Insight

Why collaboration is vital to combat money laundering

Written by Jake Plenderleith on Tuesday May 21, 2019

Great strides forward have been made in the general awareness of why combating money laundering is so important.

Take modern slavery: visit LinkedIn and you won’t have to scroll for very long before you see an infographic or a link to a blog discussing the size and impact of it – and how funds raised from it are placed into the financial system.

Promoting awareness in this fashion is a very good thing, both for those that work in compliance and for the general public. The public are contributing to putting a stop to it by, for example, reporting potential exploitation of car wash workers via a Church of England app.

Those in compliance must now capitalise on this goodwill by ensuring they are aware of the best methods to identifying such potential activity in their daily roles.

How is this achieved? Well, FATF’s Financial Flows from Human Trafficking, published in July 2018, asked institutions to identify the different money laundering risks they thought arose from trafficking and to share them with stakeholders.

This dispersal of information from a variety of people closely involved in combatting money laundering is the key to any successful AML initiative.

The Global Coalition Against Financial Crime

A brilliant example of this is the Global Coalition Against Financial Crime. Members include the World Economic Forum, Europol, Refinitiv, the Atlantic Council, the Royal United Services Institute’s Centre for Financial Crime and Security Studies and the thinktank Global Financial Integrity, all of whom believe the current AML regime needs rethinking if the overwhelming amount of illicit funds being laundered through the world’s financial systems is to be reduced.

"Currently, the amount of illicit funds being channelled through financial services sits in the low trillions – but only 1% of this sum is ever seized."

To achieve this end, the coalition’s mission statement contains a number of objectives that it believes will be successful.

One is to move away from the ‘tick-box’ approach to compliance (as outlined by ICA Member Sheila Patel); another is working with non-financial sectors to further collaboration on new technologies.

The idea behind the coalition is that deficiencies in the current system can be spotted, shared with colleagues, and, through discussions with their coalition partners, ideas can be propagated to fix any obvious (or hidden) inefficiencies in the system – exactly as the FATF recommend.

Addressing Anti Money Laundering long term

But is this enough? The emphasis should be on what money laundering does to our societies – the plural is used because criminals utilise the cross-border nature of financial services to their advantage, damaging multiple jurisdictions in the process.

This means that greater emphasis should be placed on the coalition’s objective of working closely with partners abroad and in different jurisdictions.

"Communication is essential. Working in silos is rightly derided as a huge obstacle to a company or organisation achieving its stated aims."

This is nowhere more applicable than to AML practitioners, because the global nature of financial crime means working together is a must to combat criminals who are constantly finding new ways to evade detection.

The role of collaboration

Organisations like the International Compliance Association, where individuals can come together and share ideas and provide updates in respective fields, are profoundly useful in providing a platform for discussion.

Reports and information are invaluable, but it is face to face with colleagues in your field that you will gain you special insights, and will prompt you to look at how you work in a new way. Networks are necessary to fight networks.

Watch The True Cost of Financial Crime series of videos to learn more about the importance of creating data and partnerships to fight financial crime.

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