Money laundering helped by lack of information in the world

The non-governmental organizations (NGO) Transparency International said authorities regulating the financial sector lack transparency, creating mistrust and hampering the effectiveness of systems designed to prevent financial crime, according to a report into the amount of information published on authorities’ anti-money laundering efforts in 12 countries hosting major financial centres. 

“We need to see that the people meant to stop corruption in the banking industry are doing their job,” said José Ugaz, chair of NGO.

“There is no good reason to keep this data secret," he added. "We, the citizens, have the right to know if the financial sector is being permissive or complicit with illicit activity.”

In 2013, poorer countries alone lost $1.1tn in funds illegally moved between countries. While the impact of such a loss is much more acute in the developing world, advanced economies also fall victim to illicit financial flows, and effective money laundering regulations are needed in all nations to end them.

Transparency International said anti-money laundering systems would serve as a better deterrent if they were transparent and both the authorities and the banks could be held to account.

One of the key reasons that confidence was lost in the first place was the global financial crisis of 2007-08. Weak oversight by bodies such as the US’ Securities and Exchange Commission played a significant role in failing to prevent the crash.

Currently, Transparency International said many authorities fail to publish some of even the most basic information, such as the number of times banks were sanctioned for money laundering failures in a given country.

The advocacy group developed its recommendation following an assessment of the information-sharing methods of 12 countries that host major financial centers, including the U.K., Germany, Switzerland, Luxembourg and the U.S.

It found that just four countries, Australia, Cyprus, Italy and the U.S., publish the total number of financial crime sanctions that are applied against banks.

The group also looked at how often basic anty-money laundering (AML) prevention and enforcement efforts are published in all 12 countries, including the number of banks inspected by authorities, the number of regulatory breaches found and the total number and value of sanctions imposed.

Of 20 indicators identified — drawn from internationally accepted guidance — only 36% are disclosed to the public in all countries. The group said that the little data that is published is often out of date.

If these international organisations did not publish information, the number of available indicators would fall to one in five. Transparency International added that this approach makes it difficult to get a full picture of anti-money laundering efforts in a given country and is a barrier to effective, independent monitoring.

In the 12 nations, there is only sparse information available on indicators such as the value of a transfer alerted as a suspicious transaction, the number of regulatory breaches a bank has committed, the value of financial penalties or the sanctions imposed.

The NGO called for countries to publish anti-money laundering oversight and enforcement statistics on a yearly basis, in a single report or data file, and said this should become a standard recommendation from relevant international bodies.