An entire ecosystem of tools and data processing frameworks have grown up around Hadoopas companies are building out a modern data architecture. Almost as soon as someone identifies a weakness or limitation—and there have been more than a few—someone else creates a fix. That's one of the reasons the Big Data ecosystem is so complex. And why many large companies hung back before jumping in. They wanted to see if any leaders would emerge from the chaos.
Leading researchers at IDG recently surveyed more than 50 high-level IT and business executives at mid- to large-size companies to learn more about their governance, risk, and compliance practices. One key takeaway from the survey is that manual data collection, analysis, and reporting can create unnecessary burdens that reduce the accuracy and efficiency of investigations into money laundering and other suspicious financial activity.
In some cases, what happens in Vegas is just too good to keep in Vegas. Here are some highlights from ACAMS 15th Annual AML and Financial Crime Conference.
From September 26-28, risk and compliance officers and other professionals packed this important industry event to learn about anti-money laundering; risk management strategies; innovative technology solutions; regulatory and law enforcement news; and other hot topics in the world of fighting financial crime. 2500 attendees came from a wide array of industries, including: financial institutions, casinos, accounting firms, insurance companies, law enforcement and regulatory agencies, law firms, technology providers, universities and other organizations.
Here are some of the Attivio team’s favorite sessions:
To stay in compliance with rapidly expanding international, federal, and local AML regulations and avoid what can be career- and business-ending consequences, companies face the seemingly Herculean task of investigating every suspicious financial transaction, which can number in the tens of thousands every single month.
In the month since FINRA announced total of $17 million in fines against financial adviser Raymond James and its financial services affiliate, two threads have circulated through social media. The first took note that broker-dealers were now squarely in the enforcement sights of regulators. The second focused on the piercing of the corporate veil and the penalties administered to James’ former AML Compliance officer.
According to the latest evidence, The US Treasury estimates that over $300 billion in money laundering flows through casinos annually. The two leading sources of funds, fraud or drug trafficking, account for just over $64 billion alone. Recently, officials at the federal Financial Crimes Enforcement Network (FinCEN) – the agency responsible for monitoring casino operator compliance with the Bank Secrecy Act of 1970- have stepped up their AML compliance rhetoric and activity. And they’re not alone.
Occasioned by the announcement of a consent order with Florida bank Gibraltar Private Bank and Trust, the Office of the Comptroller of the Currency (or, OCC) announced two significant updates to its policies and procedures for calculating civil money penalties for non-compliance or persistent, uncorrected BSA/AML compliance. The OCC took the opportunity to call-out failures in the Gibraltar response to earlier orders - setting clearly tougher expectations for under-performing or unresponsive compliance programs.
Effectively Documenting Transactions to Avoid Penalties
Reporters Woodward and Bernstein were famously advised to “Follow the money” as a way to navigate through the complicated web called Watergate. Last week, U.S. regulators fired their latest warning shot across the bow of another transaction-focused business – daily fantasy sports – signaling their expectation that these businesses abide by the same regulations that bind banks, gambling casinos, and (shortly) investment advisory firms. With their international counterparts, U.S. regulators are starting a boa-like squeeze to choke off the placement, layering, and integration of criminally obtained funds.
My last two posts highlighted both a recent change and a long-standing challenge. That no fewer than ten thousand Investment advisory firms face AML regulation – where the costs of compliance have increased by more than 50% over the last three years – suggests the potential for a messy regulatory train-wreck. Why are costs spiraling out-of-control? And can anything be done about it?
Between 2011 and 2014, banking respondents to KPMG’s Global Anti-Money Laundering Survey reported an average increase in AML compliance costs of 53%. That average exceeded both their 2011 prediction (40%) and the previous (2007-2011) average of 45%. In seven years, institutions seem to have made very modest headway in cost-efficiently complying with regulatory changes. Are there reasons and solutions? Read on.
Digging deeper into the survey, three areas of heaviest AML investment emerge – transaction monitoring systems, Know Your Customer (KYC) systems, and recruitment/retention systems for AML staff. Across all areas of AML investment, fully 28% of respondents predict an increase in compliance costs of more than 25% over the next three years.