Banks, investigators urged to collaborate in money laundering fight

Wednesday, February 14, 2018

While criminals still use traditional methods to scrub the stain of illegality off dirty money - such as investing in real estate - technology is providing them with an arsenal of new options.

Using cryptocurrencies to shift the proceeds of illicit activities around is one of them. And this has opened up another front in the fight against money laundering.

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The EU's law enforcement agency Europol sums it up: "Internet technologies become continuously more advanced, and so do the ways in which criminals utilize them for their illicit and illegal activities. Among these technologies, digital currencies are already transforming the criminal underworld."

David Schwartz, CEO and president of the Florida International Bankers Association (FIBA), told BNamericas a key strategy in the anti-money laundering (AML) battle is fostering close collaboration between financial institutions and law enforcement agencies.

"We have a lot of rules and regulations imposed on the banks for the banks to try to detect all of this type of illicit activity, which is not necessarily what banks are equipped for, although they have gone to the expense of putting in new technologies and new monitoring systems," said Schwartz (pictured). "But I think we need more in the area of public-private partnership; we need more information sharing."

Such collaboration initiatives are starting to be seen. In the UK, banks and investigators already work together and in the US financial intelligence unit FinCEN is trying to promote the creation of a scheme within the country's existing regulatory framework.

Also in Europe, think tank the Basel Institute on Governance holds workshops with Europol and Interpol on cryptocurrencies and money laundering. Other stakeholders such as lawyers, regulators and financial institutions also participate.

Schwartz said that launching public-private initiatives - plus the updating of banking regulations - may help drive down levels of money laundering.

"If we can continue this movement then we'll start to see some impact as we focus more on results rather than processes," said Schwartz, who added that FIBA was working on draft regulations governing cryptocurrency traders operating out of the state of Florida. In the US, there is no federal regulation specifically covering cryptocurrencies. Traders are currently regulated under laws governing money service firms such as Western Union.


Latin America is trailing in the information-sharing stakes but there are rumblings on this front, said Schwartz, speaking ahead of the 18th Annual FIBA AML Compliance Conference in Miami, FL, on March 12-14.

"You're seeing more conversation about it," said Schwartz. "There have been some events in Latin America participated by Treasury Department officials and even by members of congress promoting this idea."

The day before the conference starts, FIBA and US Treasury Department officials, along with other stakeholders from the US and Latin America, will hold a meeting of the Private/Public Sector Dialogue US-Latin America. The Treasury-led initiative was launched to promote cooperation between the US and the region in the area of AML and terrorist financing.

"This year we're going to spend hours discussing public-private partnership, information sharing and technology in order to try to promote this idea in the region, because still at this point, in many of the countries, they can't even share information between law enforcement and their financial intelligence unit," said Schwartz.

"Law enforcement in some countries has to actually petition or subpoena on request. If they can't share this type of information internally it will be very difficult for them to bring any type of action in the money-laundering sphere. [Closer collaboration] is something that we are very actively promoting."


During the three-day conference delegates will discuss key issues such as the use of gift cards to launder funds, the convergence of cybersecurity and AML, cross-border investigations, risk mitigation, the use of technology to prevent financial crime and how casinos fight money laundering. Human trafficking, virtual currency regulation and trade-based money laundering will also discussed at the event in Miami.