Nieuwe publiek-private samenwerking in Fintell Alliance – “Nieuwe boost voor aanpak witwassen”

Accur Accur February 22, 2021 0 Comments

Vier Nederlandse grootbanken en de Financial Intelligence Unit-Nederland (FIU-Nederland) hebben de handen ineengeslagen in de strijd tegen witwassen en financiering van terrorisme. De publiek-private samenwerking in Fintell Alliance NL kreeg vandaag formeel zijn beslag met de ondertekening van het Alliantiedocument. NVB-voorzitter Chris Buijink en Hennie Verbeek-Kusters, hoofd van de FIU-Nederland koesteren grote verwachtingen: “Uitwisseling van kennis betekent een nieuwe boost voor de aanpak van witwassen.”

Aan de ondertekening van het Alliantiedocument ging twee jaar voorbereiding vooraf. In 2018 startte de FIU-Nederland een pilot met de Volksbank. Omdat de samenwerking en de resultaten als zeer positief werden ervaren, volgde uitbreiding van de publiek-private samenwerking met ING, Rabobank en ABN AMRO onder de naam Fintell Alliance NL. Een (vooralsnog bescheiden) team van medewerkers afkomstig van alle partijen deelt (tijdelijk onderbroken door de coronapandemie) fysiek een kantoor waar de lijnen kort zijn. De gedeelde kennis zal, zo is al gebleken, leiden tot betere meldingen aan de FIU-Nederland en aansluitend de opsporingsinstanties, maar ook tot betere inzichten in nieuwe fenomenen en trends. Hennie Verbeek-Kusters: “Nu al biedt de samenwerking zicht op netwerken en criminele organisatievormen die we anders hadden gemist.”

Chris Buijink legt uit dat banken door Fintell Alliance NL effectieve feedback krijgen die zij weer kunnen inzetten in het transactiemonitoringsysteem.” De samenwerking zal er mede voor zorgen dat de taken zoals die zijn beschreven in de Wet ter voorkoming van witwassen en financieren van terrorisme (Wwft), zo goed mogelijk worden uitgevoerd en de wettelijke bevoegdheden optimaal worden benut.

Hennie Verbeek-Kusters en Chris Buijink

De Wwft verplicht banken ongebruikelijke transacties te melden aan de FIU-Nederland. Ze hebben daarvoor een goed beeld nodig van de klant en het risicoprofiel. Buijink: “Wil een klant geen antwoord geven op de herkomst van het geld? Of niet verklaren waarom hij of zij zoveel contanten wil opnemen? Dat is voor de FIU-Nederland relevante informatie.” De FIU-Nederland analyseert en onderzoekt de gemelde ongebruikelijke transacties. Verbeek-Kusters: “Als wij een transactie uiteindelijk als verdacht aanmerken, sturen we deze met een rapportage door naar een opsporingsdienst of, in geval van mogelijk terrorisme, de veiligheidsdienst.”

Het aantal ongebruikelijke transacties dat de banken in 2019 doorstuurden naar de FIU-Nederland steeg in 2019 fors: van 68.217 naar 155.337. Uit nog ongepubliceerde cijfers blijkt dat de stijging vorig jaar doorzette. De groei is volgens Verbeek voor een deel te verklaren uit een wettelijke aanpassing voor het objectief melden van ongebruikelijke transacties in relatie tot risicolanden. Een ander deel is volgens haar echter “absoluut een opbrengst van de extra inspanningen van de banken”. Van de door de banken gemelde transacties bestempelde de FIU-Nederland er in 2019 12.919 als “verdacht”.

Het doel van de Fintell Alliance NL is vooral het gezamenlijk opbouwen van expertise, onderstreept Verbeek-Kusters. Ze heeft al ervaren dat dat “fantastisch werkt”. Enthousiast: “Een bankmedewerker vertelde mij: ik zit al tien jaar in het vak, maar heb in de afgelopen maanden meer geleerd dan de tien jaar ervoor. En mijn analisten zeggen: we snappen steeds beter waar de banken tegenaan lopen.”

