money laundering

Lenders seek secure system to share info about shadowy entities behind dirty money deals.

A group of Belgium’s leading banks have proposed the establishment of a platform to exchange information about suspect transactions with Belgian authorities, as well as each other, in a bid to clamp down on illicit money flows.

The banks — ING Belgium, KBC Bank, Belfius Bank and Insurance and BNP Paribas Fortis — made the proposal at a Belgian parliamentary hearing in November in response to criticism over anti-money laundering (AML) failures following the release of the FinCEN files.

The Belgian banks have called for laws allowing them to set up a secure system to share information about suspected money laundering and the shadowy entities behind the transactions, according to a report by the International Consortium of Investigative Journalists.

A similar system was set up in the Netherlands last year when five Dutch banks – ABN Amro, ING, Rabobank, Triodos Bank and de Volksbank – set up the Transaction Monitoring Netherlands initiative in conjunction with the Dutch Banking Association.

European push

The Belgian banks’ proposal follows a recent agreement by European finance ministers to create a new EU-level body with the ability to intervene when institutions are deemed at risk and take action in certain situations above national regulators.

The EU ministers backed to a plan to harmonise AML rules across the EU as well as facilitate better coordination by member states’ financial intelligence units.

The Belgian proposal, and the hearings themselves, are the latest fallout from the release of the FinCEN files in September – more than 2100 documents banks sent to US authorities between 2000 and 2017 raising concerns about clients’ activities – which highlighted how banks moved billions of dollars in dirty money for criminals and corrupt regimes.

Improving AML

“The biggest banks sharing AML data to help spot criminal activity across the wider system is great news for law enforcement and bad news for financial criminals,” says Phil Rolfe, CEO of P2 Consulting and former head of AML at Royal Bank of Scotland.

Increasing collaboration and data sharing is the only way that banks and financial institutions are going to get a step ahead of the criminal fraternity

Phil Rolfe

“There is no competitive advantage to be gained by [banks] working alone, increasing collaboration and data sharing is the only way that banks and financial institutions are going to get a step ahead of the criminal fraternity.”

Mr Rolfe says one of the flaws in AML transaction monitoring at individual banks is that it traditionally uses defined scenarios – such as €10,000 ‘floor limits’ or early repayments – where loans or other debts get paid off rapidly.

“Banks push historic payment information through what we technically call ‘big boxes’ which then generate alerts when a scenario is breached – for example if more than €10,000 is paid in, in a single payment, or if there is early repayment of a mortgage, for example,” Mr Rolfe says.

“The effectiveness of the transaction monitoring system is driven by the quality of the data input and the sophistication of the ‘net’ used to detect breaches.”

Under the current system, banks sometimes seek to tune the scenarios – creating bigger holes in the net – to reduce the number of alerts they receive and therefore reduce the manpower needed to review them, Mr Rolfe adds, which has contributed to lax controls in the past and an inability to effectively tackle AML as highlighted in the FinCEN files.


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