Human beings are a social species, and as a result, we have many mechanisms that promote cooperation amongst groups of individuals. Cooperation and collaboration are also essential aspects of the digital world. This is particularly important when fighting a common enemy in the form of financially motivated fraudsters.
Collaboration is a long-recognized attribute used across industries to provide the intelligence and power to take on the onslaught of fraud and Financial crime. However, new and updated regulations and initiatives empower cooperation in the financial sector to bolster anti-money laundering (AML). An example of collaboration leveraged in a regulatory framework is the European Council’s Anti-money laundering Authority (AMLA).
Why are cooperation and collaboration needed to prevent fraud?
Financial criminals work together to improve the success of their fraudulent activities. The dark web contains examples of financial criminals acting in unison to share intelligence. Dark web forums facilitate the sharing of information on vulnerabilities and zero days. Data is sold and used to commit fraud and identity theft; financial information is shared or sold to commit fraud; Financial criminals conspire to create more potent malware and collaborate on large-scale attacks.
To counterbalance financial criminal collaborative efforts, businesses and governments must cooperate to mitigate financial crime. For example, the Council of Europe has called for “international cooperation,” offering support using the Interpol 24/7 global communication system. In 2021, the Biden Administration in the USA published a statement encouraging the use of cooperation to mitigate financial crime. The publication states that the USA will bring together “30 countries to accelerate our cooperation in combatting Financial crime, improving law enforcement collaboration, stemming the illicit use of cryptocurrency, and engaging on these issues diplomatically.”
Ultimately, sharing intelligence and working cooperatively to prevent Financial criminal activity is crucial in the fight against financial crime. This fact is reflected in the AMLA framework.
Why is the AMLA needed?
Data is behind these new opportunities and challenges in banking. But the latest financial infrastructures have also resulted in low-quality data, nonstandard data structures, and data sources that are disparate and fragmented. A landscape built upon fragmented systems and platforms makes automated transaction monitoring and due diligence difficult and less accurate.
These issues are exacerbated by divergences between national regimes and a lack of cooperation between AML (anti-money laundering) authorities. This has led to a move towards a Supernational AML authority that can supervise institutions with the highest risks. However, to ensure the success of these initiatives, a high level of cooperation between AML authorities is needed: this has led to the creation of the European Council’s AMLA.
Convergence, cooperation, and supervision
The level of cooperation required to take on Financial crime requires stringent enforcement. This comes from the financial regulators and their powers to enact laws. The Anti-money laundering Authority (AMLA) has cooperation and collaboration at its heart. The AMLA ensures that law enforcement agencies such as Financial Intelligence Units (FIUs) work closely with Financial Institutions and central banks to combat cross-border financial crime.
The levels of cooperation established by the AMLA include:
- A single integrated system of AML/CFT supervision across the EU
- Common supervisory methods and convergence of high supervisory standards.
- Monitoring and coordination of national supervisors responsible for other financial entities
- Coordination supervisors for non-financial entities
- The support of cooperation among national Financial Intelligence Units alongside facilitation, coordination, and joint analyses to better detect illicit financial flows of a cross-border nature.
How to meet AMLA regulatory compliance
- Adverse media monitoring: global media can reveal changes to customers' risk profiles. An FI must be able to use tools such as SafeWatchto monitor international media sources.
How cooperation in the fight against financial crime benefits an FI