De samenwerking zal leiden tot ontwikkeling van intelligence- en kennisproducten, waar zowel de FIU-Nederland, de opsporingsdiensten en ook andere banken van kunnen profiteren. Verbeek-Kusters noemt als voorbeeld de inspanningen van de banken mee te werken aan het opsporen van mensenhandel en moderne slavernij, een van de gronddelicten van witwassen. “Het doel van dat project is uiteindelijk een kennisproduct te delen. Fintell Alliance NL levert feitelijke casussen aan die inzichten opleveren waar ook de opsporing mee verder kan.”

Buijink verwacht veel van de interactie tussen Fintell Alliance NL en Transactie Monitoring Nederland (TMNL), waarin de Volksbank, ABN AMRO, Rabobank, ING en Triodos al samenwerken. “De kennis over netwerken en modus operandi die wordt opgedaan in Fintell Alliance NL kunnen leiden tot scenario’s waarmee TMNL de monitoring kan verbeteren.”

Fintell Alliance NL is een voorbeeld van de grote stappen die publieke en private partijen de afgelopen jaren hebben gezet op het gebied van samenwerking in het financieel-economisch domein. En bouwt verder op wat bijvoorbeeld al is uitgewerkt in de Serious Crime Task Force (SCTF), ook een publiek-private samenwerking. “Tien jaar geleden zouden banken samenwerking misschien als een ‘moetje’ hebben gezien”, zegt Buijink. “Dat is echt veranderd. Ook de politiek is in beweging gekomen, met bijvoorbeeld aanpassing van de wet die het delen van gegevens onder voorwaarden mogelijk maakt.” Verbeek-Kusters knikt. “Er is meer politieke lading gekomen. We mogen echt trots zijn op wat Nederland doet op het gebied van monitoring in de strijd tegen witwassen en financiering terrorisme. Collega’s in het buitenland vragen mij regelmatig om onze aanpak toe te lichten. Wij zijn Europees koploper.”

Buijink ziet de komende jaren met vertrouwen tegemoet. “Fintell Alliance NL is opnieuw een bewijs van de inspanningen om gezamenlijk echt een vuist te maken zodat het financiële systeem veilig wordt en veilig blijft.”

Redacteur: Rineke van Houten

Click to see: Infographic Fintell Alliance NL

The Italian Mafia and the Move Upstream

Accur Accur February 19, 2021 0 Comments

Operation ‘Tiburón Galloway’ began as a local investigation by prosecutors in the Italian region of Calabria in 2001, but quickly snowballed into a multinational, multiagency investigation. Over five years, prosecutors uncovered a vast cocaine trafficking and money laundering conspiracy spanning both Italy and Colombia – and even the retirement plans of one of Colombia’s most notorious warlords.

The investigation into the alliance between Salvatore Mancuso, a commander of Colombia’s paramilitary army, the United Self-Defense Forces of Colombia (Autodefensas Unidas de Colombia – AUC), and the ‘Ndrangheta mafia revealed just how far the Italians had come in the cocaine trade – all the way to the source.

According to reports in the Italian media, the evidence showed the Italians were buying cocaine from Mancuso in Colombia at $3,000 a kilo then organizing its shipment through Colombian ports and via Venezuela to Europe, where it would fetch prices up to 15 times higher on the wholesale market.

Mancuso, in turn, went into the business with the Italians in Colombia, even opening an Italian restaurant in the Caribbean city of Barranquilla frequented by mobsters and local elites alike. And as the paramilitaries negotiated their demobilization with the Colombian government, he sent one of his personal fixers to Italy to scout property deals, according to an investigation by El Espectador. Communications intercepts between ‘Ndrangheta members hinted at why:

“[Mancuso] is at the end of the peace process, and they will surely give him a couple of years in prison, then after he is coming to Italy,” Mancuso’s chief mafia business partner told his son.

Mancuso did not get his retirement in Italy – at least not yet. He was instead extradited to the United States, where he served a 12-year prison sentence on drug trafficking charges.

Since then, the European cocaine trade has changed and evolved. But networks organized along the same lines as the Mancuso mafia ring are becoming more common as ever more European traffickers move upstream in search of cheap cocaine and coordinate its dispatch Europe directly.

Nonetheless, it was the Italians, with their particular brand of organization, entrepreneurship and criminal efficiency, who pioneered the move upstream. And it is still the Italians who have the most far-reaching and sophisticated upstream operations.

