Uncover the Laundryman's Secrets

Tuesday, March 28, 2023

MONEY LAUNDERING: THE RASHOMON EFFECT


According to the Rashomon Effect, different people provide contradictory accounts on the same event. In the world of money laundering, the self-serving interests of the players often result in competing, and even contradictory, explanations of the problem and its solutions, all to the disadvantage and detriment of the compliance community.

Perhaps an analysis from someone who is, from personal experience, especially sensitive to all the diverse perspectives will make this clear:

(1) The Regulators: are focused upon increasingly stricter ways in which to hold the compliance industry to a standard which seems impossible to bear, given the restrictions imposed upon it by their superiors in the banking chain of command. Management does not want New Accounts seemingly handicapped by assertive compliance officers who veto prospective clients that they believe represent acceptable risks at account opening.

(2) Law Enforcement: Holding individual compliance officers personally liable for what they regard as ineffective policing, and even professional negligence, demanding 100% efficiency, while at all times trying to get along with the business realities. banks exist to serve clients, and make a profit, not to be the policemen of the financial world, yet compliance officers are fully expected to be gatekeepers, barring all who are bent on financial crime. Compliance officers charged with being willfully negligent for doing their job is the the solution.

(3) Legislators: Their utter failure to make complete corporate transparency a reality, including real-time access to beneficial ownership data, is one of the reasons the war on money laundering will remain an abject failure. Their dependence upon campaign contributions hampers their ability to assist compliance where it needs it the most.

(4) The money launderers: Their adoption of new technology, for universal information access through the Internet, to access to software, including AI programs not yet in common use by the compliance officers whom they match wits with daily, makes them more formidable than they have been in the past, which is troubling. They will continue to find new roads to success, unless and until reined in by imaginative and innovative compliance officers, working within their restrictions, but still able to interdict the laundrymen in real time.

The compliance solution to all these competing and often overreaching interests has to be the universal use of advanced artificial intelligence platforms, as they can find critical data not previously available or accessible, develop it through machine learning, and thereby allow analysis and conclusions that will effectively satisfy all these interests, and save the day for each and every compliance officer with good outcomes. Let us hope that this bit of wisdom from a old former money launderer will result success against today's laundrymen, where there has previously been only failure. Hit them hard with the new tools, please.

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