Funnels

Another one on TBML

Trade Based Money Laundering is at the basis of the recently published advice on ‘funnel accounts’ – accounts in which illicit money is coming in from many sources, is used to buy and ship goods, which are then subsequently sold.

An article about this mentions that “ the main challenge is discerning between legitimate and illegitimate trade activity “. There is no rule book to describe what is allowed and what not. More than ever a risk based approach combined with adequate training of all staff involved in the operations of processing trade and payments transactions is required.

As the article indicates “ organisations are encouraged to make use of guidance, advisory notes, case studies and typologies as the basis of training “. And that’s exactly what we do in our TBML training.

Rolf

See also
http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2014-A005.pdf

The end of a monopoly - what now?

Another warm weekend in Singapore and time to catch up on reading. Reading this article (http://www.economist.com/news/special-report/21601624-and-no-end-new-ways-pay-your-bills-end-monopoly ) on the growing percentage of payments done via mobile networks, flashcards, internet payment gateways, I think about the impact on the world of AML/CFT.

Yes: banks are losing their monopoly on the execution of payments, although I don’t believe that banks will ever be completely out of the picture. The payments infrastructure that banks have built is not something that can easily be replaced. And interbank and cross border infrastructure (SWIFT, SEPA, domestic clearing networks etc.) only add to that.

No doubt the alternatives to traditional modes of payment will increase and likely banks will play a smaller (relative) role in the overall payments world.

So what does that mean for AML/CFT? Assuming the AML/CFT risks are identical in these new forms of payment compared to payments via the regular payment channels, the danger sits more in (a lack of detection) than in anything else.

Banks have – voluntarily but more often forced by regulators - invested heavily in monitoring and screening solutions. If the payments landscape changes drastically and players that are potentially not even under supervision from the banking regulators execute an ever increasing portion of payments, what does that mean for the risk profile of a country or industry segment?

An interesting problem without immediate answers. Views are welcome…