Our Head of Investigations, Tony McClements, recently spoke to Keith Nuthall and Money Laundering Bulletin about the sharing of customer due diligence information between banks and other institutions.
Two UK information-sharing trials involving major retail banks, including Lloyds and NatWest, are now being developed, according to media reports.
The first pilot involves around six banks and Britain’s National Crime Agency (NCA), with participants sharing data if they identify multiple red flags about potential serious financial crime. A second pilot would involve a broader database for suspected economic crime and involves around eight banks.
Tony McClements, Head of Investigations, commented to Money Laundering Bulletin:
“The information held by banks is quite rightly considered sensitive and demands firewalling. This data provides a deep insight into an individual’s or corporate entity’s most private information. However, there are instances where this right to privacy is exploited by the unscrupulous. The reliance on confidentiality can be manipulated by the corrupt, tax evaders, drug dealers and even terrorists…”
However, McClements, a former police officer with extensive experience in anti-fraud and financial crime, said that for such systems to work, law enforcement also needs to be properly funded and staffed with anti-fraud expertise.
“The systems as conceived will work but you have to have the knowledge and expertise to maximise the product these systems will generate.”
The problem is that counter-fraud law enforcement expertise is often lacking, for instance in the UK, where fraud squads have been disbanded and fraud is not a policing priority.
As a result, the extra information is not often acted upon:
“There are all these innovative suggestions coming forward about how we can generate more information and more intelligence getting the banks to help us even more.
“I feel sorry for the banks because they and other financial institutions in the regulated sector are paying millions of pounds to generate information that’s never ever going to see the light of day, but they have to do it, because if they don’t, they could find themselves being prosecuted.”
It is a comparable situation in other countries, said McClements, who recalls conversations with former Australian law enforcement officers at recent conferences:
“They have trained financial and fraud investigators but they – like most police forces – are swamped by the sheer volume of work.”
But even when enough financial crime investigators are in place more work is needed to boost the flow of information between banking and other AML-regulated entities, said McClements.
“There has to be some sort of conduit; a two-way system where the private sector can exchange information intelligence with the police. As a former detective I would ensure that the intel was passed regardless as I appreciate its value and the importance of the bigger picture, but not all investigators are ex-cops.”
Read the full article at Money Laundering Bulletin
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