Third in a Three-Part Series of Blog Posts
This blog focuses on suggested improvements to information sharing between financial institutions, and between financial institutions and governments, to better combat money laundering and terrorist financing. As we recently blogged, the Royal United Services Institute (“RUSI”) for Defence and Security Studies — a U.K. think tank – has released a study: The Role of Financial Information-Sharing Partnerships in the Disruption of Crime (the “Study”). The Study focuses on international efforts — including efforts by the United States — in reporting suspicious transactions revealing criminal activity such as money laundering and terrorist financing. The Study critiques current approaches to Anti-Money Laundering (“AML”) reporting and suggests improvements, primarily in the form of enhanced information sharing among financial institutions and governments. In our first blog post in this series, we described some of the criticisms set forth by the Study regarding the general effectiveness of current suspicious activity reporting. These critiques related to an ever-increasing amount of SAR filings, coupled in part with a lack a feedback by governments to the filing institutions regarding what sort of information was considered by law enforcement to be actually useful. In our second post, we discussed the current landscape of AML information sharing in the United States, which is governed by Section 314 of the Patriot Act, and is an important component of many financial institutions’ ability to fulfill successfully their AML obligations. This third and final blog post pertaining to the Study examines its findings and proposals for developing effective public–private financial information sharing partnerships (“FISPs”) in order to better detect, prevent, and combat money laundering and terrorist financing. Observing that modern financial crime “operates in real time, is most often international in scale and can be highly sophisticated ad adaptive to avoid detection,” the Study generally posits that AML systems ideally should include real-time and cross-border information sharing.