transform your compliance processes, contact us here.

Julian has more than 20 years of financial services experience gained at major investment banks including Deutsche Bank, JP Morgan and Commerzbank. His roles have ranged from front-office sales leadership to private equity. Julian has extensive knowledge of financial services processes and technology.
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