Cocaine Brokers and the Criminal Diaspora

Italian involvement in the cocaine trade even pre-dates the rise of the Colombian cartels, with records of mafia members arrested in Brazil for cocaine trafficking as far back as 1972. But at first, cocaine was a minor part of a broad criminal portfolio that included everything from international heroin trafficking to local waste disposal rackets.

When Colombia’s Medellín and Cali cartels began to ramp up cocaine trafficking into Europe in the 1980s, the Italians were among the main wholesale buyers, moving and selling the product that Galician smugglers brought in for the Colombians.

But the Italians’ experience in the heroin business offered them a major competitive advantage over other European mafias getting into the cocaine trade.

“They exported heroin from Europe into the United States so they had a lot of experience and they had established distribution and importation chains,” said Mike Vigil, a former chief of international operations for the US Drug Enforcement Administration (DEA).

The more forward-thinking mafiosi understood that this experience and criminal infrastructure could be used to traffic the cocaine themselves.

“They came to Colombia so they could be closer to the supply and coordinate shipments to their standards,” said Vigil.

By the early 1990s, Italian cocaine brokers were stationing themselves in the country, where they worked quietly reshaping the European cocaine trade. The most infamous was the baby-faced trafficker Roberto Pannunzi, the man dubbed the “Copernicus of Cocaine” by Italian crime writer Roberto Saviano.

Pannunzi’s first realization was that the heroin he had trafficked for years was worth much more to Latin American traffickers than the cocaine they shipped to Europe. As Saviano describes in his book ZeroZeroZero, he began a drug exchange of 1 kilo of heroin for 25 kilos of cocaine. His second realization was that there was far, far more money to be made from cocaine upstream.

By the early 1990s, Pannunzi had leveraged his cartel contacts in Colombia and his mafia contacts in Italy to set himself up as an upstream middleman, establishing himself as one of the original cocaine brokers. He worked for himself, brokering deals between the Medellín Cartel and both the Cosa Nostra and ‘Ndrangheta mafias, but beholden to none of them.

The cartel era was winding down, with the killing of Pablo Escobar in 1994 and the capture of the Cali Cartel bosses in 1995 ushering in a new generation of traffickers and organizations. Pannunzi was captured in Medellín less than two months after Escobar’s death. The police officials arresting him turned down his offer of a million dollars to let him go, according to media reports at the time. Nevertheless, he was released five years later after prosecutors ran out of time to bring their case against him.

By that time, Colombia’s criminal monoliths had splintered into federations of smaller trafficking networks. For the Italian mafia, that represented new opportunities, and their footprint upstream began to grow.

The mafia that proved the most adept at moving in the new cocaine trade was not one of Italy’s infamous and storied mafias like the Cosa Nostra, but the ‘Ndrangheta, a relatively minor federation of family crime clans from the impoverished region of Calabria.

The ‘Ndrangheta plotted a chart upstream by turning a weakness into a strength. Poverty and lack of opportunity drove a mass migration of Calabrians, and among their numbers were ‘Ndrina – the mafia clans that make up the ‘Ndrangheta network.

“Migrants from Calabria created communities around the world and they strengthened the connections with the Calabrian region – this was the first base of their network,” said Alessia Cerantola, an investigative journalist at the Organized Crime and Corruption Reporting Project (OCCRP) and co-founder of the Investigative Reporting Project Italy (IRPI).

These migrant crime clans not only dedicated themselves to crime but also setting up legal businesses as fronts for illegal activity and to launder money. Among them were export companies, which the Italians used to ship cocaine to Europe in cargo and containers – what would become the main method of shipping cocaine to Europe.

This upstream presence allowed the ‘Ndrangheta to cut out the independent brokers and control more of the supply chain directly.

“They have their people in the key positions in the supply chain,” said Cerantola. “This is not only in Italy but also on an international level thanks to the people they located in key strategic roles around the world.”

Italian migration was key to the alliance between the ‘Ndrangheta and Salvatore Mancuso, who was the son of an Italian migrant from the southwestern region of Campania, and came from the city of Monteria in Colombia’s Caribbean, home to a signi ficant Italian diaspora.

