Anti-money laundering rules will force banks to review data-handling capabilities

By Gareth Morgan
17 Feb 2012 View Comments
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New anti-money laundering rules set to come into play by 2013 will force financial services firms to improve their data-handling capabilities predict analysts.

The Financial Action Task Force (FATF), a global standard-setter for the financial services sector, has ratified standards for dealing with money laundering, the lifeblood of international criminal and terrorist networks.

Further reading

The new FATF recommendations provide governments with stronger tools to take action against financial crime and protect the integrity of the global financial system.

While it is yet to be seen how the new standards will be implemented, they will likely require that banks have systems in place capable of tracking the flow of money across the globe, said Martha Bennett, head of strategy at analyst group Freeform Dynamics.

“Many banks have taken great strides in building the types of data-handling systems necessary,” she told Computing.

“How far they have got down that road will probably dictate the extent to which the banks welcome the new standards.”

The new standards, however, have been welcomed by the UK government. “The integrity of the global financial system will now be better protected through strengthened measures to combat the global threat of money laundering, terrorist financing and the proliferation of weapons of mass destruction,” said Lord Sassoon, the commercial secretary to the Treasury.

The new FATF standards will introduce a risk-based approach to money laundering, with those at greater risk expected to do more. They also introduce requirements for countries to be more transparent about the parties involved in electronic transfers.

FATF estimates that the total cost of money laundered each year is equivalent to between two per cent and five per cent of global GDP.

IT chiefs in the financial service sector were becoming accustomed to greater regulatory oversight of their data handling systems, said Bennett. And already, risk is increasingly becoming a day-to-day part of handling transactions.

Nevertheless, many in the banking sector will feel that there is little more they can do to prevent money laundering, because often the money is moved around outside the banking system, she added.

Elsewhere, the European Commission has said it will review its own anti-money laundering regulations, with a view to bringing them inline with the FATF recommendations by the end of 2012.

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