Shock as TMNL announces wind down in face of Article 75, EBA warns on CDD complacency and world’s top banks criticise ‘ineffective’ STRs

From Paul O'Donoghue at AMLi

Shock as TMNL announces wind down in face of Article 75, EBA warns on CDD complacency and world’s top banks criticise ‘ineffective’ STRs

TMNL WINDS DOWN: “We’re fishing for criminals with nets, when we want to be spearfishing.” This quote from ING Chief Compliance Officer Rein Graat neatly sums up the logic for establishing Transaction Monitoring Netherlands (TMNL), an initiative which has been sharing information between five large Dutch banks in an effort to crack down on money laundering. The organisation was the most pioneering AML model in the world of money laundering when launched four years ago and had buy-in from the country’s government and FIU. And given that Mr Graat's statement is from October, less than a year ago, it makes the announcement that TMNL will wind down its current operations all the more shocking.

It’s true to say this week’s news the organisation is winding down operations has taken us all by surprise. The reason given was the EU’s new Anti Money Laundering Regulation, (AMLR) and Article 75 which sets out details on how information should be shared across the EU. TMNL implied that its efforts would be little more than duplication, and is now set to reorganise and search for a new purpose. But the move has caused real shock in the sector and serves as yet another example of how quickly things move in the world of AML.

The agency said it was looking at a “redesign of TMNL will result in a change of focus, staffing and structure of TMNL to allow this work to progress at a measured pace in full collaboration with all key stakeholders. The future business plan for TMNL will be developed in the coming period.”

At AML Intelligence we can’t but feel a little sad at the turn of events and wish the incredible team and leaders at TMNL the very best – and hopefully will see the agency in a new guise soon. Read Paul O’Donoghue’s report here: Shock as Dutch banks’ AML coalition, TMNL winds down operations

AML CONTROLS IN FOCUS

EBA WARNING: In its statement announcing the wind-down of #TMNL, the five Dutch banks behind the coalition that formed the agency emphasised their mission remains to crack down on money laundering risks. It’s clear however that regulators are clearly worried many other European lenders don’t share their enthusiasm. The European Banking Authority (EBA) this week has warned that many lenders are not taking AML seriously, despite multiple failings and financial penalties. The regulator has said the problem is bad enough that it is causing “substantial” reputational damage to the EU’s banking system and risks undermining the integrity of the entire sector. Customer due diligence (CDD) was pinpointed as a particular problem blackspot, with “most” of the serious identified last year related to the area. The full story is available on our homepage now. Our report on the #EBA risk analysis is here: EU banks not taking money laundering risks seriously, despite costly CDD failings, EBA warns

STR INEFFECTIVENESS: Banks across the EU file thousands and thousands of suspicious transaction reports (STRs) every day. What happens with them? In most cases - nothing. In highlighting the ineffectiveness of most STRs, the Wolfsberg Group gave the example of how the German FIU passed on just 15% of the 340,000 STRs it received in 2022 to law enforcement agencies.

Then, 95% of cases resulting from the STRs forwarded were closed without prosecution. A poor return by any standard, and the #Wolfsberg Group has said it is time for a major overhaul in how STRs are used - readers can see more detail on its proposed changes here.

DEUTSCHE: Congratulations are in order for Laura Padovani . After being appointed Chief Compliance and AFC Officer at 德意志银行 , she became just the second woman on the company’s 10-person board. Ms Padovani has a stellar CV, holding the position of Group Chief Compliance Officer at Barclays before joining Deutsche and having 20 years of experience at American Express.

Deutsche has lagged many other top European lenders in female representation at board level, and chairman Alexander Wynaendts has said the firm is now actively aiming for greater gender balance. Joining Laura’s leadership team as Head of AML is Nina Patel, who is moving over from 瑞信 .

***We hope you are enjoying our mid-week news update, filled with the latest news, insights and regulatory intelligence from across the globe. Are you an ‘AML Intelligence’ Member yet? The AML, FCC and AFC teams in many of the world’s top banks, regulators and governmental policy teams are Members, giving access to our full premium content as well as other benefits, including discounted access to our award-winning summits. Our Members are distinguished by a desire to be professionally successful. Feedback includes our regulatory intelligence articles are easy to understand and teams can action the learnings quickly. Many of our Corporate Members use the Membership as a continuous education tool. Don’t miss out. Join today as a Corporate or Individual Member here: Become a Member Today

CITIGROUP: Finally, Citigroup is the latest financial institution to be implicated in a U.S.-led money laundering crackdown on Mexico’s infamous Sinaloa cartel.US prosecutors claim two California men deposited nearly $36,000 at Citi ATMs in January 2021. The deposits of several hundred dollars each were allegedly fed into the machines at intervals just a few minutes long. Drug Enforcement Administration officials claimed the duo chose to use Citi ATMs due to what they perceived to be looser AML controls. The full details are available here.

SILVERGATE: The other major story of the week involved a twist in the tale of Silvergate, formerly a tiny real estate lender which grew into an internationally-known name in banking after moving into cryptocurrency in 2013. The firm was one of the major lenders linked to FTX, the cryptocurrency exchange which spectacularly collapsed in 2022. Silvergate followed shortly after, with claims by the U.S. Securities and Exchange Commission that the bank misrepresented its operational and legal risks to investors.

The remaining corporate entity has been hit with $63 million in penalties, while former CEO Alan Lane and former Chief Risk Officer Kathleen Fraher have agreed to pay $1 million and $250,000 respectively to settle the charges without admitting or denying the allegations. However, Antonio Martino, Silvergate's former Chief Financial Officer, denied similar allegations and intends to fight the charges in court. Meaning the case still has some way to go.

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Have a great Wednesday ??

Stephen and the team at AMlintelligence.