AML News – a Practical Perspective

News travel fast. Especially bad news.

It is the same principle for AML news, as well. We see it, read it, wonder at it, comment it, share it, discuss it with our pears. But to what extent do we actually use it? After a week, when a new AML scandal hits the linkedin page, the above process is resumed for a new “target”. We, as AML specialists become more aware, make more connections between ML schemes, understand the risks better, and…. what else?

When the ABLV Bank scandal broke out last February (2018) I used it in my internal trainings to increase awareness, both for top management, as well as for colleagues from front-office and other departments. I made an e-learning presentation that was distributed in the bank, explaining the “how and why” of the story. At that time, for me it was shocking. It was after all a bank from the European Union, directly supervised by the European Central Bank. Little did we know that it was just the tip of the iceberg for 2018.

One way to use the AML news is in our trainings for our colleagues. Reality always beats theory and recent examples of ML schemes uncovered, of criminal organizations brought to justice or of banks that were fined for non-compliance will make your audience more aware of the importance of their AML efforts.

And yet, it is not enough.

The best way to use the AML news is by proactively analyzing if your bank was ever used in the ML schemes that you’ve just read about. Are or were the people/companies mentioned in those articles your customers or was your bank used in any way in that money laundering process?

For example, how much of the 200 billion EUR of Danske Bank Estonia transited your bank?

Let’s all remember that bank transactions are international and money travels fast. To read an article about Danske Bank Estonia and imagine that it just happened there, far, far away and that your bank is as clean as the Easter Bunny is simply naïve. You must investigate, find out and analyze how much of that money passed through your bank without the bank being aware of it at that time. And what you should do from now on, knowing what you know?

A year after “Europe’s largest money laundering scandal” broke out, there still are people surprised by the fact that new banks come out as having been involved in the money laundering schemes. Wow, unbelievable! What?? Deutsche Bank, too? Swedbank, Nordea Bank… and who else?

Where is the surprise coming from? Money laundering is not done in just one bank. This is the classical definition of “layering” – layers and layers of financial, cross-border transactions in order to hide the true origin of funds and to make their tracing as difficult as possible. So now, do you still believe that your bank was not at all involved in the Danske 200 billion EUR between 2007 – 2015? And what are you going to do about it?

For this particular situation, I believe that all AML professionals should have started their internal analysis in order to find out what actually happened in their relation with Danske Bank Estonia since 2007 and up to the present. Yes, your customers’ accounts were monitored during that period, you analyzed their accounts and reported the suspicions. But, an overall perspective on those transactions, keeping in mind the ML schemes publicly disclosed in the press, will most surely give you a different understanding of your bank’s unwilling (hopefully) involvement.

Step 1 – the database

Request a report with all the incomings and payments from/to Danske Bank Estonia customers since 2007 until now. Depending on the size and location of your bank, you will end up with hundreds or thousands of transactions. Pfiuuuu…..

Step 2 – the Risk Based Approach

Start with the customers having the largest transactions and focus on them. You will not be able to analyze all customers and all transactions. You must try to find patterns and draw general conclusions. This is a different analysis as compared to the daily monitoring of the customers’ accounts. It is more difficult, extensively larger and very challenging. You must sharpen your analytical skills and have a broader view and increased attention.

Step 3 – the analysis

The main elements that you should consider in your analysis are:

• your customers (internal information on them, their profile, activity object, present status – active or dissolved, if they were ever reported with suspicions, negative public information)
• your customers’ counterparties with accounts opened at Danske Bank Estonia (public information on their registration country, their activity object – if it is in line with that of your customer’s, their current status – if they are still active or dissolved, negative news)
• the transactions (if they were in line with your customers’ activity, if they seem to have had an economic reason, if they were considered suspicious at that time and were reported or passed freely through your filters).

This analysis must be formalized in an easy-to-read format. Excel tables can sometimes incorporate many pages of Word descriptions and explanations.

Step 4 – what now?

Depending on what you have found out, you should have conclusions and mitigation measures both for the customers that you analyzed (and are still active), as well as at a broader level.

And this is how AML news should really be used by AML professionals.

Next time we read about another bank being “engulfed in the Russian laundromat”, we should not be that surprised anymore. After all, we are all chained to one another in an international, borderless financial system.

By Andreea Tampu, ACAMS

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