Mancuso, though, was far from the only ‘Ndrangheta supplier, as their upstream brokers set to work making other connections, not only with right-wing paramilitaries but also guerrilla insurgents.

By 2006, as the AUC was coming to the end of its demobilization process as part of a peace deal with the Colombian government, the ‘Ndrangheta was handling up to 80 percent of European cocaine imports, according to a report commissioned by Italy’s anti-Mafia commission.

The Italian Mafia and Cocaine Migration

In 2008, Salvatore Mancuso was extradited to the United States for continuing to traffic cocaine after his demobilization, along with 13 other paramilitary commanders. It was a watershed moment for the cocaine trade, as the old guard walked off the criminal stage and a new generation jostled to take their place in the Colombian underworld.

Since then, the European cocaine trade has opened up, both geographically and strategically. Now, there are more routes and more actors involved than ever before. But the Italian mafia remain at the forefront of this expansion.

Police and intelligence sources all around Latin America report their presence. In Brazil, today one of the main dispatch points to Europe, according to Europol, police sources described how they uncovered an alliance between the ‘Ndrangheta and Brazil’s most powerful criminal group, the First Capital Command (Primeiro Comando da Capital – PCC) in 2017. In Costa Rica, intelligence sources say they are the most common European actor found trafficking in the country, while in Peru, police report that the Italians are among the main financers of cocaine shipments.

Brokers, many of them resident upstream, remain the lynchpin of their operations, with their connections to suppliers and dispatch networks.

“The ‘Ndrangheta have brokers in these countries, typically in Colombia, Venezuela, Brazil, the Dominican Republic and Costa Rica, and these brokers try to organize the sales from these countries using legal businesses,” said Maurizio Catino, an expert on the Italian mafia and author of the book “Mafia Organizations.”

“In these countries, there are ‘Ndrangheta logistics cells for trafficking cocaine through the movement of goods for export to North America and Europe,” he added.

An IRPI and CORRECTIV investigation into one of these brokers, Nicola Assisi, offered a glimpse into how they work.

According to the investigation, Assisi established himself as one of the cocaine world’s leading brokers after he inherited the contact book of the legendary trafficker Pasquale Marando, who had worked alongside Roberto Pannunzi as one of the pioneers of Italian cocaine trafficking. When Marando was murdered by rivals in 2002, Assisi moved to take over the upstream networks he left behind.

Evidence collected by investigators shows how Assisi sources cocaine from suppliers in Peru, Paraguay and Brazil. He then contracts the PCC to move the cocaine to the port of Santos and dispatch it to Europe, where his ‘Ndrangheta clients are waiting.

Assisi, like Roberto Pannunzi before him, is an independent operator rather than a member of an ‘Ndrangheta clan. Most trafficking networks prefer it this way because it avoids the alerts that known mafia members would raise upstream, according to Esteban Chavarría, the head of the anti-narcotics unit of the prosecutors’ office in Costa Rica, where the Italian mafia currently has a major footprint.

“They do not directly form a part of the mafia in Italy, they have not been arrested and they have not been investigated, but they know the Costa Rican market and they come to form this link, a bridge between the mafia and Costa Rica,” Chavarría said.

The relationship between Assisi and the PCC is also typical of today’s Italian trafficking networks, where the brokers contract local criminal groups to handle the export. However, in some cases, the Italians have set up their own front businesses for sending cocaine shipments.

One of these cases ended with murder, when an Italian trafficker who set up a front fruit company in Costa Rica was gunned down in San José after a lost shipment. Chavarría believes it was not an isolated case.

“We are investigating more of these structures that have been set up by Europeans to carry out this type of trafficking,” he said.

Italian mafia operations have been uncovered in many other countries that have become – or are at risk of becoming – major cocaine export platforms supplying the European market, such as Ecuador, the Dominican Republic, Suriname, Guyana, Uruguay, Argentina, Bolivia, the Dutch Caribbean, and Chile. The ‘Ndrangheta alone operates in more than 30 countries around the world, according to European police.

However, these networks are far more than just cocaine trafficking cells. They are also master manipulators of illicit finance flows, which they channel through Latin America and the Caribbean. In some places, they have turned their money into power, by spreading corruption and penetrating vulnerable states.

