FinCEN leaks - 5 ways banks can get tough on money laundering

Tuesday, September 22, 2020

The FinCEN revelations this week show how some of the world's biggest banks have allowed criminals to launder dirty money around the world. 

These files are the latest in a series of revelations in recent years that have exposed secret deals, money laundering and financial crimes. For example back in 2018, ING Bank paid the Dutch Public Prosecution Service a massive 775 million euros in fines for inadequate controls on money laundering activities. 

At that time Fair Finance Guide Netherlands published a call for changes in the banking sector that are just as relevant today. So here are five steps banks can take to show that they are serious about tackling money laundering:

  1. Check the ultimate beneficial owner of every corporate entity before providing any financial service to it, including international payments, transactions in currencies or stocks and loans.
  2. Use all possible information sources, including UBO registers and NGO and media publications, to assess if the client or the ultimate beneficial owner might be involved in corruption, money laundering, tax evasion and/or tax avoidance.
  3. Make sure that this 'Know Your Customer' research is done also for all clients of foreign subsidiaries and link all branches to a common information exchange on these issues.
  4. The goal of this 'Know Your Customer' research should not only be to avoid that a bank gets involved in transactions related to corruption, money laundering, tax evasion and/or tax avoidance, but also to avoid that a bank provides loans or other financial services to clients  involved in these practices elsewhere.
  5. Be transparent on the steps being taken to tackle these issues and the results of these processes.

Fair Finance International operates guides in 11 countries assessing, reporting on, and campaigning for financial institutions' to invest responsibly.

Check out our national Fair Finance Guides


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