Money Laundering is a process that aims to conceal traces that lead to the actual source of money acquired illegally. Eventually, illicit financial activities have to be investigated and origins of proceeds from such activities revealed. Nevertheless, institutions such as banks tend to conceal information on such activities in order to prevent law enforcement agencies from finding out.
Imminently, money launderers spent a lot of time devising strategies to ensure that such proceeds are diverted to personal accounts without arousing any suspicion. To deter money laundering, it is not only enough to create laws or regulations but financial institutions need to put in place measures where they can easily detect such fraud in order to assist law enforcers and the state.
What are the Consequences of Banks Venturing in Money Laundering?
Money Laundering erodes financial institutions by weakening their role in facilitating economic growth. It facilitates corruption and promotes other illegal activities. Such activities negatively affect economies, foreign relations or in some cases the social welfare of citizens. The Financial times issue of 4th July 2018 reports that one of the major Danish banks had its share fall from allegations of money laundering. According to the Standard Newspaper, the Central Bank of Kenya penalized five lenders a total of Ksh 392.5 Million for handling money linked to corruption (Ogila, 2018).
Another article on the Standard Newspaper on September 28th 2010 revealed that a Kenyan bank was placed under the CBKs statutory management because of claims of tax evasion and money laundering (Anyanzwa, 2010). These are just some examples of the financial losses which financial institutions can incur as a result of money laundering activities. A bank’s reputation can be jeopardized and they can loose trust from the public as a result of activities perpetrated by Money Launderers.
The need for an Anti-Money Laundering Solution
Financial institutions should consider new ways that they can deal with money laundering; the government through the legislature has already come up with the Proceeds of Crime and Anti-Money Laundering Amendment Act of 2017 to help prevent and prosecute money laundering activities. With rejuvenated efforts in the fight against corruption in Kenya, Kenyan financial institutions have also found themselves on the receiving end, as perpetrators of corrupt deals use accounts held in various banks to launder proceeds of crime. Recent penalties by the CBK have served as a wakeup call, to most banks to implement measures and devise strategies to fight Money Laundering. Bankers that are not involved in money laundering can avoid wrongful prosecution because the counter-fraud management platform can identify specific individuals involved in the illegal activity.
The best way to fight such fraud is through embracing technology. NLS Banking solutions through its counter fraud management system solution dubbed Tera Intelligence, provides a comprehensive solution to assist banks and other financial institutions in this fight. The solution focuses on aiding banks to profile their customers, transaction monitoring, detecting suspicious activities, fraud management, Watch-list and cause management as well as Data mining and reporting.
Tera Intelligence Capabilities:
1. The system supports multi-channel (Omni-channel) functionality within a single platform.
2. The system has ability to detect fraudulent transactions in real-time from all channels which include Branches, ATM, Mobile, internet banking among others.
3. The system analytics processes are predominantly rule based
4. The open nature of the system allows risk analysts to model and configure rules in a simplified way. This reduces time and costs associated with onboarding or enhancing new rules. NLS believes that the customer will be able to manage the ongoing configuration themselves (after training).
5. System includes a business intelligence module to provide advanced visual analytics.
6. The system has inbuilt investigation management and coordination tools, keeping investigation work on track and recording key findings and decisions.
7. Data acquisition capabilities to connect the investigation teams to the right information quickly and effectively.
8. Reporting and dashboards to show progress and effectiveness of investigations.
9. Collaborative tools, supporting information sharing and communication, joining the dots between previously archived investigation activities.
10. System includes a prevention component to stop unwanted transactions (DECLINE) from taking place, discover component to identify fraudulent patterns through the usage of analytics components and finally an investigating component which includes link analysis tools through which a network is provided to show relationships between the account holders and events.
11. The system is highly customizable configurable to a bank’s specific use case, technological ecosystem, or desired features and functionality.
12. The system is designed to interface with any system through web-services, ISO or DBconnect
13. Ability to turn on and off certain rules, with multiple controls or authorizations.
Professionals tasked with risk and compliance should focus on the significance of investing more time to compiling customer profile information and rules that need to be used to identify activities that could lead to fraud or money laundering. This approach ensures that Tera Intelligence (counter fraud management platform) functions easily and accurately so that bank managers can access reliable alerts that the system produces. Partnering with experts like NLS Banking Solutions is key for banking managers because of the benefits that they stand to gain if they adopt the NLS Tera Intelligence solution.
Anyanzwa, J. (2010). Push to reopen Charterhouse Bank ignites storm. Available at https://www.standardmedia.co.ke/business/article/2000019209/push-to-reopen-charterhouse-bank-ignites-storm
Ogila, J. (2018). Banks respond to CBK over handling stolen NYS cash. Available at