One of the most audacious attempts to coopt upstream states came on the Caribbean island of Curaçao.

After gaining autonomy from the Netherlands in 2010, Curaçao elected Gerrit Schotte as its first prime minister. However, the country’s first independent government was compromised by Francesco Corallo, a casino owner in the region and, according to Italian prosecutors, an international drug trafficker who was an important member of the Sicilian mafia.

Investigations into Schotte revealed how Corrallo bribed the Curaçaoan politician to gain access to confidential government information and to secure the appointment of his relatives and allies in critical positions at the Central Bank, the Gaming Board, and within Schotte’s cabinet. In 2016, Schotte was convicted of forgery, official bribery, and money laundering.

Latin America and the Caribbean are also used as a refuge for Italians mafiosi on the run from the law, needing to lie low or looking to take semi-retirement by laundering money in the sunshine.

Just such a criminal retirement ring was broken up in the Dominican Republic earlier this year, when Interpol arrested eight Camorra fugitives, who had fled Italy after being convicted of crimes ranging from cocaine trafficking to embezzlement. The men – all but one over 50 – were living quiet lives allegedly laundering money through restaurants and tourist businesses.

The Italians are no longer the only European criminals setting up operations upstream. More and more groups – above all from the Balkans – have followed the path they forged upstream to maximize profits from the cocaine trade. Today, it is common to hear of Serbs buying cocaine at the source in Peru, or Albanians organizing shipments through the ports of Ecuador.

However, the Italians’ generations of experience moving both drugs and money, their global networks, and their proven capacity to innovate and adapt will ensure they remain among the most powerful and innovative criminal syndicates, posing serious security threats not only in Europe, but also upstream in Latin America.

*Investigation for this article was conducted by Maria Fernanda Ramírez, Douwe den Held and Owen Boed.

Curaçao past wetgeving witwassen en terrorismefinanciering aan

Accur Accur February 16, 2021 0 Comments

Curaçao heeft zijn wetgeving ter bestrijding van witwassen en terrorismefinanciering aangepast. Voornaamste doel daarvan is dat in het financiële verkeer aandeelhouders traceerbaar worden.

Zo kunnen commissarissen en toezichthouders van rechtspersonen op dezelfde voet aansprakelijk worden gesteld als bestuurders. Dit betekent dat zij bij onbehoorlijke taakvervulling aansprakelijk kunnen worden gehouden voor de schade, indien hun daarvan een ernstig verwijt kan worden gemaakt.

Als tweede wijziging moet het bestuur van een SPF in een register de gegevens van de begunstigden vastleggen: namen, adressen en wat hun toekomt. De nationale autoriteiten kunnen inzicht vragen in dit register.

Een houder van toonderaandelen in een NV kan – als derde maatregel – de rechten op dat aandeel niet meer uitoefenen zolang hij de aandelen aan toonder niet heeft omgewisseld in aandelen op naam.

Enquêterecht

De regeling van het enquêterecht is op enkele punten aangepast aan de wijzigingen die in 2013 in het Nederlandse enquêterecht zijn doorgevoerd.

Nieuw is dat de rechtspersoon aan het Gemeenschappelijk Hof een onderzoek en ook voorzieningen bij zichzelf kan vragen. Het verzoek wordt dan ingediend door het bestuur of de raad van commissarissen, een zogenaamde ‘zelfenquête’.

Ook nieuw is dat de curator in faillissement een enquêteverzoek kan indienen.

Met deze Landsverordening is de raadsheer-commissaris geïntroduceerd. Het Gemeenschappelijk Hof kan één van de raadsheren aanwijzen die tot taak heeft de meer praktische kanten van het onderzoek te faciliteren en eventueel met betrekking tot de praktische kanten beslissingen te nemen.

Bron: Persbureau Curacao

The AML System: A Failure of Statecraft?

Accur Accur February 9, 2021 0 Comments

Consider the current state of anti-money laundering efforts across the globe.

Around 2% of global GDP is laundered annually, amounting to between $800B – $2T. Banks spend around $8B annually fighting it but affect only 0.1% of criminal finance. What we know then is that the ROI of the global AML regime is poor. Compliance costs exceed recovered funds many times over, and the private sector is subjected to larger penalties than the criminals. To make matters worse, no competent authority has the resources to fully evaluate all the data submitted to it by industry. Is the system broken? If it is, why do so many AML initiatives and much of the media attention focus solely on offshore jurisdictions when a universal rethink is required?

