A United Kingdom bank that was onboarding new clients, via automated compliance checks, has reportedly discovered potential money laundering activity. What's wrong with this picture? Given that money launderers are nothing if not innovative, how can any financial institution rely upon non-human compliance policies and procedures to interdict them, on a real-time basis?
Compliance officers use their experience, as well as their familiarity with current money laundering tactics and strategies, to identify, and suppress suspicious techniques, whether they follow a pattern, or are unique or mutating. How can an automated program match the critical thinking of a compliance officer, who can sense emerging threats and trends; The answer is it cannot.
It is the seasoned frontline compliance officer, backed up by his or her director of compliance, who is the gatekeeper best equipped, by both training and experience, to spot possible money laundering trends. Since money launderers are skilled at creating credible profiles, automated compliance programs could be easily manipulated, hence the admission by its user bank that it was ineffective.
Chronicles of Monte Friesner - Financial Crime Analyst
Contributed by Kenneth Rijock - Financial Crime Consultant