From a recent report by Kroll and Central Banking Publications which investigates the current state of anti-money laundering measures by the relevant authorities (the research was conducted between January and February 2022 on 21 central banks: 5 from Africa, 6 from Americas, 3 Asia-Pacific and 7 European) and how they are adapting to the new challenges that technology (for example, through the use of cryptocurrencies or fintech companies), it has emerged that the main focus of the control activities of organisms anti money laundering within central banks remains with traditional financial institutions: 81% mainly control banks and only 19% control companies that deal with cryptocurrencies and 14% fintech companies in general.
Only a few companies working in the financial sector have suffered the loss of their license due to violations of anti-money laundering regulations. In the past three years, only 24% of investigations led to a license withdrawal. Transnational cash flows are considered to be the main source of risk that may indicate possible money laundering; and indicated by 76% of respondents. This was followed by corruption (57%) and large sums of money paid in cash (48%). milanofinanza.it interviewed David Lewis (pictured), Managing Director of the Forensic Investigations and Intelligence division of Kroll, a leading global company in the supply of data, technological solutions and insights related to risk management, governance and business development that in Italy it has offices in Milan and Rome.Question : There is room for further action in the current anti-money laundering regulatory framework
How Answer: There is significant room for improvement in the implementation of global standards nationwide. This is particularly true with regard to both supervisory authorities and regulated sectors, from banks to operators dedicated to money transfers, from casinos to real estate agents, from lawyers to accountants. The approach should not be based solely on the fulfillment of certain duties and should not only involve filling in forms and updating records. Instead, it is necessary to know how to understand risks, concentrate limited resources on major risks and work in partnership, supported by an intelligent use of technology. Governments must invest more in the resources and intervention possibilities of financial intelligence units, law enforcement and supervisory bodies. A more strategic approach, based on risk analysis and intelligence activity, is needed to identify and counter complex operations and professional money laundering networks. This is valid in every area.D : Prevention and control can make a difference A.: Preventive measures can and do make a difference. They are more effective if framed in a cohesive and effective anti-money laundering / combating the financing of terrorism – AML / CFT system at national level, with a true public-private partnership and a national and international cooperation, where information and intelligence activities are shared, where there is a good understanding of risk and where priorities are shared and clear. We cannot hope to eliminate all the dirty money from the financial system; preventive measures are therefore essential to identify it and to be able to collaborate with the authorities to investigate and combat criminal activity. The professionals ofQ : How can money transfer R be opposed to dirty money transfers with nominee splits: Money transfer services are highly exposed to money laundering. The implementation of the Financial Action Task Force (FATF) standards and compliance with its guidelines help to identify and mitigate risks, including that of “smurfing” (ie a hacking action conducted by entering a huge amount of information in the database of a company, so as to slow down its consultation by other users), to which even banks are vulnerable. Strategic analysis of transaction data will help identify suspicious activity. The risk of focusing on individual transactions is that of missing out on the bigger picture, even though it may be enough to meet the requirements of local regulators. D.: Cryptocurrencies are often used to circumvent regulatory bodies. There is an internationally defined regulatory framework A : Yes. The FATF introduced global standards in 2019 that require the regulation and supervision of virtual currencies and related service providers. It also published guidelines to help governments introduce them without delay. Governments should quickly implement FATF-suggested standards to help mitigate the risk of cryptocurrency use by criminals globally. D : Without forgetting the forgery of coins and banknotes or counterfeit certificates and stamps. How to recognize fraud R: When it comes to fraud, remember that there is no such thing as “free meals”, and if something sounds too good to be true, it probably is. Scammers are smart. They take advantage of human frailties. Clicking a link in an email without paying attention or when fatigued can be disastrous. Attention should be paid to the small details before accepting any proposal, clicking on any link or providing personal information to strangers. Q : Technological innovation and fintech can help fight money laundering.
How does R: Technological innovation and fintech present risks and opportunities, including when it comes to money laundering. The intelligent use of technology can and should make a big difference for financial intelligence units and supervisors, as well as for banks. The possibilities that technology can provide should make available the information necessary to allow the concentration of human resources activity on the areas where the risks are greatest. The technology has the potential to improve the effectiveness of anti-money laundering measures, for example by detecting patterns and anomalies in large data sets under human investigation. Q : Recently there has been talk of Italy’s candidacy for the headquarters of the European anti-money laundering agency.A : There is a lot of competition between EU Member States to host this body. Whatever the host country, it must be ensured that staff have all the necessary resources to operate effectively and independently and in the interest of the EU as a whole. Italy has a solid experience in the fight against financial crime and money laundering, also thanks to globally recognized organizations such as the Guardia di Finanza. (All rights reserved)
