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Banks push for more info-sharing over rise in money laundering reports

Banks such as Nordea and Danske have been ravaged by a number of recent money laundering scandals.

En rulle med eurosedlar som har en handboja runt sig.
Image: Mostphotos \ Marén Wischnewski

Some 9,000 cases of suspected money laundering were referred to police investigators last year – nearly double the 5,000 reports filed in 2017, according to Finance Finland, FFI, the lobby group representing the banking and insurance sector.

The organisation said that the number of cases referred for investigation rises to nearly 40,000 if reports made by other non-banking institutions are factored in. However the total number of reports filed overall declined from 2017, FFI noted.

According to the organisation’s calculations, the total amount of funds that authorities seized in Finland in attempted money laundering cases amounted to 2.3 billion euros, while funds confiscated abroad totalled one billion.

FFI said that the current notification procedure for suspected money laundering proved to be too slow for some of the cases referred to law enforcement. For example, by the time a bank’s surveillance systems flag unusual cash transfers, the funds have already been transferred abroad and withdrawn from an ATM.

FFI called for measures that would allow banks to act faster to prevent the suspicious transfer of funds. One method it proposed is increased information exchange among financial institutions.

In recent times, banks have been ravaged by a slew of money laundering suspicions that have undermined confidence in the institutions.

Bank secrecy a hindrance to anti-money laundering actions

"We currently have legislative limits on how banks can share information about suspicious business activity," said FFI head Piia-Noora Kauppi.

Banks have talked about information-sharing before, but the issue has previously stumbled over data privacy concerns.

At the same time, banks are under pressure to demonstrate that they are acting to curb money laundering and they also need to show results.

Achieving these goals means having a secure chain of operations, starting with the customer.

"This type of crime must be prevented at the outer edges of the system. By that I mean that if a criminal player gets access to even one of the banks in the EU’s internal market, it creates a greater risk that it will be able to continue operating from there," Kauppi added.

The NBI has been positive about the suggestions proposed by the finance sector organisation.

Flagging bank account fraud

"We think all of these methods are useful, from a duty to report so that officials can quickly find the people behind suspicious transactions and then identifying others who may have illegally received funds," said Pekka Vasara, head of the anti-money laundering unit.

Vasara added that a more rapid exchange of information could also prevent other offences, such as fraud. For example, changing the account number on an invoice might not work out if the system were to flag when an invoice asks someone to pay into an account that is not the recipient’s.

"If we were able to see who is posing as the recipient of the money, we would be better able to prevent these cases. At the same time, in cases where people quickly set up accounts for online fraud and the money is rapidly transferred onwards, then information-sharing among banks would be another effective tool," Vasara remarked.

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