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Banks & Building Societies

Banks and Building Societies offer a vast array of services and products to their clients, and as such have a complex array of policies and procedures to deal with a range of differing products and clients with diverse interests and circumstances. Those could be Individuals or Business clients and the financial and reputational risks of getting it wrong can be substantial and have serious consequences. The effects of this can be seen by a number of high profile Banking Institutions being fined in recent years over AML indiscretions.

SmartSearch is currently the only single platform that can perform AML verification on both Businesses and Individuals.   The standard AML service also includes full Sanction and PEP Screening with ongoing monitoring of all clients.  Additionally, SmartSearch also provides a unique “Alerts Service” that triggers an email alert to the Money Laundering Reporting Officer (MLRO) when high risk Sanctions (SDN & Terrorist) or Politically Exposed Persons (PEPs) warnings have been encountered. This allows your MLRO to retain control of the Enhanced Due Diligence process ensuring your Business remains protected and compliant.

The following three factors make Money Laundering and Financial Crime an increasingly important Operational Risk for Banks and Building Societies going forward.

  • In February 2012, the Financial Action Task Force (FATF - an Intergovernmental Body aimed at stopping Money Laundering and the Financing of Terrorism) recommended adding Tax Crimes to the list of Predicate Offences for Money Laundering
  • Throughout 2012, US and European Authorities increased their use of Sanctions as a Foreign Policy Tool, and with civil war continuing in Syria and tensions between the West and Iran still high, this is likely to continue in the foreseeable future; especially given their apparent impact in terms of economic stress and hyperinflation in Iran. As the scope of Sanctions grows wider, Banks face a greater compliance challenge; particularly in the wake of a number of high-profile Sanctions Evasion cases, which have made clear the potential financial cost of a deliberate or accidental compliance failure.
  • The penalties for Sanctions Evasion and AML failures have reached record levels. The Coutts Bank fine in March 2012 was a UK Record at £8.75 million, exceeded in July by the £17.7 million fine for HSBC, who also face a World Record Fine of over $1 billion for its failures in the US.  The lag between failure and penalty in HSBC’s case is significant, the failures are said to have begun in 2004 which means that the penalties imposed in 2013 will be the result of failures which have in large part already happened.

There are, however, still actions that Operational Risk Managers can take to reduce potential exposure.   In Money-Laundering as in other areas of Financial Crime, bona fide efforts to address problems will be a powerful mitigating factor when the Regulators come to decide on the size of penalties to impose.

The SmartSearch Ongoing Monitoring Service is an excellent way to internally audit your Sanction and PEP Compliance to ensure none of your clients appear on any of our 1,000+ Sanction Lists.   Going forward we will then monitor all your clients on a daily basis as we update the Dow Jones “Watch List” daily ensuring your Business remains Sanction vigilant and compliant.

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