Following the 2007 crisis, governments sought better disclosure of beneficial ownership of offshore structures and financial accounts to help plug fiscal deficits. President Obama memorably quoted that a Cayman Islands building (Ugland House) was home to “12,000 corporations. Now either that’s the tallest building in the world or there’s a scam going on.” After that, the hunt for tax evaders took off, aimed particularly at the offshore industry, which was tarred forever under the mantra of ‘tax havens’. Few commentators distinguished between “havens” (no tax at all) and low or neutral tax jurisdictions, or between legal avoidance and evasion. Fewer still recognized that the world’s leading offshore centres did not fit the stereotype pedaled by the media, including the US, the UK and a number of full member EU member-states such as the Netherlands, Luxembourg, Lichtenstein and Malta.

Initiatives sold on the pretext of cleaning up the so-called tax havens have included FATCA (from 2010) and CRS (from 2014), both of which seek disclosure of whom the ultimate beneficial owners of entities and accounts are. Beneficial ownership disclosure requirements then followed, capturing a range of different vehicles and assets, and under pressure from the European Union (EU), a growing number of offshore jurisdictions have committed to public disclosures from 2023.

Economic substance (ES) was next on the agenda. ES requires firms to demonstrate that income streams from certain activities are, in fact, based on real local activity to justify the use of low tax jurisdictions, thus limiting the use of ‘shell companies’ and letterbox entities. EU Council Directive 2018/822, known as “DAC 6”, also seeks to force third-country firms (i.e., those within “tax havens”) to report not only on hallmarks of tax evasion, but also on legitimate tax avoidance, and so on. Thus, the focus is now on the “morality” of tax planning.

No one can reasonably suggest that today’s offshore industry is anything like it was twenty years ago when the US Senate PSI Committee first investigated the use of offshore structures to launder Raul Salinas’s $100m. Offshore jurisdictions are collecting, reporting and disclosing an avalanche of data on client activities and beneficial owners, both locally and globally. When taken together, these initiatives give authorities a significantly better holistic picture of the industry, but critics persist in using outdated perceptions to mount attacks. If only the authorities had the time, and the right strategy and resources to deal with the data industry is providing. The difficulty perhaps is that several aspects of AML policy are misguided:

Comingled policy objectives lead to poor outcomes

Initiatives have moved way beyond permitting authorities to identify and prosecute crimes into raising more tax. DAC6 and FATCA go beyond criminals, to fishing expeditions for revenue raising, including in circumstances where there is no suggestion or evidence of evasion. Given the limited resources available to the AML authorities, should their efforts be focused on raising revenue or catching criminals? Is this mixed approach undermining our ability to combat money laundering?

Is the continued focus on stereotypical offshore centres misguided?

So, who now isn’t playing their part? Whilst all parts of the system are to some extent broken, isn’t it time to revisit the hackneyed mantra that offshore is always toxic? The picture is now much more nuanced than that. Is the ongoing focus on offshore a convenient diversion for lager economies to attract large-scale capital flows by not meeting the standards they impose on smaller territories?

