4 process tactics banks should employ today — Medium

Banks should embrace process improvements now in order to improve the bottom line and pave a smooth road to the future

As the financial industry continues to evolve in the face of rapid technology advances and ever-changing compliance regulations, banks today are faced with the challenge of constantly retooling internal processes or risk falling behind more enlightened competitors. Rather than fear the dynamics of change, however, banks should lean into it and embrace process improvements and reengineering as ways to improve the bottom line. By taking a deep look into your bank’s programs and processes, you’ll likely find several opportunities where simple process changes can improve efficiencies across the board.

In fact, here are four areas of focus where you can easily start the process:

1) Know your high-risk customers

One of the most frequently asked question by regulators is how many high-risk customers do you have? If you are not able to answer that question, it’s time to make improvements. . . Click here to read the rest of this story: 4 process tactics banks should employ today — Medium

Why Satoshi Nakamoto doesn’t matter — Medium

All eyes should be on the emerging technology’s disruption of the banking technology instead of finding the Bitcoin founder

The financial industry is increasingly shadowed by the image of Satoshi Nakamoto; the supposedly reclusive Bitcoin digital currency inventor who has been publicly outed by the press on numerous occasions, only to find once the headlines have ceased that the person in question was not Satoshi Nakamoto. The latest Nakamoto? Australian Craig Wright claimed to be the Bitcoin founder last year, but his claims were largely rebuffed by the Bitcoin community and by the press. Now he is back and begging the world to believe he created Bitcoin, claiming he has ‘extraordinary proof’ to back up his claims.

I say, who cares? The founder of Bitcoin doesn’t matter in the greater scheme of the financial world. What really matters is Bitcoin’s disruption of a technology resistant financial industry, which is taking place on a scale that goes beyond just digital currency.

In fact, 60 Minutes ran a groundbreaking story about fintech’s disruption of the financial arena recently and it pointed out something key to the fintech debate — the banks, by and large, are not mapping to the trends and changes happening in just about every industry that are being caused, not by technology, but by banking customers’ adoption of technology into their everyday lives. One of the fintech startups featured in the story, Stripe, was founded by a couple of millennials from Ireland. Their view of the world is focused on the internet-driven society they were raised in, but is also surprisingly customer focused. . . Click here to read the rest of this story: Why Satoshi Nakamoto doesn’t matter — Medium

The blockchain train has left the station — Medium

42 major banks have now tested five blockchain technologies

If 2015 was the year everyone was talking about blockchain, this will be the year that everyone builds on it. In the last few months since blockchain hit the cover of the Economist, there have been dozens of announcements trumpeting the benefits of blockchain systems, ranging from proprietary technology developed by Overstock.com and which it plans to use to issue public shares, to open-source technology developed by IBM on the Linux kernel to be freely shared between developers.

To say that the financial services industry is nervous as a result would be an understatement. For decades, banking transactions have been kept on private ledgers that only the institutions could control. Blockchain is changing that system and shaking up the status quo. . . To read the rest of this story, please click here: The blockchain train has left the station — Medium

Crying Wolf on Money Laundering? – Medium

Banks and the media that covers them are crying wolf on money laundering cases, here’s why that could be bad

We’ve all heard the Aesop fable about the ‘boy who cried wolf,’ teaching us that false reporting will do more harm than good. I am reminded of this story daily in reading the all-to-frequent headlines on money laundering that land in my inbox. I’ve long felt that the media was, in many cases making unfounded accusations of money laundering in headlines covering financial fraud cases.

Upon further digging, I discovered a working paper from the IMF that determined ‘crying wolf,’ or false — and too frequent — reporting on money laundering can overwhelm the governing agencies and fail to improve the prosecution rates for money laundering crimes. What’s the solution? Simply put, it’s on all of us, including financial institutions and the media, to do better.

In the Media:

Since my consulting business focuses on helping banks navigate the many regulations tied to money laundering, I receive daily news alerts on the topic. Every day, there are 10–15 new headlines about money laundering. At first I was surprised, even though I know money laundering happens all over the world on a daily basis. . . Click here to read the rest of the story on Medium.com.

Israel’s Addition to Financial Action Task Force Long Overdue – Medium

Data proves some existing FATF member countries have much deeper AML issues than Israel

The worldwide Financial Action Task Force (FATF) on money laundering recently announced that Israel will join the organization as an observer starting in June 2016. Considering Israel’s tough stand on terrorists, adding it as an observer is a big step forward for the prestigious FATF, which sets global rules and standards for combating money laundering and terror financing. To date, only 34 countries make up its membership; countries that don’t meet FATF’s standards land on the task force’s blacklist.

In order for Israel to become a full member of FATF, it will have to pass comprehensive international inspection, showing that it has improved identification requirements at its financial institutions and expanded its AML regulations. The rewards for doing this work and joining the organization are that Israel will be able to participate in shaping global policy dealing with financial fraud and position itself as one of the leading countries in the worldwide fight against money laundering and terror financing.

Knowing the other 34 countries already accepted as full FATF members, I’m surprised it took this long to start the membership process for Israel. . . Click here to read the rest of this story on Medium.com.

