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The FinCEN leaks shine a light on systemic AML flaws

The impact of the FinCEN files leaks – Insights from our recent webinar with RAW Compliance.

Antonis Melis
October 16, 2020

More than 120 compliance practitioners joined a live webinar hosted by RAW Compliance earlier this week, discussing the impact of the FinCEN leak.

During the event a live poll found that only 8% of participants believed that the AML regime was functioning effectively in the wake of the FinCEN files, and a total of 68% of respondents said that the leaks had highlighted fundamental problems within the AML/CTF regime, with 24% still undecided on the matter.

A total of 44% of practitioners said the banks involved had fulfilled their duties by reporting intelligence and waiting for law enforcement agencies to take further action. Only 6% of respondents said the banks had breached their regulatory obligations and half of the participants said there was not enough information to decide either way.

Lack of communication

This leak does not show the full picture of the SAR process and has only revealed “0.002%  of the SARs that were submitted over a 20-year period” said Oonagh van den Berg, the Founder of RAW Compliance.

She went on to say that these leaks show the need for FIUs to provide more details on reporting entities about their expectations post-SAR submission.

“One of the challenges I've had when working in-house is what we call the 'black abyss' of SAR submission. When you submit a SAR you don't ever know what happens with it. For instance, if you submit a SAR and then you say to your regulatory contact, 'what do you want us to do?', the response is, 'just follow your internal controls and we'll be in touch if there's anything further that we expect from you',” said Oonagh.

Data security and broken trust.

The submission of an SAR is expected to be confidential, and by breaking that confidentiality you bring life threatening risk to the names that were on the SAR. This could bring life threatening danger into the lives of those working for financial institutions and could make some compliance officers reluctant to report certain activity due to the fear of criminals discovering that they did.

Fellow panelist Napier’s CEO Julian Dixon mentioned that this leak not only shows AML process flaws but exposes massive flaws in FIU data security systems. He went to say that FIU’s need to “get on the front foot” and respond to the industry’s concerns about data protection.

"They should really be wholly prepared for things like this. Leaks like this appear to be becoming more prevalent in society generally. There's a honeypot of information here that is interesting to journalists and criminals," Dixon said. "In terms of cyber protection, I would hope that FinCEN and other agencies who have this data have got the highest levels of protection."

Difference in standards

The leaks have shown the importance of investing in better systems and controls, for both financial institutions and FIU’s. However, the difference between the efforts of institutions has been significantly higher than that of the FIU’s.  

Julian went on to say that "The banks and other institutions are held to such high standards, and I think in most instances adhere to those standards, but the gamekeepers here don't actually seem to have the same standards employed."

A deeper look into the webinar and its survey

For a full summary of the webinar discussion and its survey, read the article authored by Thomson Reuters Asia-Pacific Manager Nathan Lynch below.

ANALYSIS: FinCEN leaks highlight fundamental flaws in AML regime — survey

We would also like to thank RAW Compliance for pulling together an amazing session. RAW Compliance provides a global leading platform for compliance professionals, and those interested in compliance, to develop new skills, learn from experts, collaborate with a compliance community, and try new initiatives.

It was a pleasure to be a part of the webinar, find out more on the event here.

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