Welcome to our monthly round up of the things we’ve been up to! It’s been a busy few weeks, so here’s a look back at some of our highlights.
We started the month with a workshop on Cyber Data Breaches. Following shortly from major events including both the Sing Health and SIAS data breaches (among many others), and the official implementation of the General Data Protection Regulation (GDPR) in Europe, this was a busy session! This was followed up with a specific in-house session for one of our top tier banking clients on Cyber Security for front Relationship Managers, further demonstrating the growing need for all employees to be aware of cyber risks and how to mitigate these.
The issues around both Cyber Security and Data Protection certainly aren’t going away anytime soon; the demand is such that we’ll be running a full day session exclusively on GDPR in October, and another Cyber Security session in November.
We also ran a focused half day session on Know Your Customer (KYC) Due Diligence for an international private bank. The recent wall of news on global money laundering concerns has kept this very much front of mind, and not just for financial services firms. The same week as this session we had a packed house as we delivered a day of dedicated Anti Money Laundering training to Accountants. Whilst other topics are certainly in vogue, nothing seems to be as central an issue for so many industries as AML.
September also saw Complilearn back at one of our Private Banking clients for a follow-on session on Transforming Corporate Governance, Conduct & Culture. Certainly, this is a very ‘hot topic’, not just locally but internationally, with an ever-growing body of demand and questions relating to conduct and misconduct in various industries. With ongoing conduct related investigations progressing in several countries, as well as investigations such as the Australian Royal Commission, we expect this to be a central topic for a while to come.
The month carried on with an in-house workshop on Fraud Risk Management. This is always a nice change to deliver, as it’s one of the rarer requests we get! However, this session was for a regular client who trust us to deliver regular quality, in this case to ensure staff could complete annual CPD requirements, so one we were more than happy to deliver.
We also returned to another regular client, this time a top tier European Wealth and Investment Manager, for a CPD session on Ethical Challenges. The session was primarily focused on the challenge relationship managers do, and will increasingly, face with regards to changing technology in their industry. We were joined in the session by the Head of Wealth Management for South East Asia, showing great corporate and compliance leadership by walking the talk.
Our final engagement was delivering an AML session based on a local Notice, SFA04-N02, for the Singapore division of one of Indonesia’s leading banking groups. This isn’t the first time this request and content type will be used this year! It’s one of our favourite topics though, so happy to do many more like this.
And that’s a wrap! October started with a bang hence a slightly delayed write up and that looks set to carry on for the coming weeks. We’ll keep you posted on progress and see you in person soon!
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This week Complilearn attended the RHT Academy Asia Fraud, Anti-Corruption & Investigations Conference in Singapore, where we were involved with several sessions.
The event crossed across multiple industries, providing interesting viewpoints from participants who have business interaction with a very broad range of jurisdictions and legal/regulatory requirements.
Complilearn was involved in several areas throughout the day, with Managing Director Sam Gibbins Chairing the event on behalf of RHT Academy. We also hosted a panel session on Beneficial Ownership related to KYC concerns and challenges for institutions. This provided not only some fascinating viewpoints form the panellists, who came from industry organisations and consulting practices, as well as from the audience. As if to highlight the challenge posed, audience questions asked didn’t always lead to a single answer or outcome even when audience members added their thoughts and opinions based on extensive work in this area. This proved, to any, the difficulties and complexities of trying to get a satisfactory outcome in this complex area of business.
Later in the afternoon Sam presented a session on Building a Customised Compliance Training Program. This, of course, is a core area of work for Complilearn, and even though it had been a long day, we had lots of audience engagement and interaction! Building on themes which had been presented throughout the day, we were able to tie together key themes related to legal and regulatory requirements, fraud and corruption challenges, and the essential element of ethical and cultural leadership, to give attendees and idea of how to look more effectively at learning from the compliance perspective.
The event was hugely successful not only for the perspective of information sharing, learning, and generating ideas for better compliance, but also for networking. Attendees spent a lot of time making new connections, including with us!
We were delighted to be involved with this event and are already looking forward to next year’s conference!
This is now a (nearly) three-decade old statement of intent, and logic would rightly dictate that a measure of success here would have seen a dwindling of cases. Both key elements of the statement focus on the preventive elements in the case against financial crime, but as evidenced by recent news (too much to stuff into one article!), there are no shortage of money laundering related events occurring.
...“there has been minimal effort at evaluation of how well any AML intervention does in achieving its goals”.
AML Assessment and Effectiveness
A pair of articles from this year by Dr Ron Pol got some limited media coverage, but are, in our opinion, of essential reading for any compliance, AML, or Financial Crime practitioners. Usefully, these journal articles have now been made free until the end of September by the publisher, Emerald Insights. Kudos to them for working to advance this conversation.
Building on a seminal research article from Halliday, Levi, and Reuter, which focused on assessing the assessments under the third round of Mutual Evaluation Reports (MER3), Dr Pol took this further when analysing the idea of effectiveness as an ‘outcome’ based on the updated FATF Methodology for assessing technical compliance (for the fourth round of Mutual Evaluations, MER4) from 2013 (revised early in 2018).
