Almost a year on from the catastrophic events in New York, money laundering and terrorist financing have climbed to the top of the political, legal and regulatory agendas. The prospect of opening the business pages to find that your organization has been linked to allegations of international financial crime ranks among the worst nightmares of financial institution CEOs. As well as involving costly litigation, and the possibility of large fines and long prison sentences, successful penetration by money launderers may also cause incalculable damage to corporate and professional reputations and careers. Banks need to be on top of the ever-growing mountain of international anti-money-laundering regulation and legislation but many institutions are sticking plasters over the gaps rather than addressing the risks strategically as part of their wider business processes and controls.
Money laundering is no longer just a simple issue of cash in briefcases. Money laundered by criminals globally is estimated to be equivalent to 2% to 5% of world GDP and is measured in trillions of US dollars. The international anti-money laundering framework, overseen by the OECD's Financial Action Task Force (FATF), has now been in place for more than a decade and the considerations for the banking industry impinge on fundamental business strategies, such as selection of target customer types and potential acquisitions.