Standard-bearer no longer

I once had a very scary Latin teacher – scary because she could tell you off for doing something when she had her back turned while writing on the blackboard.  (She later confessed that she kept an eye on us by checking the reflections in the glass cover of the classroom clock – impressively sneaky.)  And one of her principles was this: if you make a mistake in your translation, I can forgive it – but if I tell you it’s wrong and then you make the same mistake again, woe betide you.  I have often passed on the same message in my training: if a regulator tells you to improve something, you’d better make sure you do it, and quick smart.  (The same applies to jurisdictions, when the FATF or IMF or MONEYVAL has come a-calling.)

And yet it is a lesson that Standard Chartered seems unable to learn.  For anyone who has been sunbathing on a rock for the past month and missed all the hoo-hah, back in August 2012, the bank paid a fine of US$340 million for hiding $250 billion of transactions with Iran.  It also agreed to play host for two years to a monitor from the New York State Department of Financial Services (DFS), who would evaluate AML controls at the bank’s New York branch and report back to the regulator about progress.  You would think, therefore, that Standard Chartered would move heaven and earth to get this right – after all, it’s not inventing anything new here, but simply ensuring that its AML controls meet current, published, accepted standards of good practice.  But as the two-year period of monitoring drew to a close, the news was not good: according to the regulator, the bank had failed to detect numerous suspicious transactions, and “a significant number” of them had originated at Standard Chartered branches in the United Arab Emirates and a subsidiary in Hong Kong.

On 20 August 2014 the bank agreed to pay a further penalty of $300 million for failing to improve its money laundering controls, and was also ordered to: suspend US$ clearing operations for high-risk retail business clients of Standard Chartered Bank Hong Kong; continue a previously launched process of exiting high-risk small and medium business clients at the bank’s branches in the UAE; open no new US$ demand deposit accounts for any new customers without approval from the DFS; extend the monitoring of the bank for an additional two years; and establish a comprehensive remediation plan to tighten money laundering detection and reporting.  Again.  Standard Chartered has said that it “accepted” the findings of the DFS.  Again.  Or, as my Latin teacher, would have said: rursus, you silly girl.

This entry was posted in AML, Due diligence, Money laundering and tagged , , , , , . Bookmark the permalink.

2 Responses to Standard-bearer no longer

  1. Roy McCarthy says:

    Speaking generally Susan, do you find that there is a lack of well-qualified compliance professional and might this be the root cause of problems at Standard Chartered and elsewhere? It’s still a comparatively new specialism.

  2. In my experience, Roy, I am finding that more and more of the compliance professionals with whom I deal do in fact have qualifications – mainly from the ICA in Europe and ACAMS in the US. But bear in mind that the compliance professionals with whom I deal are a self-selecting group of converts, who are (nearly) as batty about AML as I am. The compliance people who are lukewarm or see compliance as a backwater or are simply passing time in a safe job will probably not commission me to do their training, and certainly won’t sign up for one of my workshops-for-the-truly-obsessed.
    If I ruled the world (that’s my job for next week), I would probably have something along the lines of chartered engineer status for compliance people; in other words, you can demonstrate your skill either by exam-based qualifications, or by relevant on-the-job service (attested to by others), or by a combination of the two. I would hesitate to insist that long-serving MLROs have to go back to get qualifications. But I do very much like the idea of compliance being seen as a specialism – a definite career choice rather than somewhere you just end up by default. After all, I have always believed that compliance demands a certain type of person – detail-oriented, thorough, curious, moral – and these are rarely the characteristics of, say, a good salesman.
    Bet you’re sorry you asked now!
    Best wishes from Susan

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