In “Anti-money laundering effectiveness: assessing outcomes or ticking boxes?”, Dr Pol found that the FATF “Effectiveness” methodology does not yet fully reflect an “outcome-oriented model as it purports”. Part of this hinges on the method by which FATF have determined, and described, outcomes, as opposed to ‘Outputs’, which give a very different view if what and where ‘Effectiveness’ may come in. A second element builds on the previous research from Halliday et al (2014) that “in the third round of AML/CFT evaluations (before the fourth round ‘effectiveness’ criteria), FATF failed to demonstrate that objectives were more likely to be reached by compliance with FATF Standards”.
Evidence based analyses of assessments from both the third and fourth round of Mutual Evaluations thus seems to provide no evidence that ‘effectiveness’ has been improved, and therefore that we are not closer to the ‘prevention’ of money laundering over time.
Does the System Work?
One of the most frequent questions regarding Anti Money Laundering to be asked by both individuals and organisations, globally, is whether “the system is working”. Of course, this is an almost impossible question to answer, depending on what one views as the ‘system’, and how one evaluates something as ‘working’, or being of potential benefit.
Talking to practitioners often gives a slightly more nuanced point of view. It is not uncommon to hear someone who specialises in this area say something along the lines of “it doesn’t matter, if we fulfil our regulatory requirements’. Whilst there is some truth in this (from a purely black/white operational perspective), it misses the wider point that if all we are doing is ticking the legal and regulatory box, how are we moving any closer to fulfilment of the initial FATF mandate to “prevent” money laundering? What if, fundamentally, the overall global policy framework is not fit for purpose?
Measuring impact of policy is challenging. Challenging, however, does not mean we should not try. In a follow up research article, Dr Pol looks at metrics for success with regards to enforcement of Anti Money Laundering policy globally. The somewhat (and purposely) provocatively titled “Uncomfortable truths? ML=BS and AML= BS2” looks at interdiction rates (the proportion of criminal funds seized or forfeited) across a range of jurisdictions including the UK, Canada, Australia the EU, and New Zealand.
Across the board interdiction rates are abysmally low, indicating a lack of success in enforcing the ‘Anti’ in AML. Dr Pol finds that “only about 0.2% of criminal funds laundered annually is seized by authorities, compared with more than 20% of the globally produced illicit opiates […] and more than 40% of the cocaine”. As far back as 2011 the UN Office on Drugs and Crime (UNODC) asked “whether money launderers really are so much smarter than drug traffickers, or whether there is something wrong with the existing control system”.
Is there enough Data?
Another recent paper from Levi, Reuter and Halliday once again asks the questions of evaluation without better data. As stated in the opening of their paper, ‘Can the AML system be evaluated without better data’, “there has been minimal effort at evaluation of how well any AML intervention does in achieving its goals”.
This is a fascinating point to consider; in nearly all lines of work and business, decision on policy direction, strategy, and intended outcomes, are made with data at hand. Yet when it comes to global Anti Money Laundering, the researchers “find that data are relatively unimportant in policy development and implementation”.
We are in a situation where there is:
It is almost inevitable that the organisations charged with applying Anti Money Laundering policy, when it comes to ‘on the ground’ work, rely on a tick box approach to compliance, when there is such limited discussion or analysis of outcomes effectiveness. It is, or should, be clear to all that the current system and policy framework clearly is not working as intended. This is not to say it is for lack of effort, but that we need to have a fresh think about how, in a fundamental sense, we work to truly ‘prevent’ money laundering.
Avenues for wrongdoing will only grow as technology develops and the world becomes more intertwined. It is time to think about how we do what we do, why we do it, and who, in those years to come, will be at the forefront of this cultural and leadership challenge.
In developed markets such as Europe, the US, Australia, HK and Singapore, KYC and DD have been commonplace for several years. In jurisdictions that have a developing approach to compliance, these ideas are significantly newer, and so current approaches are still more foundational. Providers must therefore be cognisant of providing solutions that are a solid fit for the market as it currently stands and for development in the following years. It is of limited use to turn around to clients who have only been ‘doing’ compliance for a few years, and have strained resources, to promote a range of solutions which do not solve any of their current problems.
A key outcome of the discussion was the focus on RegTech being Trust as a Service. In an earlier side conversation with some participants, Complilearn was described as ‘Training as a Service’, and, coupled with ‘Trust as a Service’, provides an interesting take on what has been traditionally viewed as a Client/Vendor model.
The idea of providing the Service based on the model of Trust certainly seems more in line with most RegTech companies approach of building long lasting relationships, and not focusing on transactional sales. The question now is whether this idea will take off whilst dealing with the myriad other challenges faced by providers.
As ‘Service’ providers become more attuned to their client needs, hopefully the level of Trust placed in them will increase. Recent cases of RegTech adoption certainly seem to indicate that there is a solid basis for this relationship, with excellent results based on industry adoption, enabling significantly improved outcomes. Long may it continue.
Finnolux have provided a write up of the event which is available here, and details of the other events in the series can be found here.
If you would like a copy of the Complilearn presentation, please contact us at email@example.com