Thread by @FintechPolicy

Stung by Big Fines, Big Banks Beef Up Money-Laundering Controls
By Yalman Onaran (Bloomberg)

The tech-race:
☝️New tech allow regulators better AML detection but then forces banks to use even better tech to detect before the regulators

Thread👇
bloomberg.com/amp/news/artic…

Measures by HSBC
HR👉 HSBC quintupled the number of AML employees to 5,000 (2012-2016)
Tech👉upgraded its #Fintech #technology (#MachineLearning scanning transaction data)
Lobby&learn👉in 2016, hired Jennifer Calvery, the U.S. Treas.Dpt’s top #AML official who fined HSBC in 2012.

👉9 big banks paid a total of $20 billion (2012-2015) for lax AML controls
👉 clients evade taxes or violate U.S. sanctions
👉most of the settlements came with deferred-prosecution agreements and outside monitors

👉big banks withdrew from certain countries
👉dropped correspondent-banking ties with hundreds of lenders.
👉small banks took over the risky business

☝️the way the pressure goes
👉 pressure on banks forced countries to overhaul their regulations&practices as the loss of correspondent ties threatened their ability to transfer funds internationally
👉Mexico&Argentina both established official dialogues with the U.S. Treasury

☝️fun fact:
👉it’s easy to create a shell company in the states without disclosing beneficial ownership.
👉not possible anymore anywhere in Europe
👉Battle between US Treasury and EU Commission (remember Google VS DeutschBank)

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