Suspicious Transactions? Not on my watch!

Annemarie MullerAML (Anti-Money Laundering), Transaction Monitoring

On May 22nd, the Financial Intelligence Unit (FIU) in the Netherlands published its annual report for 2017.
 

About the FIU
In accordance with the Dutch Money Laundering and Terrorist Financing Act (WWFT) the Financial Intelligence Unit in the Netherlands (FIU) is the designated organization where reporting entities must report unusual transactions. The FIU’ mission is to contribute to the prevention and combating of crime, especially money laundering and the financing of terrorism, to safeguard the integrity of the (Dutch) financial system.

Some highlights of the FIU’s annual report for the year 2017 :

  • FIU received 361.015 reports of unusual transactions
  • 546 transactions were considered as suspicious transactions
  • The suspicious transactions represented a total amount of EUR 6.7 billion in total (an increase of EUR 2 billion compared to 2016)
  • This is the highest amount that FIU-the Netherlands has observed since its foundation
  • Most these suspicious transactions were money transfers reported by payment service providers.
  • 280 unusual transactions were reported by Trust offices
  • The number of reported intended transactions from Banks increased significantly from 841 in 2016, to 1,481 in 2017

 

Improved effectiveness in the fight against money laundering

The number of unusual transactions is significant and the total amount of suspicious transactions is even record-breaking. But while the initial reaction might be to think that this might indicate an increase in financial crime, the FIU sees this development as an improvement of effectiveness in the performed transaction monitoring. They also state that the improvement of the KYC and compliance procedures (especially within the banking sector) has shown a positive impact on the fight against money laundering.

 

A perfect storm

Transaction monitoring procedures are sometimes considered a ‘tick-the-box’, – just for the sake of showing the supervisor that you comply. Nowadays, companies start to see its real value and a true contribution to operating a sustainable business

You think compliancy is expensive, try non-compliancy” – a quote that many of us are familiar with. Non-compliance with regulations can kill a business due to the fines, or (temporary) loss of your business license. But as we know,  bad news travels fast and now reputational risk now outstrips regulatory risk. Fines can be paid, and licenses can be regained, but reputational damage is almost impossible to fully overcome.

With manual transaction monitoring procedures, one’s attention can slip; it always goes well, until it goes wrong… and that one transaction that nobody noticed can lead to a perfect storm.

Going from manual to automated procedures for transaction monitoring is a new way of working. However, if you truly value proper transaction monitoring and having diligent procedures in place, automation is the key to ensure effectiveness.

 

Its all about setting the right parameters!

Accurate KYC processes and the creation of transaction profiles for your clients are vital to transaction monitoring. Basically, transaction profiling is really about understanding who your clients are via their financial habits and behaviors, and you can use that information to help spot unusual activities.

How? By using ComplianceWise 360°! By allowing you to set up parameters around transaction amounts, frequency and counterparties, identifying ‘unusual transactions’ is easy. Potential issues will not slip by unnoticed anymore. Profiles are also linked to the client acceptance files, with integrated document management to allow the addition of substantiating documentation. And don’t get us started on the endless commercial advantages ComplianceWise 360° has to offer…

 

Curious? We would be happy to show you our tool. Get in touch for a demo!

 

Annemarie Muller

Annemarie Muller

Director Client Relations at ComplianceWise
ComplianceWise’s CW360 can help you easily take control of your AML and compliance obligations, from KYC to transaction monitoring and cashflow management. Not only do we help to reduce the risk of non-compliance costs, but our solution also offers an opportunity to gain valuable business insights that can be used to inform management decisions and support strategic planning.
Annemarie Muller