Human trafficking, a serious money laundering problem for financial institutions

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LONDON–(COMMERCIAL THREAD) – Human trafficking is now one of the biggest concerns of compliance professionals around the world, according to BAE Systems’ latest annual anti-money laundering study: The state of the fight against money laundering 2021.

According to the latest data, more than three-quarters (77%) of compliance professionals admit that they are not convinced that money laundering crimes related to human trafficking could be prevented from going through the accounts of their clients. Over 60% of those polled said new advanced criminal techniques had become even harder to spot over the past 12 months and the financial impact on banks was huge. In the UK, a quarter (25%) of risk and compliance professionals in financial institutions said that human trafficking causes the largest financial loss of all money laundering crimes. In the United States, it was one-third, and in Australia, almost half (45 percent).

Banks worried about the human impact of money laundering

Along with fraud, corruption and organized crime, human trafficking was cited among the top 5 concerns, with over a quarter (27%) of respondents admitting it to be a serious concern .

Almost a third (29%) said their teams struggled to identify key indicators related to human trafficking and one in five (21%) simply did not have enough anti-trafficking information. money laundering within its organization.

Compliance is now a checkbox exercise that ignores the real issue

Compliance is a major cost center for financial institutions, especially in the fight against money laundering. However, the consensus of many industry professionals (76%) is that compliance has become a checkpoint exercise that prevents addressing the real source of money laundering.

With more than half (57 percent) of money laundering remaining to be uncovered in the last year, nearly a fifth (17 percent) said compliance is now a stagnant culture that is wrong. far enough to understand and support the real victims. money laundering.

Enda Shirley, Compliance Officer at BAE Systems Applied Intelligence, said: “For many financial institutions, controlling money laundering is now just about making sure they avoid fines or damage to reputation.

“Our research tells us that the current system does not go far enough to have a significant impact on the crux of the matter. For many, compliance has stood in the way of the primary goal – how to identify and protect vulnerable victims. ”

Call to action: “more collaboration and shared intelligence are needed”

Research suggests that banks and financial institutions, policymakers and law enforcement need to come together in what is described as a financial crime feedback loop to better tackle money laundering issues. .

Many financial institutions are seeking more input and action from law enforcement agencies, with half of respondents (50%) revealing that they currently do not feel well enough supported. Almost a third (32 percent) request more shared industry information.

A summary of key statistics from The state of the fight against money laundering 2021:

Money laundering is a serious and pervasive societal challenge

– More than half of money laundering goes through the cracks, according to respondents

– 1 in 3 say that it is almost impossible to spot emerging criminal typologies, that it is difficult to measure the frequency with which money laundering occurs and that it is difficult to quantify the impact

– 62% say that money laundering has become more difficult to detect in the past 12 months

So why doesn’t compliance solve the problem?

– 1 in 6 compliance professionals say compliance is a stagnant culture

– The majority say that compliance does not get to the bottom of the problem

– And against all this, most financial institutions are trying to comply while facing budget cuts of up to 25 percent

The Financial Crime Feedback Loop – Compliance, Done Right, Has Huge Societal Impact

– 40 percent of respondents believe they would benefit from a central anti-money laundering group to share information with key industry players

– 92 percent of respondents believe the lack of collaboration between financial institutions, law enforcement and policy makers is hampering progress

Enda continued, “Stopping these incidents at the time of the transaction is still only a small part of solving the problem. There is work to be done to delve into how we can look for early indicators of these often life-changing offenses. For real change to happen, collaboration within the anti-money laundering industry is essential. This means that law enforcement, policymakers, financial institutions and technology are constantly working together more closely to share ideas and information. ”

To read the report, please visit: www.baesystems.com/2021AMLReport

Notes to Editors

The state of the fight against money laundering 2021

Methodology: An online survey was conducted by Atomik Research among 452 finance professionals working in risk management and compliance in the banking and insurance industry. The research took place in the UK, US, France, Germany, Australia and Singapore. Fieldwork took place from July 16 to July 21, 2021. Atomik Research is an independent, creative market research agency that employs MRS-certified researchers and adheres to the MRS Code.

About BAE Systems Applied Intelligence

At BAE Systems Applied Intelligence, we help nations, governments and businesses around the world defend themselves against cybercrime, reduce their risks in the connected world, comply with regulations and transform their operations. For more information on our compliance, fraud detection and prevention solutions, visit www.baesystems.com/financialservices.


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