Mexico’s Know Your Country Problem – Medium

Mexico develops a U.S. dollar transfer business to thwart money laundering and encourage international commerce

Bloomberg Business broke the news last week that Mexico will soon enter the dollar transfer business in an effort to catch money laundering before it causes harm and to promote the continued exchange of U.S. currency by legitimate Mexican businesses. Mexico’s money laundering woes, followed by subsequent de-risking and this proposed dollar transfer solution, are prime examples of the impact ‘Know Your Country’ can have on a nation’s economy.

Money laundering leads to punishment and de-risking

When it comes to criminal activities, money laundering is a necessary evil. Criminal enterprises in Mexico were finding it a little too easy to launder illicit pesos through U.S. banks. For example, banks were failing to flag transfers linked to Mexican drug cartels, with Wachovia’s gaffe of failing to alert authorities to billions of dollars in wire transfers, travelers checks and cash shipments through Mexico being one of the most egregious. This led to a crackdown by U.S. regulators and law enforcers, causing many banking institutions to back out of working with Mexican businesses entirely as a way to avoid the risk of money laundering and the millions of dollars in penalties associated with it. This process of de-risking, while understandable, does not foster economic growth.

What happens now? Click here to find out on Medium.com. . .

AML Scandals that Flew Under the Radar in ’15 – American Banker’s BankThink Blog

Screen Shot 2016-06-20 at 3.03.02 PMIn addition to anti-money-laundering scandals involving global banks and worldwide organizations such as FIFA that grabbed headlines last year, there were plenty of damaging laundering convictions and accusations in 2015 that went unnoticed but still took a heavy toll on midlevel banks.

Money laundering is a crime that occurs more often than the general public realizes, and in most sectors of our economy. In the past year alone, charity officials, a mortuary owner, a church director and a doctor providing chemo treatments were at the center of appalling cases you probably never heard about.

1. Tayfun Karauzum, of Newport Beach, Calif., was sentenced to five years in prison for distributing $1 million to $2.5 million of Potion 9, which contained a solvent that metabolizes in the body to become gamma-Hydroxybutyrate, or GHB, a known date-rape drug. He then laundered the proceeds.

2. Charles and Diana Muir were sentenced to 48 and six months in prison, respectively, and forced to return the $1.1 million they stole from a 140-year-old college scholarship charity in Louisville, Ky. — the Woodcock Foundation — that was run by Charles Muir. The couple then laundered the proceeds through Diana Muir’s dental business.

To view the rest of the top 10 most unheralded, yet just as disturbing money laundering stories from 2015 please click here.

American banks: all aboard Bitcoin Express? – Medium

U.S. applying anti-money laundering rules to digital currencies

Digitally encrypted cryptocurrencies are hot, particularly as consumer confidence in the current global money infrastructure wanes. So what exactly is a cryptocurrency? The most visible example, Bitcoin bypasses traditional banking systems and operates as an alternative to cash. It’s decentralized, virtual and somewhat anonymous, and was originally developed to handle transactions over the Internet. The currency units consist of a series of numbers that can be traded between accounts, or “wallets,” for services or goods; when it launched in 2009, Bitcoin transactions happened without any government interference (or oversight).

Today, Bitcoin’s not just popular with the average consumer; organized crime and the criminal element have figured out how to use it to efficiently launder money, just as they did with the original cryptocurrency, eGold. In fact, I recently wrote about a money laundering case involving Bitcoin and two secret servicemen who attempted to launder a considerable amount of Bitcoin stolen from Silk Road. For this reason, the U.S. is now applying the anti-money laundering (AML) rules initially written to govern traditional financial organizations to all digital cash companies.

Perhaps even more interesting is that. . . Click here to read the rest of this article on Medium.com.

Money laundering uptick in 2016? Magic 8 Ball says, ‘signs point to yes.’ – Medium

When I was a kid, the Magic 8 Ball was a quirky toy used to tell fortunes or predict the future. The answers to yes-no questions were often vague enough to be accurate, such as “Ask Again Later” and “Don’t Count on It.” As we kick-off 2016, it might be fun to ask the Magic 8 Ball what we can expect to see as far as financial institutions and risk strategies go for coping with money laundering in the coming months.

Most Likely. We all know that we can expect to see an uptick in attempts to launder money, despite the tightened scrutiny by banks. In fact, as 2015 drew to a close, a man in Minnesota was being charged with conspiring to launder more than $2 million in a penny stock fraud scheme. It’s probably just human nature: where there are laws, there will always be people who try to figure out how to avoid them for personal gain.

Signs Point to Yes. . . Click here to read the rest of this prediction article. 

Big Data Redefines KYC? – Medium

Thanks to technology, KYC is evolving to Know Your Country

To the average American, the acronym KYC probably sounds like a misspelling of the infamous KFC, but those of us in the financial services industry immediately recognize the acronym as referring to Know Your Customer, one of the cornerstones of today’s efforts to reduce risk and fraud in banking. The definition of KYC is about to change, however, as the acronym evolves to the risk management tool, “Know Your Country.”

It used to be understood that a successful banker would need to know his or her customers. One hundred years ago, chances are good that the home town banker would be intimately acquainted with his or her neighbors investing money, or seeking loans. Fast forward to today, and life is just not that simple anymore, particularly with national and global banks having hundreds of branch offices in multiple countries.

After 9/11, the U.S. Patriot Act in 2001 formalized the requirement for financial institutions to “know” their customers. . . Click here to read the rest of the article.