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Is compliance creating an industry own goal?

Most, 77 per cent of compliance professionals admit they are not confident that money laundering crimes linked to human trafficking could be stopped from passing through their customers’ accounts. That’s among findings in the annual anti-money laundering study from the defence firm BAE Systems: The State of Anti-Money Laundering 2021.

Compliance is a cost for financial institutions, particularly for anti-money laundering. However, the consensus from many in the field (76 per cent of those surveyed) is that compliance has become a box ticking exercise that is getting in the way of tackling the true source of the money laundering. About one in six (17 per cent) said compliance is now a stagnant culture that doesn’t go far enough to understand and support the real-life victims of money laundering.

Enda Shirley, Head of Compliance at BAE Systems Applied Intelligence, said: “For many financial institutions, getting a handle on money laundering is now simply about ensuring they avoid fines or reputational damage.

“Our research is telling us that the current system just doesn’t go anywhere near deep enough to have a significant impact on the crux of the issues. For many, compliance has gotten in the way of the primary goal – how to identify and protect vulnerable victims.”

The firm suggests that banks and financial institutions, policy makers and law enforcement, need to come together in what is described in the report as a ‘Fin Crime Feedback Loop’ to better tackle money laundering. Many financial institutions are looking for more input and action from law enforcement bodies, with half of respondents (50 per cent) admitting that they do not feel well enough supported. Almost a third (32 per cent) are calling for more shared industry intelligence.

Some 40 per cent of respondents believe that they would benefit from a central money laundering group to share intelligence across key industry stakeholders. And most, 92 per cent of those surveyed believe that the lack of collaboration between financial institutions, law enforcement and policy makers hinders progress.

Enda Shirley added: “Stopping these incidents at the point of transaction is really still only a small part of tackling the problem. There is work to do to look deeper into how we can look for early indicators of these often life changing offences. For real change to happen, collaboration across the anti-money laundering industry is essential. This means law enforcement, policy makers, financial institutions and technology consistently working together more closely to share insights and intelligence.”

To read the report – visit:

earlier this year, the firm reported that banks and insurance providers were reporting significantly increased threat levels from COVID-related cyber crime.


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