FRONT-LINE EMPLOYEES, not monitoring systems will be the first defence against money laundering under the Federal Government’s anti-money laundering reforms, a US expert claimed
FRONT-LINE EMPLOYEES, not monitoring systems, will be the first defence against money laundering under the Federal Government’s anti-money laundering reforms, a US expert claimed.
Robert Molloy, an associate partner at IBM’s global business group based in Georgia, US, said that while banks are concerned with system upgrades and integration, there are issues around front-line staff and training.
“Globally, more than 70 to 80 per cent of the suspicious transaction reports that are filed are not detected by the monitoring systems, they are detected by the front-line personnel,” he said.
“The critical elements of the systems are not only the system’s capabilities, but the training that goes on in the front office and how those people are compensated.”
While many front-line staff in banking and financial services are trained to spot suspicious activity, spotting money launderers and terrorist financiers is another step, which may involve conflict.
“They are currently compensated to sell. When you are focusing on selling, that can take some of the focus away from compliance. As part of a true compliance program you have to look at the need to readjust that.”
Sean Hughes, group general manager, compliance, at ANZ bank, said the staff training element of the money laundering reforms will require significant investment and is comparable in scope to the Financial Services Reform Act.
“In terms of staff training and process reengineering, these changes can be compared to the work undertaken to achieve compliance with Financial Services reform,” he said in the bank’s submission to the Attorney-General’s department on the money laundering reforms.
Molloy, IBM’s AML expert, said banks in Australia are concerned the Federal Government may repeat the mistakes of its US counterpart on AML.
“Most project teams are concerned about the postponement of the issuance of the final rules,” Molloy said.
“This happened in the US, where the law passed in October of 2001 and the rules were promised by October 2002. They didn’t come. Then they said December, then they said March. What happened was they issued them in April 2003 and they only gave until October 2003 for compliance. When the banks raised this and said it’s not enough time, the regulator said you’ve known about this for two years, why didn’t you do something?”