Failed statecraft

Onshore centres should start to mirror the costly high standards relating to reporting and disclosure, controller and beneficial owner checks, registration, and corporate governance that offshore centres have been obliged to follow, particularly if offshore have to pay an equivalent tax. The USA, for example, never permitted reciprocity in respect of FATCA automatic exchange of information. Does anybody know what business is being transacted in Delaware, Nevada and Wyoming?
The UK, whilst now changing slowly, has permitted limited liability partnerships and companies to be established with minimal or negligible checks on owners, controllers and financial statements such that the USA considers the UK a higher risk jurisdiction, since it has enabled many thousands of these poorly controlled entities to be set up. There is more than a hint of American hypocrisy here, which really speaks to the principal motivation – economic competition. Every jurisdiction wants as large a slice of the capital pie as it can get and competes for it by whatever means necessary, both fair and foul; domestically, they manipulate regulatory and tax regimes at the same time as repelling capital from competitor jurisdictions through a combination of blacklisting, sanctioning and hyperbole pedaled by the media
Whilst raising millions in fines from firms for failed AML controls, authorities everywhere are unable to investigate SARs effectively because Financial Crime Units (FCUs) are not resourced properly. Where are the fines going? To make matters worse, some FCUs have withdrawn from issuing MLROs with consent to proceed on transactions against filed SARs, in favor of making firms take a commercial decision whether to transact. Why? Because the FCUs don’t have enough resource to investigate. FCUs are good, generally, but they are overwhelmed and they are working with antiquated systems. NRAs that are being released today reflect data that is two-years-old because jurisdictions simply don’t have the real-time data analytical capability required to combat money laundering. There are rich pickings out there if only there were sufficient FCU resources to take advantage of the intelligence provided by industry.
We now know that FinCEN, which oversees the US SARs database, has been the subject of a data leak. Ultra-sensitive US-linked suspicious activity reports compiled by firms have been leaked. If a firm in the private sector suffers a data leak, the fine can be immense. Yet the public sector has immunity. SARs data is too important to allow state impunity to continue.
The very nature of the FinCEN leak shows that firms have reported their clients in compliance with their obligations and no doubt filed continuation SARs. The media has failed to acknowledge this and portrayed it in a universally negative way. Media reports suggest that the banks ‘continued to transfer money….’ This misunderstands the nature of assisting the authorities with their fight against money laundering. In most cases (until very recently), MLROs note that a transaction is going to take place and inform the FCU, which then gives consent to continue to make the transaction because there has been value for the FCUs in watching this and collecting further intel.

Taken together, the constant finger-pointing at the parts of the AML system that have stepped up to the plate (including many offshore centres, businesses and their MLROs) is misguided. MLROs are damned if they don’t report suspicions, and damned if they do, because they’re left unprotected under the “commercial basis” regime, or because the data isn’t safe once reported. Is it any wonder that so many MLROs feel exposed and demotivated despite attempting to do the right thing? The same question applies to the offshore centres that now comply with the highest AML standards but continue to get beat up.

Is it time to consider whether the real story is not a failure by offshore centres or financial institutions and their MLROs but a failure of statecraft manifested in double standards imposed by large economies unwilling to practice what they preach and a SARs regime that is under-resourced, unworkable and leaky?

Stephen Platt is the author of ‘Criminal Capital’ and the Founder of KYC360

Top skills that make a good compliance officer

Accur Accur February 5, 2021 0 Comments

The fundamental duty of a compliance officer is to keep the ethical integrity of a company uninjured.

AML compliance officers and MLROs must make sure that the business activities of the organisation are carried out within a regulatory framework. To accomplish this, the compliance officer must possess a defined set of skills and expertise.

We originally published this list in August 2018 but in October 2020 we put it out to a survey of KYC360 users, asking you to tell us which skills you thought were particularly important. Hundreds of you answered, so thank you. These are the results, in order of importance, as well as some of your other suggestions as to the most important features needed to be a good AML compliance officer.

1. Integrity (59% felt this was particularly important)

Integrity is a must for any profession. Regulation management process can only be implemented and achieved effectively if the officers have strong moral principles and honest qualities. But it’s not just enough to know what the right thing is, it’s about having the courage of your convictions; the confidence to speak out; the determination to see things through. Courage was mentioned again and again by survey respondents, along with resilience, strength and developing a ‘thick skin’ – suggesting how daunting a job in compliance can sometimes feel.

The reassuring aspect is that you’re not alone – thousands of AML professionals are in the similar positions. 99% of the time you’ll know in your gut what the right thing to do is to fulfil your professional, and ethical, requirements. Finding the courage to carry it through is the next step. And the right one.

2. Industry knowledge (56%)

KYC360 itself wouldn’t exist if there weren’t an ongoing need from compliance officers to keep abreast of industry developments. As well as keeping on top of relevant regulatory requirements, professionals should also stay up to speed with the latest tactics and trends in financial crime and money laundering. Criminals are always going to move fast, so to some extent we’re playing catch-up, but we need to keep trying. Never give up.

