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February 23, 2009updated 04 Apr 2017 4:18pm

Banks urged to keep AML guard up

Many banks are considering cutting technology spending but one area they should not contemplate skimping on is anti-money laundering (AML), warns UK-based SWIFT messaging software and data services specialist SMA Financial (SMAF) Quite simply, stressed SMAF, for banks that trade across international, legal and financial jurisdictions, benefits to be gained from having adequate AML processes far outweigh the financial and reputational costs involved. SMAF warned that the UKs Financial Services Authority (FSA) routinely fines compliance officers and money laundering risk officers as well as holding company directors responsible for lack of adequate AML and risk controls.

By EPI editorial

Many banks are considering cutting technology spending but one area they should not contemplate skimping on is anti-money laundering (AML), warns UK-based SWIFT messaging software and data services specialist SMA Financial (SMAF).

Quite simply, stressed SMAF, for banks that trade across international, legal and financial jurisdictions, benefits to be gained from having adequate AML processes far outweigh the financial and reputational costs involved.

SMAF warned that the UK’s Financial Services Authority (FSA) routinely fines compliance officers and money laundering risk officers as well as holding company directors responsible for lack of adequate AML and risk controls.

“The regulatory fines that have been handed out by the various financial authorities clearly show banks cannot afford to make cut backs in this vital area,” said SMAF MD Simon Murby.

Jonathan Pell, CEO of UK data quality management specialist Datanomic, reinforced Murby’s point.

“We are starting to see the FSA show its teeth and impose hefty fines against companies who fail to implement the proper screening systems and controls against anti-money laundering,” said Pell.

Indeed, in January, the FSA fined insurance broking company Aon £5.25 million ($7.4 million) – its largest ever financial crime-related fine. According to the FSA, Aon “failed to take reasonable care to establish and maintain effective systems and controls to counter the risks of bribery and corruption associated with making payments to overseas firms and individuals”.

Companies elsewhere in the world are also under pressure from regulators to ensure AML vigilance. For example, in January, the US Financial Industry Regulatory Authority fined E*Trade Securities $1 million for failing to establish and implement AML policies and procedures. E*Trade offers brokerage services in six international markets.

The largest-ever penalty for violating AML rules – $ 15 million – was paid to the US government by California-based money transfer business Sigue in January 2008.

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