Despite the advancements in technology and improved security, money laundering is still a real threat to financial institutions of all sizes. Recently, a small east coast US community bank got slapped with a $400,000 fine for violations of the Bank Secrecy Act when it was discovered that accounts maintained by the bank were tied to a fraudulent investment scheme that affected a number of the bank’s unwitting customers.
Money laundering is not a new compliance issue. Banks have been battling with it for as long as economies have existed, and possibly always will. There will always be some people who try to defraud others and who will, quite often, try to conduct their fraud through financial institutions. In this technological age, money laundering operations are becoming more sophisticated. Therefore, financial institutions need to implement tougher policies and more effective AML compliance programs.
Compliance Training – New and Improved!
For any financial institution already affected by money laundering or concerned about its threat, improving your compliance training is one of the first steps to consider.
Even simple changes can make a big difference in the effectiveness of your organization’s AML compliance initiatives, and improve the company’s overall compliance performance. For example:
- Switching from your classroom training to compliance e-learning
- Changing the delivery method of training content so that employees can access it on a ‘wherever, whenever’ basis through mobile devices
Learn more about enhancing your compliance training and Creating a Global Culture of Compliance, in one of our recent articles.
Know Your Customer – It Can’t Be Stated Enough!
It may sound like a cliché, but the entire financial industry needs to recognize importance of “know your customer” (KYC).
Every employee in every financial institution in every country needs to be extra vigilant when it comes to knowing their customers. By doing so, every employee plays their part in helping their organization and their industry to prevent financial crimes.
New Technology – Fighting Fire with Fire!
Earlier, we alluded to the fact that advances in technology are facilitating financial crime and making the job of preventing it much more difficult for financial organizations. With access to so much online information, cases of cybercrime have become very frequent over the past 2-3 years. Money laundering operations, in particular, are being facilitated by the internet.
But if cyber criminals are using technology to their advantage, then banks MUST use it more vigorously to combat the issue. Some of the initial steps that financial institutions can take to improve their security include:
- Better password protection
- Updated firewalling
- Designating banking-only computers
A 2012 Forbes article highlighted a number of simple but effective measures businesses can take to protect themselves against cybercrime. For any organization seeking to improve their cyber security, this article is a good place to start.
Want to learn more about how your organization can improve its AML compliance?
Interactive Services develops custom compliance training for global Fortune 500s. To learn more about ways to improve your compliance performance, contact us for a free consultation.