Sibos 2018: AML struggles amidst new payment methods
The face of payments has changed dramatically in the past few years. However, this change hasn’t been driven by new technology, as much as by the mass adoption of these technologies, allowed by a series of factors affecting customer behaviour.
New ideas are Bourne?
On day three of Sibos, at the panel “The digital revolution: managing the emerging AML and regulatory risks of new payment methods”, we managed to get an insightful take in how banks, regulators and fintechs struggle with anti-money laundering (AML) compliance in the light of the rise of new payment methods.
The panel was formed by the following speakers: David Howes, global head, financial crime compliance, Standard Chartered; Lauren Girard, MD head of compliance at JP Morgan Treasury; Natalie Hall, GM, financial crimes compliance at Commonwealth Bank of Australia; and Hiromi Yamaoka, director general of the payment and settlement systems department, the Bank of Japan.
The whole panel seemed to agree on the premise that the boundaries of what constitutes new payment methods are not clearly delineated. Do banks really understand what these payment methods entail?
Plus, transaction information is often stored in a fragmented manner. This means that while each bank has information of their respective side of the transaction, fintechs may have access to the whole picture. This gets even more complicated when you look at the disparity of AML legislation across geographies, particularly in Asia.
As the digitisation of payment increases, the risk for the individual decreases, but for banks, it increases. This means that AML regulation around new payment methods needs to keep up. Girard suggests that the best way to do this is to overlay the control framework that we see in correspondent banking and adapt it to new payment methods.
The panels quipped about the idea of a “Jason Bourne”-esque image where law enforcement agencies can track individuals accurately based off their card credit activity. “We’re not there, and it’s unlikely that we’ll get there any time soon, but if banks, fintechs, and regulators sit together to discuss a regulation and collaboration framework, we might get somewhere,” said Hall.
“It’s everybody’s responsibility, after all,” said Girard.
This article is also featured in Daily News at Sibos 2018, our flagship daily publication at the Sibos conference.
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