view | Banks can’t fight money laundering — and compliance officers certainly can’t

Do you know one compliance officer In a position of ultimate responsibility, who has reached retirement age? We do not. This may be due to the professional group, the individual, or the fact that the position has only been in existence for 25 years. Or are the circumstances?

The compliance officer must ensure compliance with the laws and regulations of the bank or financial institution. However, things often go wrong. ING and ABN Amro settled €775m and €480m respectively because they breached the Money Laundering and Terrorist Financing Prevention Act (Wwft) for years, and Rabobank is now under criminal prosecution. It’s always about the same thing: Banks fall short in combating money laundering.

An important reason for this is the regulations imposed by the financial supervisors Three lines of defenseThe model, where combating money laundering is the responsibility of 1. Management, 2. Compliance Officer, 3. Internal Auditor. this is not working.

The Compliance Officer is sometimes referred to as the Head of Collateral Affairs. Often feels like a carrier of an annoying message, which also costs money and distracts from all other performance goals. A sane bank manager tries to do (not) enough and see where the ship is headed.

Not enough for years

Principle ‘Know your customerOnce again, or remains, the center of attention in the financial sector. Justifiably. Russia’s invasion of Ukraine means that for many companies and entrepreneurs, two questions for customers have rightly become the main issue: Who are you (is there a connection with the Kremlin)? How did you earn your money?

For more than twenty years, De Nederlandsche Bank (DNB) has rated the financial sector as unsatisfactory with regard to Know your customer. And if you, as a teacher, come to the conclusion that the class has not had enough grades over the years, then this is a serious mistake. Only when the headmaster ensures firm, steady pressure can the caravan be moved and kept moving.

Whereas in large banks one in five employees participate in customer knowledge.

Level up

The customer who pays for all of this is ultimately entitled to a better approach. But above all, society has the right to take a more effective approach to money laundering. The question is whether society can expect a commercial institution (a bank) to perform the function of gatekeeper. This assignment often conflicts with other business objectives, is not accompanied by a government budget and is almost impossible to carry out effectively. After all, a real money launderer would use many banks to hide transactions. This means that the single banker by definition does not have a comprehensive picture and goes into battle with one arm tied behind his back.

The possible sharing of customer data with a bank it has nothing to do with is a new proposal from The Hague. Aside from any data protection legal issues, this still means putting the cart before the horse. Then this data goes to a bank that does not know this customer. The risks of incorrect interpretation are high, while such a proposal would lead to higher costs.

The Compliance Officer is sometimes referred to as the Head of Collateral Affairs

What is wisdom? We see two options for improvement. Let the government take the responsibility of detecting money laundering to the next level. Precisely because she is the only one who can create an overview. Let individual banks provide the government with data on natural and legal persons. Also for all transactions. The government can then look at these together, so that money laundering risks emerge sooner. Ensure that information known to government agencies (tax and customs administration, investigative agencies, etc.) can be properly included. The likelihood of being caught will increase dramatically. And that’s the whole point. You can also outsource to DNB, because our tax and customs department is already overburdened.

Is this easy to achieve? No, of course not. But it is a dot on the horizon. If the government points out that all this is too difficult, now you understand how bankers must feel.

Read also: OM also identifies former ABN Amro CEO Van Dijkhuizen as a suspect in the anti-money laundering investigation.

The ultimate responsible CEO

Finally, adjust the governance and purchasing structure Commitment turning off. For clarification: the abolition of the position of self-employed workers in the so-called “The second line of defenseIt just doesn’t work. By dividing risk management and, more importantly, personalizing it in the form of a compliance function, this is the perfect scapegoat for when things go wrong.

If detecting money laundering is that important, it’s chefsache. So put the final responsibility out there: with the CEO. Then he can’t turn back to a fellow manager or the head of side affairs if things go wrong.

Compliance officers know they are now fighting an unfair fight. But the love of the profession and the drive to try to do the right thing means that many do more every day than they are asked. Sometimes the price is increased.

It is good for the legislator to realize this and adopt the two options described above. The only loser, then, is the current winner: the money launderer.

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