The Impact of Money Laundering on Customer Due Diligence

The Panama Papers scandal of 2016 led to the leaked individuals’ names and associations being scrutinized by governments in the UK, Germany, France, Italy, Spain and Australia, among others, which is unsurprising given that the financial services industry is in the process of preparing for new, stricter regulation.

The Common Reporting Standards regulation, the Fourth Money Laundering Directive, the Foreign Account Tax Compliance Act and Financial Action Task Force recommendations on money laundering that have been proposed and enacted in Europe and the US are intended to strengthen the AML regulatory environment and increase pressure on institutions to comply.

Financial institutions need to do more to be compliant with CDD and KYC processes and, in particular, the need to check the internal security of client data. The is also applies to the provision of retail and not-for-profit services, and the need to minimise a business’s exposure to risk as a result of failure to comply with AML regulations.

Scope

The report is divided into three chapters, which cover the following areas:

• Overview of Risk Management

• Key Operational and Technological Trends and Spend

• Opportunities in Client Onboarding and Best Practice

Key Highlights

• Emerging economies are upgrading their compliance procedures to bring them in line with international standards.

• Institutions have been taking new measures such as establishing committees to focus on financial crime to ensure everyone in the organization is accountable for AML compliance.

• Firms are investing in technology solutions, integrated platforms, cloud technology and data analytics to meet compliance obligations and increase efficiency in operations.

• The emergence of new methods of financial crime has created a challenge for regulators, technology firms and institutions, requiring significant improvements in overall IT systems.

Reasons to buy

• Understand key factors that drive governments and regulatory bodies to formulate and implement AML regulations.

• Be informed of the key operational and technological trends and challenges that institutions face due to the rapid rise in money-laundering activity and frequent regulatory upgrades.

• Gain insight into key vendors operating in financial risk management, and analyze best practices adapted by financial and non-financial companies to combat money-laundering activity.

• Be informed about challenges and opportunities in client onboarding available to providers.

Companies mentioned

HSBC, DBS, UBS, Gibraltar Private Bank and Trust, Deutsche Bank, Commerzbank, Wells Fargo Advisor, Standard Bank, Tokyo Mitsubishi-UFJ, Axis Bank, HDFC Bank, ICICI Bank, Atlas One Financial Group, Firstrade Securities, EFG Private Bank, Wegelin & Co., Standard Chartered, Mossack Fonseca, Bank of America, Northern Trust, PNC, Stering National Bank, UMPQUA Bank, CharlesShwab, Scotiabank, HSBC, RBC, TD Ameritrade, Lloyds Banking Group, BMO Harris Bank, CIBC, SBD Next Generation Solutions, Nice Actimize, SAS, Fiserv, Accuity, AML360, AML Partners, AML RightSource, BAE, EastNets, Fiserv, Nice Actimize, SAS, Coutts, Barclays, Standard Bank, JP Morgan Chase, BNP Paribas, Al Baraka Bank Egypt, DataGear, Temenos, Euro Pacific Bank, SOFGEN, Bank Central Asia, Galadari Brothers, Baskin Robbins, Mazda, Komatsu, JCB, Wynyard Group, Fiserv, InvestEdge

Table of Contents

1 EXECUTIVE SUMMARY

2 DEFINITIONS AND METHODOLOGY

2.1 What is this report about?

2.2 Definitions

2.3 About WealthInsight

3 INTRODUCTION

3.1 Overview of AML Risk Management

3.2 Key Drivers

3.3 AML End Participants

4 KEY OPERATIONAL AND TECHNOLOGICAL TRENDS AND CHALLENGES

4.1 Operational and Technological Challenges Summary

4.2 Technology Spending Trends

4.2.1 Overview of AML solution providers

4.2.2 Advanced AML solutions

4.3 Operational Trends

5 OPPORTUNITIES IN CLIENT ONBOARDING AND BEST PRACTICES

5.1 Risk Management Program Upgrades

5.2 Client Onboarding Challenges and Opportunities

6 APPENDIX

List of Tables

Table 1: Instances of Banks being Imposed Money Laundering Sanctions, 2014–2016

Table 2: Operational and Technological Challenges

Table 3: Total IT Security Services Expenditure by Financial Institutions (US$ Million), 2015–2020

Table 4: Total IT Security Services Expenditure by Retailers (US$ Million), 2015–2020

Table 5: AML Vendors and Type of Solutions Offered

Table 6: Risk Identification and Mitigation Measures in Financial Institutions

Table 7: AML Update – Regulatory Environment – Americas

Table 8: AML Update – Regulatory Environment – Europe

Table 9: AML Update – Regulatory Environment – Asia-Pacific

Table 10: AML Update – Regulatory Environment – Middle East

List of Figures

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