It is estimated that about £1.8tn is laundered globally each year, some 3% of total GDP. Of this amount, the UK has the second highest sum of money laundered each year, an estimate of around £88bn. The only country to see an even higher amount is the US, with £216.5bn. It is only fair that ensuring organisations have strong Anti Money Laundering (AML) controls in place to prevent financial crime is a high priority for the FCA and other regulators across the globe.
Here are just some of the money laundering fines that the FCA has imposed on financial institutions in the past couple of years:
- Ghana International Bank Plc (GIB) was fined £5,829,900 for poor AML and counter-terrorist financing controls over its correspondent banking activities in June 2022;
- NatWest Bank was fined £265m for failure to prevent the money laundering of £400m in 2021;
- Commerzbank London was fined £37,805,400 for AML failures in 2020.
The FCA have identified a range of failures, such as a lack of annual reviews on banks GIB held relationships with, flaws in NatWest Bank’s automated monitoring systems, long-standing weaknesses in Commerzbank’s automated tools for monitoring transactions and a lack of timely KYC checks. In most of the cases, the FCA has also determined that the institutions failed to establish appropriate policies and procedures.
The FCA concluded that GIB “failed to give staff adequate training on how to scrutinise transactions properly and did not establish appropriate procedures for staff” and that Commerzbank London failed to “have adequate policies and procedures in place when undertaking customer due diligence on clients”.
Many of these money laundering scenarios could have been prevented, or at least minimised, if these financial institutions had a robust compliance programme in place.
This is why financial institutions from different sizes and profiles are turning to RegTech and policy management technology to effectively create, manage, and disseminate their policies and procedures to their workforce. RegTech and policy management technology help organisations:
- Adapt faster to comply with new rules. Companies can achieve this with intelligent mapping that helps answer the question:, “what specific policies and procedures need to be updated when a new regulation is introduced?”, as well as automated workflows for drafting, reviewing and approval cycles;
- Prove compliance. Smart RegTech solutions will allow you to evidence compliance, with full audit trails in place to show regulators that an organisation is doing all they can to prevent financial crime.
- Drive staff engagement and adherence. Having policies and procedures that nobody reads or understands is almost worse than not having policies at all. A policy distribution solution that makes sure staff can easily access all policies that are relevant to their job function, from anywhere, can be a game-changer.
- Cut compliance costs and boost efficiency. By automating time-consuming processes, the company will free up their existing workforce to focus on real compliance matters, without having to invest in additional resources. They will also save the time of their most expensive resources, senior executives, by streamlining review and approval processes.
Is your policy lifecycle management programme robust and agile enough to assist you in your fight against financial crime and terrorism?
Here are some free resources that will help you assess your current stage and provide food for thought on how other institutions are upping their game when it comes to policy management:
- Self assessment: how mature is your policy management programme?
- Why the future of compliance is smart, connected documents
- 8 reasons to invest in a policy management platform today
- How Barclays adopted a cloud-based policy portal for their global workforce
- Why Griffin, a BaaS Fintech, has adopted policy management technology early in their journey
- How UK Fintech PensionBee adopted policy management technology