Banking Supervision Department Activity against Money Laundering / Financing of Terrorism


Abstract

·         In this survey, we present the essence of the Banking Supervision Department’s actions in recent years in regard to anti-money laundering/combating the financing of terrorism (AML/CFT), including findings and instructions regarding the Banking Supervision Department’s examinations and surveys.

·         In recent years, major countries have stepped up their war on unreported money and tax evasion, including intensive activity to track down funds that are kept offshore. The result is a significant toughening of the requirements that the law imposes on banks to examine customers’ transactions in their accounts and to trace suspicious actions, report them, and, in certain cases, prevent them. Banks that fail to act in the requisite manner are liable to fines and other significant sanctions. Consequently, there has been an increase in friction between banks and some of their customers because, in response to the foregoing, banks have stepped up their Know-Your-Customer checks and are demanding more explanations about transfers of funds to and from their customers’ accounts.

·         In an analysis by the Banking Su​pervision Department, it was found that the banking system au large has been adopting a more stringent and cautious policy on AML/CFT risks than in previous years, and that the integration of high-quality controls and monitoring arrays into the system’s work has seen major improvement in recent years. It is also evident that the banking system has made sizable investments in information systems for the management of AML/CFT risks. However, the Department’s examinations indicate that certain systems at some banks need to be updated and adjusted to existing and emerging risks against a background that includes the COVID-19 crisis and the growing use of advanced means of payment, and that these systems are in need of improvement.

·         Accordingly, the Banking Supervision Department is using the tools in its possession to monitor the correction of deficiencies and is instructing the banks to enhance the efficacy of their control systems. The purpose of these measures is to give the banking system better tools with which to cope with the risk by improving their ability to detect irregular activity, for example.