41 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s protect the institution where there is an element of doubt. However, the compliance cost of that work is significant and, far from being helpful, this can instead overwhelm under-resourced law enforcement teams with reports that have little to no value in the fight against financial crime. Where law enforcement and financial institutions are able to collaborate, this is far more likely to produce a tangible outcome. Initiatives such as the UK’s Joint Money-Laundering Intelligence Taskforce (JMLIT) allows prosecuting authorities to share live details of the subjects of an investigation with participating institutions without compromising investigations. This allows financial institutions to very quickly identify where they have information that is directly relevant to an ongoing criminal investigation. Law enforcement collating data from across many banks will get amuch better picture of the financial funds flows, as well as supporting information and documents provided in relation to account opening and periodic KYC checks that can significantly enhance or progress an investigation. Legislation that is in place to protect the privacy of personal data poses challenges to information sharing, but some regulators are providing assurances regarding information sharing in the AML context. In December 2020, FinCEN published updated guidance which gave great latitude in financial institutions’ ability to share relevant information with each other under existing legislation – s.314b of the USA PATRIOT Act 2001. The guidance specified that the financial institution doesn’t need to have specific information regarding proceeds of a crime or have made a conclusive determination that the related activity is suspicious. It also stated that information on attempted transactions and information which includes personally identifiable information (PII) can be shared, and financial institutions are not restricted in their methods of sharing information, including verbally. What financial institutions can do today Some areas of improvement that would make financial institutions more effective in combating money laundering are not within their control, particularly the creation of complete and accurate UBO registers to facilitate KYC. However, the developments discussed in this article reveal two areas where financial institutions can and must take action: firstly, really understanding and focusing effort on areas of higher money laundering risk through conducting regular and rigorous risk assessments; and secondly, actively participating in information sharing to the fullest extent possible in their jurisdiction. We are seeing an increasing trend of both publicprivate partnerships and, in some areas, financial institutions sharing information directly with each other – a positive trend which is only likely to continue. “Where resources are inevitably stretched, concentrating on risk is more likely to produce effective outcomes.”
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