Banks payback for non compliance and money laundering

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Banks Payback For
Money Laundering
An Insight into losses faced by the
banks, and sanctions levied upon them
by authorities for non adherence to
anti- money laundering (AML) Laws.

Money Laundering!!! What is it ?
 Money laundering is a process whereby the proceeds of crime are
transformed into apparently legitimate money or other assets.
Takes place in 3 distinct stages
 Placement, the stage at which criminally derived funds are introduced in
the financial system.
 Layering, the substantive stage of the process in which the property is
‘washed’ and its ownership and source is disguised.
 Integration, the final stage at which the ‘laundered’ property is re-
introduced into the legitimate economy.

Effects of Money Laundering
 Undermines the integrity of the Banks.
 Loss of Revenue
 Reputation Risk

Undermining the Integrity of Banks
 Financial institutions that rely on the proceeds of crime have additional
challenges in adequately managing their assets, liabilities, and operations.
For example, large sums of laundered money may arrive at a financial
institution but then disappear suddenly, without notice, through wire
transfers in response to non-market factors, such as law enforcement
operations. This can result in liquidity problems and runs on banks.
 E.g. failure of the first Internet bank, the European Union Bank.
Furthermore, some financial crises of the 1990s — such as the fraud,
money laundering, and bribery scandal at BCCI and the 1995 collapse of
Barings Bank as a risky derivatives scheme carried out by a trader at a
subsidiary unit — had significant criminal or fraud components.

Loss of revenue
 The Banks fined for non-compliance have to payback a lots of money as
fines and settlement to regulatory bodies apart from the losses involved
due to money laundering.
2012 2013 2014 2015
Total $3,543,480,265. $9,726,243,304. $19,612,375,530 $2,951,246,467.
$-
$5,000,000,000.00
$10,000,000,000.00
$15,000,000,000.00
$20,000,000,000.00
$25,000,000,000.00
Top Banks fined for Money Laundering and Non compliance
(2012-2015*)
* Information till May 2015

The Losses feared by the Banks

Banks’ first responders
 According to the survey taken by Neustar the responsibility for AML
compliance by banks is fairly widespread among the departments. The
departments listed below were rated among the most important in
achieving compliance.

Banks’ Requirement Of AML Compliance Solution

CLARI5 REAL-TIME ANTI-MONEY LAUNDERING
 Clari5 Real-time AML solution helps banks and financial institutions
automate, streamline and comply with existing and emerging regulatory
AML/CFT compliance programs. The solution suite comprises of 6 major
modules viz. Suspicious Activity Monitoring, Customer Risk Categorization,
Entity Identity Resolution/Watch List Filtering, Regulatory Reporting
(CTR/STR/SAR/FATCA), Case Management and Entity Link Analysis.

SOLUTION FEATURES
 Fully automated AML compliance program starting from customer on-
boarding to ongoing relationship monitoring
 Monitors suspicious money laundering activities in real-time and takes the
right decision at the right time as opposed to end of day reporting and
analysis
 Compliance with regulators by timely filing of various regulatory reports
including CTR, STR/SAR reports
 Integrated reports and dashboards providing insights on the efficiency and
effectiveness of the AML System

BUSINESS BENEFITS
 Real-time approach to monitor and detect suspicious money laundering
transactions
 Improved regulatory compliance and customer confidence
 Quicker implementation owing to pre-packaged AML scenarios and built-in
interfaces for integration
 Low cost commodity hardware infrastructure leading to reduced TCO
Clari5 Anti-money laundering suite has been successfully implemented in
various banks across the world. To know further about the product or our
implementations contact us at: -
 +91-80-3221-8309
 clari5@customerxps.com
 www.customerxps.com

References
 Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument
2007 (No. 1). (2007, june 12). Retrieved from Commercial Law:
http://www.comlaw.gov.au/Details/F2007L01000/Explanatory%20Statemen
t/Text
 Fines for non-Compliance. (2015, May 9). Retrieved from AML ABC:
www.amlabc.com
 Neustar. (2015, May). HOW ARE BANKS FIGHTING THE WAR ON FRAUD?

About Us
 CustomerXPs is the leading provider of real-time cross-channel Enterprise Fraud
and Customer Experience Management products for global tier 1 banks.
 This report has been prepared for general guidance on matters of interest only,
and does not constitute professional advice. You should not act upon the
information contained in this report without obtaining specific professional
advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this report, and, to the
extent permitted by law, CustomerXPs Software Private Limited does not accept
or assume any liability, responsibility or duty of care for any on sequences of you
or anyone else acting, or refraining to act, in reliance on the information
contained in this report or for any decision based on it.

Thank You

Banks payback for non compliance and money laundering

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Banks payback for non compliance and money laundering