Banks such as HSBC are committed to detecting and deterring financial crime
From bribery and corruption to people-trafficking and drug-smuggling: organised crime takes many forms and does untold damage. Banks have a major part to play in stopping it.
The vast majority of financial institutions take this responsibility very seriously. At HSBC, for example, we have significantly strengthened our ability to fight financial crime over recent years.
But no organisation can tackle this complex, long-term challenge alone. A close partnership between banks, policymakers like regulators and governments, and law enforcement agencies is crucial.
Sharing information is at the heart of that partnership. In effect, different organisations hold different pieces of a jigsaw. Banks have an overview of financial transactions taking place around the world; public agencies gather intelligence about the greatest threats to society. By coming together and sharing information, public and private bodies can see the whole picture – allowing them to target their efforts to stop criminals more effectively.
By sharing information, public and private bodies can see the whole picture
But data protection and privacy rules sometimes make it difficult to share information between different parts of the same bank, let alone with third parties. Different legal jurisdictions can make cooperating across borders harder still.
That’s why it is encouraging that, over the past few years, authorities in a number of countries and territories have set up dedicated information-sharing forums. These bring together experts from regulators, law enforcement agencies and financial institutions. Working within strict parameters, the different organisations pool their knowledge to better understand and tackle the biggest threats.
A new report from the RUSI Centre for Financial Crime and Security Studies’ Future of Financial Intelligence Sharing (FFIS) research programme, produced with support from organisations including HSBC, examines the different approaches taken in six such forums around the world – the US, UK, Hong Kong, Australia, Canada and Singapore. The report shows that, although it is relatively early days, these forums are already delivering results.
In the UK, for example, the Joint Money Laundering Intelligence Taskforce (JMLIT) has contributed to the arrest of 63 individuals, the closure of 450 bank accounts and the restraint of GBP7 million of suspected criminal funds in its first year. Public-private information sharing in Hong Kong is credited with contributing to the arrest of 65 persons and the restraint of HKD1.9 million worth of assets in just four months.
This is a positive start. With a commitment from a total of 20 countries around the world to set up such forums, there is real momentum behind efforts to improve coordination. It is now vital to build on this.
Jennifer Shasky Calvery is HSBC’s Global Head of Financial Crime Threat Mitigation
The FFIS report suggests some important next steps. Foremost among these, as argued by HSBC’s Chief Legal Officer Stuart Levey in a speech last year, is the Financial Action Task Force setting global standards on information sharing so legal barriers do not prevent these partnerships developing in more countries.
It is also important to invest in technology to improve the quality of the information shared. Advanced computer programs are able to sift through reams of data far quicker than humans, spotting patterns of unusual transactions that until now would have been virtually undetectable.
Such programs could also help to refine and strengthen existing defences against financial crime. According to the FFIS report, private companies file millions of reports on suspicious financial transactions each year – but more than 80 per cent of these are of no immediate value to law enforcement agencies. Using technology to identify and focus on the areas of highest risk could help everyone make better use of their resources.
The threat from financial crime is constantly evolving. Criminals have significant resources and can learn, adapt and innovate themselves. There are no easy answers, and sharing information is only part of the solution.
But the experience of the past few years is encouraging. It shows that private companies and public bodies are ready to invest serious time, money and trust in building partnerships. I believe that together we are heading in the right direction: towards a stronger, more robust financial system that is better able to disrupt crime and protect the public.
Read the full report: The Role of Financial Information-Sharing Partnerships in the Disruption of Crime on the RUSI Centre for Financial Crime and Security Studies website.