In a nutshell, what does the work of your group depend on? What sort of advice are you offering to TMF offices globally on a day-to-day basis?
The team advises on the client risk linked to every new business opportunity for TMF. We advise and assess the money laundering risk, as well as on the sanctions and reputational aspect of each new potential client relationship. Our aim is to protect the good name and integrity of the TMF affiliate and TMF Group. If TMF were a ship, we could say that the Corporate Due Diligence team keeps TMF away from shallow waters.
How much of anti-money laundering (AML) is routine box-ticking, and how much of it is applying common sense and intelligence (human or artificial) to sift out the clues which could track down potential criminal and terrorist activity?
The box-ticking routine actually can be quite useful to keep the track of process flow. Of course, there is the development of the technology which frequently supports companies in meeting the regulatory requirements (such as AML). In practice, however, the software is used only for certain activities. If the process framework is followed and respected, it can be verified by simple check lists and careful team members who perform their duties in an accurate way. Technology solutions are becoming always more sophisticated with time, but they are also becoming more expensive. Not every company can afford to purchase a solution to support their internal KYC (know your customer) and AML processes. We are an internal team, so protecting TMF Group is our main objective, however we also ensure that TMF clients are safe since thanks to our efforts, TMF’s client portfolio consist of companies which generate low/medium risk for TMF and for each other as well.
To what extent is artificial intelligence beginning to make a difference in AML procedures? Scanning large amounts of data to seek out anomalies, rather than have humans doing so less efficiently will surely lower the costs of compliance in time. As real-time reporting becomes more commonplace, will the use of AI become standard?
Fortunately, many companies (TMF included), apart from relining on AI and automated solutions still value the human factor which makes the difference in performing complicated risk assessments. The purpose of implementing AI tools should be to take over from experts the time-consuming or repetitive activities (such as routine box-ticking activities) and allow them to focus on the analysis of the cases where experience, common sense and intelligence play a key role in a proper identification of potential money-laundering scheme or any other threatening or harmful activity from reputational perspective.
AML and KYC have become commonplace acronyms in the financial-services sector in recent years. For most law-abiding businesses, they mean an extra headache of having to provide documents and information to prove that they are not drug traffickers or other wrong-doers. Meanwhile, the world's bad guys, with large amounts of cash that they need to launder, are finding ever smarter ways of getting round all the new AML rules anyway, leaving honest customers of financial-services firms with new red tape to deal with. How can the financial-services sector counter this commonly held view?
Major financial sector institutions are used to have AML and KYC procedures. Having had such processes in place for many years, so should any institution fail to prevent money laundering, it’s down to one of two things. It can be either a failure in the process – which unfortunately is normal and happens from time to time – or intentional. The latter is more serous because it means that a group of employees in have been working together in agreement, with the aim of facilitating money laundering. From both situations – harmful to the company involved – usually come lessons learned and corrective actions are introduced. I would be more concerned about other sectors (outside of the world of finance) that are now bound by AML laws or smaller market players which frequently do not have sufficient internal compliance resources to track regulatory changes. Such companies create even a bigger threat since they can unconsciously facilitate or participate in money laundering schemes due to the weaknesses or absence of proper AML policies and procedures in place.
I know this isn't an AML question, but it's one I'd like to ask; the recent G7 declaration about global corporate taxation shows the direction of travel for the future. Corporations (especially the IT giants) can expect to face higher levels of taxation as loopholes are progressively closed. How do you see this affecting TMF's work as a global accounting and tax-services company?
I’m quite convinced it will. Tax law is becoming always more complex in different jurisdictions, we observe that it’s also more difficult for investors (even ones with the huge capital) to successfully meet local requirements linked to the most essential aspects of running a company such as accounting. And here comes TMF Group with our mission and vision of servicing our clients – Global Reach & Local Knowledge. We are present in more than 80 jurisdictions all over the world and thanks to our wonderful teams, we are able to provide the service for the clients which meets all (sometimes ambiguous) local requirements.