Financial firms have their work cut out for them when battling the bad guys, trying ensure that funds go where they need to go, and that money laundering is not taking place. Easier said than done, and at times the regulators call for reinforcements.
Last week, a finance industry organization in Asia advocated letting regulators embrace new technologies that are geared toward fending off money launderers. The Asia Securities Industry and Financial Markets Associates said that it wants to see more know your client (KYC) checks that would help companies reduce costs tied to those efforts. That advocacy comes on the heels of the Monetary Authority of Singapore and the Hong Kong Monetary Authority’s statement last year that KYC utilities were under consideration.
The backdrop in Asia may be shaping up to see at least some more stringent regulations in place. The Commonwealth Bank of Australia had agreed to pay a fine of $5.3 million, tied to money laundering activities that also indicate the largest fine in history in that country. The bank had skirted money laundering laws more than 53,000 times.
On domestic shores, it seems that in California, a relatively small regulatory setting may have broader implications. As noted in this space last week, voters in that state will give a thumbs up or down later in the year to the California Consumer Privacy Act.
The Act would let individual consumers find out what data is being siphoned up by businesses — and gives the individual the right to tell them not to do so. Thus, GDPR comes to the states — even if the Act is not a direct nod to that legislation. The Act would embrace firms that bring in at last $50 million in top line or sell 100,000 consumer records annually, or get at least of half their sales via selling personal data. Firms that transgress the rules would have to pay at least $7,500 per violation.
A letter from the Comptroller of the Currency (OCC), Joseph Otting, has laid out how some financial players have devised “sales practice dashboards” with data feeds that help keep tabs on sales activities. The banks have also set up “fair banking” practices. In addition, some firms have both reassessed and redesigned the way they incentivize and compensate sales activities. Ahead of Capitol Hill Hearings, Otting also confirmed that his office had issued more than 250 notices to 40 banks tied to the review, known as matters requiring attention. The OCC had reviewed as many as 600 million new accounts at the banks over three years, and of that tally, 10,000 were unauthorized.
In testimony before the Senate Banking Committee this past Thursday, Otting stated that “this was not systemic across the banking industry. There were isolated cases of it.”