You can keep abreast of the latest AML news with our daily or weekly emails (sign up here), and you can record your Continuing Professional Development in KYC360’s CPD wallet (register here).

It’s not just industry or regulatory knowledge, that’s important. Many of you mentioned the importance of taking a world view on situations, and encouraged compliance officers to be well-networked and globally connected

3. Risk assessment (55%)

Risk assessment is a vital component of the compliance function. It is important that the compliance officer takes into consideration all the factors that contribute towards risk scoring, and understands the implications of those risk scores for wider business decision-making.

In the survey, you reinforced how important it was not just to understand the risks you were involved in assessing, but how to balance commercial and regulatory risks (and sometimes personal vs business risks). Being able to consider the risk impact of your work in a wider commercial context is invaluable, particularly if you’re aiming to persuade colleagues of a certain course of action.

4. Communication (42%)

Written and verbal communication skills are vital. The compliance officer must have the ability to communicate at all levels in the organisation so that they can share relevant and comprehensive information at the appropriate times. Skills in negotiation (or diplomacy!) can also be useful, and with an approachable manner and a listening ear people won’t be afraid to ask you for help or advice about issues that may be significant.

5. Detail-oriented (28%)

With regulatory requirements changing rapidly, it is crucial that the compliance officer pays attention and understands them in detail. Requirements may be different between jurisdictions; screening tools may have differences in the parameters they apply; suspicious entities may operate under multiple aliases. Whether it’s the technology, the data, or the law, you’ll need to have a good eye for detail.

6. Problem-solving (25%)

Effective problem solving demands a blending of creative and analytical thinking. Compliance officers face the problem of unclear and obscure regulatory policies, cost issues and so on. The compliance officer should be able to identify the risk associated with particular policy-making so that they can draft a simple structured solution.

It helps to actually enjoy solving problems, to be curious and inquisitive about new situations and to be open-minded about possible solutions.

7. Interpret data (24%)

Not all the rules out there are black and white; there will sometimes be grey areas and the ability to create sense and policy out of these can be very useful. Logical analytical skills and critical thinking are valuable – as is (of course) common sense, and sometimes a sprinkling of scepticism…

8. Conflict management (10%)

Last but by no means least, a compliance officer should know how to manage conflict and handle dissension, as there will be times where they may encounter circumstances requiring them to explain and defend their point of view. They should also have confidence and resilience when faced with tough situations and dealing with external agencies such as regulators – as well as when handling internal conflict.

The skills to confidently assert yourself and carry out your job professionally are vital, but don’t neglect your softer side. Being approachable, collaborative and demonstrating good emotional intelligence with your peers and colleagues (both above and below you in the ranks) will stand you in good stead.

What else is important?

Although these attributes are weighted here, many respondents felt that they were all important. Indeed, it is hard to imagine how a good compliance officer could do their job well without needing skills across all eight areas. But if that’s not enough, there were some other key aspects that many of you felt should be highlighted:

Support from the top – It can make all the difference to your job satisfaction if you feel truly supported and empowered by senior management. We all know how miserable it can be if you feel you’re fighting internal forces in your effort to do a good job, with integrity, so ensuring you have your boss’s or board’s full support is invaluable.
Patience … or persistence / perseverance …. Or all three. Overseeing AML compliance work is not a job with quick wins or one that often delivers immediate results. The fight against financial crime is waged with many tiny decisions, and you may never directly see the impact of your actions. But take heart, as it’s a job worth doing, in particular, if you:
Love your job. You’ll rarely get the bonuses of a salesman or the applause of an actor. But that’s why discovering your own satisfaction in your work is so important, whether it’s through well-completed SARs, smoothly managed regulatory inspections, or improvements to internal processes that free up time for your team to concentrate on delivering an excellent client experience. (On that final note, KYC Global’s RiskScreen software is loved by our customers for its easy-to-use interface and up to 95% reduction in false positives – click here to set up a demo!)

Thank you, once again, to everyone who took part in this year’s AML compliance officer survey. For those new to the job, we hope this has been of help. For those already in these posts, we hope it reflects your reality with reasonable accuracy. You’re doing a great job.

By Suresh Chavali (August 2018), updated by KYC360 staff December 2020

Centrale Bank van Curaçao en Sint Maarten

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FIU Curacao

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