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What do we consider to be economic crime? It is firstly a breach of trust with fatal consequences if it strikes: financial loss, expensive in- vestigations and follow-up work, damaged reputation and ultimately a wholesale threat to your existence. This means that if you want to prevent all these threats and damages, you should evaluate the risk of crime, take a clear stance on economic crime, establish a culture of trust within the organisation and, above all, pursue any suspicious cases uncompromisingly and act consistently in every respect.
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JOURNAL
GOODMORNING,LADIESANDGENTLEMEN.
It is a true privilege to be here and to have the opportunity to talk about the fight against economic and financial crime, a factor that contributes to social problems, a threat to financial stability and financial inclusion. I will try to illustrate the legal framework and the context of tackling the illicit flow of dirty money in the legitimate economy, aiming to underline how big is the challenge and why the topic must be constantly prioritized.
Curtailing money laundering has been around as a policy objective for a long time, but the target has broadened significantly and the mandate has grown over the past two decades to include tax evasion, financing of terror- ism, human trafficking and modern slavery, state-sponsored and corporate bribery. While billions have been invested to tackle this type of criminality, greater emphasis needs to be placed on bolstering the efforts of law enforce- ment with the help of the private sector and ensuring the legal and regula- tory framework and financial crime risk management toolkit are enhanced to enable stakeholders to achieve more effective outcomes.
Currently the cases uncovered continue to be a small fraction of the 2 - 5% of global GDP ( 1.7-4 trillion) that is estimated to be laundered annually. To analyse the context of financial crime, we have to point out how factors such as globalization, the liberalization of international markets and the suppression of borders, have largely contributed to increase the possibilities of financial exchanges. Thanks to the evolution in the world of ICT (Information and Communication Technologies), such technological advances have made it easier to invest in developing countries, connecting people across the world, managing bank accounts even if financial institutions are located overseas.
On the other side, the same advancements have made it difficult to iden- tify the beneficial ownership of accounts and monitor and freeze finan- cial transactions involved in money laundering: while technology has the potential to make anti-money laundering and counter terrorist financing efforts faster, cheaper and more efficient.
Money launderers need the technical co- operation of a financial institution/entity, feeding a parallel market of financial inter- mediaries. The European Union (EU) An- ti-Money-Laundering (AML) legislation is constantly updated, aiming to create the most harmonized regulatory framework among the different member states legis- lation. To make it possible the EU has dif- ferent legislative tools such as regulations, directives, decisions, recommendations and opinions. These vary depending on whether or not they are binding and on how they are applied in the member states as described in Article 288 of the “Treaty on the functioning of the European Union.”
Regulations are the preferred tools as they are binding and directly applicable, in their en- tirety, in the member states without domes- tic legislative process of transposition. In the international scenario, the Financial Action Task Force, also known by its French name, Groupe d’Action Financière (FATF-GAFI), is the most important intergovernmental organization. It was founded in 1989, on the initiative of the G7 countries, to devel- op global policies and standards to combat money laundering and, since 2001, also the financing of terrorism. In February 2012, the FATF-GAFI completed a thorough re- view of its standards and published the re- vised “recommendations” to strengthen safe- guards and further protect the integrity of the financial system worldwide.
The recommendations have been expanded to deal with new threats such as the financ- ing of the proliferation of weapons of mass destruction, and to be clearer on transparen- cy and tougher on corruption.
Another important player in this context is the EGMONT GROUP (EG), the global orga- nization for the Financial Intelligence Units (FIUs), set up in 1995, to provide support for operational practices and international cooperation. The EG manages and develops the protected network known as the “Egmont Secure Web” (ESW), which is used by nation- al FIUs to exchange operational information.
Economic crime continues to be a major concern for organizations of any size and in virtually every sector. On the other hand, we have financial crime, which is when the offense is committed against property, involving the un- lawful conversion of the ownership of property to one’s own personal profit. Financial crimes are an increasing problem for all financial institutions, from the largest global organizations to the smallest companies and partnerships. The challenge is too big an issue for any single actor to solve on their own: everyone has a role to fulfil. As gatekeepers of the system, financial-services companies play a key part in this context and financial institutions are strongly committed to helping them accomplish this important mission.