Operational Fashion Police and the Persistent Threat of Trade Based Money Laundering
- Strengthening your CDD practices and geographic risk assessments to unmask potential TBML
- Effectively spotting methods of facilitating black market peso exchanges
- Boosting your monitoring techniques to detect cross border money movements and third-party payments serving no clear business purpose
Presented by: Tom Obermaier – Chief Executive Officer, RDC
View The Presentation: Threat of Trade Based Money Laundering:
The Evolution to Knowing Your Customer’s Customer
- Practical steps to understand the risk of your customers customer.
- Workshop with industry experts, practitioners and utility service providers on their approach.
- Explore alternatives to de-risking.
Tom Obermaier – Chief Executive Officer, RDC
Bart Claeys – Head of KYC Compliance Services, SWIFT
Alan Schienberg – Former Head of AML
View The Presentation: Know_Your_Customers_Customer
Compliance is a Competitive Advantage
It is amazing how often this notion still is dismissed out of hand. To many, the thought is simply incredulous: “Compliance is nothing more than a tick-the-box business: do the minimum, stay out of trouble and focus on growing your business through all other means.” There is absolutely no benefit to a firm from doing anything more. Being great at compliance will not lead to selling more mortgages, car loans, bank accounts or any other revenue driver of a modern financial services firm.
Do you really think this long standing belief rings true anymore? I recently came across the following graphic from The Huffington Post:
128 billion clams.
The first consideration in determining whether you should develop a competitive advantage in an area is whether the activity is of strategic importance. I guess the global regulatory community has answered that question. But for those who still doubt, let’s put this number in perspective. Ironically, it is the combined total of the two massive M+A deals that formed the behemoths Citigroup (Travelers acquisition of Citibank for $70 billion in 1998) and JPMorgan (JPM acquired BankOne and Jamie Dimon for $58 billion). No one views either of these transactions, let alone both, as strategically unimportant. Yet somehow $128 billion in fines over a handful of years is?
It ain’t. And it’s why compliance costs are becoming an important item for investment analysts. At a recent earnings conference, well-respected HSBC CEO Stuart Gulliver was challenged by the analyst community over the bank’s compliance expenses. HSBC has a full 10% of its workforce, some 25,000 of its 258,000 employees, toiling in the compliance area. Gulliver masterfully deflected the inquiry with his trademarked upright candor: “I think that that’s frankly a fixed cost of running this business model.”
There you have it. A fixed cost of running a business model is absolutely something for which you need to develop a competitive advantage. Think of other fixed costs. No one thinks that having better technology than the competition isn’t worthwhile. Ditto for low-cost operational centers of excellence. “Doing compliance” better than the competition is the same. It may not initially lead to the origination of more mortgages, loans or accounts. But for sure doing it better, faster, cheaper than your peers will improve your pricing power and your gross margins. And that spells more p-r-o-f-i-t-s. Which is, after all, what our shareholders rightfully demand.
It’s also not lost on Silicon Valley. I’m spending a lot of time with the best and brightest of the Valley as they work night and day to disintermediate traditional banking. Whether it’s those working on the next great payment, Internet commerce, social media or sharing economy platform, their focus on building a strong and efficient compliance engine is core–that’s right, core–to their success. Significant time and resources are expended in building a better compliance mousetrap because it’s strategically important: it will prevent bad guys from using it, build trust, and significantly challenge the cost paradigm banks currently place on the market. That will be significantly beneficial to customers (read: cheaper prices and better user experience), drive exponential growth (read: huge valuations), and garner significant market share from the competition–banks (read: competitive advantage) .
Chief Executive Officer, RDC