Anti-money laundering – the need for intelligence
| Pages | 472-479 |
| DOI | https://doi.org/10.1108/JFC-04-2017-0030 |
| Published date | 03 July 2017 |
| Date | 03 July 2017 |
| Author | Richard John Lowe |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Anti-money laundering – the need
for intelligence
Richard John Lowe
Department of Risk Consulting, KPMG LLP, London, UK
Abstract
Purpose –The purpose of this paper is to highlight the need for predictive intelligence to support
anti-money laundering programs in the nancial sector.
Design/methodology/approach –The methodology adopted herein consists of a literature review on
the use of intelligence in anti-money laundering, the sources of intelligence and information used in the
nancial sector, supported by experience gained from investigating and prosecuting money laundering cases,
and the assistance provided to nancial services companies.
Findings –Banks and other regulated services are required to meet international standards to deny services
to criminals and terrorists, identify suspicious activity and report to the authorities. Regulated businesses
have large operations which check customers against sources that conrm their identity or against lists of
proscribed or suspected offenders at an individual or national level. Their controls tend to look backwards
when other organisations that rely on intelligence, such as the military, value predictive, forward-looking
intelligence. The penalties that banks and others face for failure in their controls are increasingly severe, as
looking backwards and not forwards reduces the extent to which the controls meet their purpose of reducing
the impact of organized crime and terrorism.
Originality/value –This paper serves as a useful guide to alert and educate anti-money laundering
professionals, law enforcement and policy makers of the importance of predictive intelligence in countering
organized crime and terrorism. It also considers whether lessons in intelligence handling from other areas can
inform a debate on how intelligence can be developed to counter money laundering.
Keywords Intelligence, Terrorist nancing, Organised crime, Anti-money laundering
Paper type Research paper
1. Introduction
The nancial sector is required to operate within the anti-money laundering regulations in
place in the country in which they are based. In the United Kingdom the regulations in force
are the Money Laundering Regulations 2007.
These regulations are based on the Financial Action Task Force (FATF) International
Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation
(often referred to as the FATF 40 Recommendations) as interpreted by the EU Money
Laundering Directive (3
rd
and 4
th
Money Laundering Directives).
The Money Laundering Regulations 2007 set standards for identifying customers and
benecial owners, applying customer due diligence and identifying higher risk situations
when enhanced levels of due diligence are required.
Firms are given guidance on implementing the Money Laundering Regulations by the
Joint Money Laundering Steering Group guidance and the guidance issued by their regulator
or supervisor, for example the Financial Conduct Agency Financial Crime Handbook.
FATF and UK guidance encourages rms to take a risk-based approach to countering
money laundering and terrorist nancing. Thematic reviews conducted by the Financial
Conduct Agency have given examples of good practice and poor practice found in the control
systems in the regulated sector of the United Kingdom. In parallel, the policy makers in the
The current issue and full text archive of this journal is available on Emerald Insight at:
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JFC
24,3
472
Journalof Financial Crime
Vol.24 No. 3, 2017
pp.472-479
©Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-04-2017-0030
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