2020: The Year of Improved AML Practices in the Banking Sector
Updated: Jun 16, 2020
Banks are at the forefront of any financial ecosystem and thus hold a greater responsibility to prevent all the related crimes. AML compliance is a central part of the efforts to curb illegal transactions and to make sure the source of capital is clean and adequately regularized.
In an ideal world, banks can detect, stop, and report shady financial practices. However, we all know that this is not the case. The pervasion of technology and mounting cross-border transactions have made it quite difficult for Banks to work with old AML policies. They can’t run their AML and KYC compliance departments while being short-staffed.
As FATF is becoming more powerful and proactive, it has become nothing but obligatory for banks to revamp their AML arms, including the staff and policies.
AML Noncompliance Means Heavy Fines
The first and foremost reason why banks will want to hire more AML staff in 2020 is to make sure they are complying with the anti-money laundering policies laid out by respective regulators. There are many cases where banks had to bear hefty fines due to AML noncompliance. For instance, a Dutch bank ING had to pay $900 million for failing to meet AML compliance requirements set by the Dutch government. The bank was unable to spot money laundering.
The famous money-laundering scandal of Danske Bank is also a hard-hitting lesson for banks and financial institutes to get their act together with AML-related policies. The bank administration has been charged for failing to notice a whopping 200 billion Euros of suspicious transactions over the course of eight years.
The former CEO and financial director of the bank are facing criminal charges now. Moreover, the bank has to pay $2 billion in fines to authorities in the US, Denmark, and the UK.
The Importance of AML Compliance for Banks in 2020
A large portion of the money laundered through Danske Bank was allegedly used in criminal and terrorist activities. Such revelations have sent ripples across the banking sector all around the world. It has also been noted that the banks that failed to spot money laundering and were fined subsequently had neglected some basic AML practices.
Due to this development, many banks are working towards improving their AML compliance programs this year. Some of the AML practices we are going to see this year are:
Banks will onboard a client by assessing its present situation only
Banks will ask for various IDs in a random, spontaneous manner to run AML and KYC screening during the preliminary onboarding process.
A PEP (politically exposed person) will be assigned a higher risk score and will remain in the AML screening radar.
To run all that checks, banks will certainly need an increased AML workforce that also knows how to work alongside the technology and can use the latest AML software applications. ComplyGenics. is one such entity that can act as a liaison between banks and expert AML compliance officers. It can help banks in hiring the right candidates to implement AML compliance measures.