EU update – September 2020

Bank branch staff doing a heroic job

Bank branch staff in the UK prevented fraud worth £19.3 million in the first half of 2020.

Scams were interrupted due to a scheme called The Banking Protocol. This a UK wide initiative launched 3 years ago by UK Finance, National Trading Standards and local police forces.  The scheme sees bank employees trained to look for fraudulent activities which are often aimed at people over 65 or those that are more vulnerable.

The Banking Protocol saw 3250 calls made by banks to police in Jan to June, resulting in over 100 arrests.

Throughout the Covid19 pandemic we will no doubt have seen a shift in channel risk for most banks.  With an increase in the number of people moving to internet or telephone banking, giving criminals another way to take advantage of society’s most vulnerable. The banking industry are working with police to somehow expend the scheme to these other channels.

FCA drops half Criminal Investigations in ML

So far 2020 has seen 7 out of 14 criminal investigations into AML breaches shut down by the FCA. There have in fact been criminal prosecutions at all under the 2017 regulations.  

It is suspected that the reason for such a large drop is the cost of pursuing these cases. Why spend money prosecuting when you can invest that money into civil proceedings with a likely financial return.

Without the FCA using the powers they have to charge and convict those responsible, individuals will continue to act negligently with no real, tangible threat to them personally.

FinCEN Files.  Just another data leak? 

This one is a little different. Unlike the Panama and Paradise papers, where politicians and public officials, Russian oligarchs, billionaires, celebrities and even world leaders were outed for acts of tax evasion, fraud, bribery and corruption and more, this leak shows activity not hidden or disguised offshore, but channelled straight through the world’s largest financial centres.  The FinCEN Files show that suspicion had been raised, documented, and submitted to authorities.   The regulators, authorities and the banks all had the information, and yet they continued to facilitate the payments.

With SARs and other documents spanning a 7 year period, it is debatable how negligent the banks were in some cases, but less so in others. We could talk about the Ponzi Scheme run through HSBC for a further year after it had been detected. A bad investment that saw at least one man lose his life. Or how Putins nearest and dearest deposited money into Barclays Bank in London to avoid sanctions. Money that would buy works of art (prior to High Value Goods falling under AML regulations). We will no doubt read full articles on these scandals and many more as they come to light.

The real take away here is the lack of transparency and connection. The need for more Public Private Partnerships, where similar activities across different financial firms can be identified, with law enforcement and government agencies playing a joint role in connecting the dots.  These Partnerships, such as the Joint Money Laundering Intelligence Taskforce (JMLIT) in the UK, are seeing these initiatives pay off. We need to see more of these, with an international reach. 

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