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
Regardless of industry, today’s consumer-centric world requires organizations to challenge the status quo and move into a new way of looking at how to better deliver products and services
A business can only go so far in its race to bottom-line pricing; the key is to find differentiators that deliver increased customer value. There’s no better way to achieve this than through reengineering and optimizing your organization’s business practices.
Continuous process improvement, sometimes referred to as Lean Six Sigma and Design for Six Sigma, offers an ongoing improvement program that can define how an organization embraces change. The principles of Lean were first applied to automotive manufacturing in the U.S., but refined by the Japanese after World War II. Toyota Motor Company recognized that workers had much more to offer than just muscle, and initially experimented with Quality Circles. Eventually, this was distilled into principles that improved process and quality control to increase productivity.
Today, continuous improvement principles are at the heart of organizations across the economic strata. In the financial services industry, we successfully introduced Kaizen principles. . . Click here to read the rest of this story: Are you ready to Lean? — 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
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
Is Goldman Sachs in trouble in the tropics? One of its top executives, Tim Leissner, the Singapore-based chairman of Goldman’s Southeast Asia operations, remains under investigation by the FBI for his connections to embattled Malaysian Prime Minister Najib Razak. Razak has come under fire from the Malaysian government regarding $681 million in funds that were mysteriously transferred to his personal bank account by the Saudi Arabian government.
In addition, Leissner is being investigated for his role in striking deals worth $6.5 billion for his employer with the Malaysian financial fund 1Malaysia Development Berhad (1MDB), owned by Razak, for which Goldman Sachs earned an almost $600 million commission, amounting to 9.1 percent of the money raised. The average commission for an investment bank is about five percent, or less.
Leissner, 45, who was married to model and fashion designer Kimora Lee Simmons in 2013 (Simmons is the former wife of hip-hop mogul Russell Simmons), reportedly was considered one of the financial firm’s ‘Golden Boys’. . . Click here to read the rest of this story on Medium.com.
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.
The good, the bad and the ugly of the legal marijuana business
With medical marijuana now legal in 23 states and recreational marijuana legal in Colorado, Washington, Alaska and Oregon, cannabis is a legitimate growth industry generating substantial income. In Colorado alone, the pot industry is expected to pour an estimated $120 million in tax revenue in the state’s coffers for 2015. Nationwide, medical and recreational marijuana as an industry is expected to net between $2 and $3 billion per year in revenue.
You might think banks would be lining up to do business with these cash-rich entrepreneurs, but nothing could be further from the truth. The banks, rightfully so, in my opinion, assume they are putting themselves at risk with the federal government by engaging in marijuana-based businesses, as marijuana is still considered an illegal substance on the federal level. And the reality is today’s banking industry is all about risk mitigation, especially when it comes to cash-based businesses and the potential for rampant money laundering.
Yet, as I stated above, this is a quickly growing and legitimate industry in the states where it is legal. In its infancy, however, marijuana entrepreneurs are facing a mountain of regulatory and financial issues. The biggest of these issues is the lack of access to banking services. Here are what I’d consider the good, the bad and the ugly stories related to legal marijuana banking and taxation.
To read the rest of this story at American Banker’s BankThink blog, please click here.
Originally published at www.americanbanker.com on February 29, 2016.
Banking the proceeds remains a crap shoot for legal pot shops
Despite the fact that federal statutes make it illegal, a growing number of states (23 and the District of Columbia at last count) are approving some form of sale of marijuana to the public. These legitimate (by state) businesses have figured out how to securely grow, ship, receive and store their products, but banking the proceeds from these agribusinesses is still a crap shoot.
Banks inherently avoid risk due to the stiff penalties they face for money laundering, an activity largely associated with drugs, so any profits earned from the sale of marijuana are suspicious. As a result, nearly all of the nation’s banks refuse to even offer basic services to these businesses, their owners and employees. This has forced many marijuana-based organizations to move to all-cash transactions — spawning more opportunity for money laundering than if the transactions were handled by the financial services industry.
It’s such a murky area that a bipartisan group of U.S. senators proposed a bill that would legalize banking. . . Click here to read the rest of the story on Medium.com.
Turns out, it’s not that difficult
I frequently talk about money laundering and how financial services industries are required to guard against it, but I’m consistently asked by friends and colleagues, “just how easy is it to take questionable cash and turn it into legitimate funds?” Turns out, it’s not that difficult.
Despite the damage that the illegal flow of money inflicts on the global economy, it’s been occurring for thousands of years and people do it every day. It’s international in scope, with China holding the dubious honor of being at the head of the pack. Conservative estimates have China losing more than $1 trillion between 2002–2011, despite laws prohibiting foreign exchange. Other countries with significant problems include Russia, Mexico, Malaysia, India, Saudi Arabia and Brazil.
So how is it done? There are several ways a U.S. citizen with a little illegal money can launder it. . . Click here to read the rest of this story on Medium.com.
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. . .