FEATURE/Experts say money laundering is getting harder to detect because of new technology.

NEW YORK--(BUSINESS WIRE FEATURES)--Nov. 26, 1996--

Illegal activity moving into securities

The future of combating money laundering is heavily reliant upon our legal and financial systems getting and staying in tune with the sophisticated laundering techniques that continually evolve, according to experts at a recent USCIB training seminar on Bank Secrecy, Money Laundering and other Regulatory Issues.

The seminar, developed by the U.S. Council on International Banking (USCIB) and the International Management Advisory Group (IMAG), traced the history of anti-money laundering activities from the Bank Secrecy Act of 1970 (BSA) through the Financial Action Task Forces' recommended revisions of August 1996. More importantly, the seminar also covered the future of money laundering and suggested ways that financial institutions can keep abreast of suspicious activity that may be occurring within their institutions.

The key, according to Gary E. Peterson, a former executive at Midland Bank and the subsequent Hong Kong Shanghai Group for over 13 years, is to have a well-trained staff who has access to comprehensive management awareness programs and a Compliance Department well versed in the latest trends. "If you walk into a bank, you can automatically tell whether its staff has been well-trained," says Peterson. Sarah DiStefano, who specializes in BSA/money laundering legislative issues and spearheaded the development of the seminar, added, "The greatest risk to any bank is failing to spot a transaction designed to cleanse criminal funds. A bank is only as good as the people who work there."

Logically, the development of technology will play a tremendous part in the future of money laundering. Financial institutions are going to need the very latest in technology to keep up with the systems of the future, according to Anthony J. ("Bud") LaMarca, an experienced professional in international banking operations. "(Money laundering detection) is not going to get any easier," says LaMarca. "It's going to get harder, and the banks with the most sophisticated technology are going to be in the forefront." He estimated that over the next decade, as banks diversify and move into capital markets and securities, money laundering activities will be found more prevalent in securities firms. In fact, as the use of new technologies such as Cyberbanking, Smart Cards, and International Debit Cards grow in the financial services industry, money laundering techniques will also adopt these high-tech means.

Even the latest amendments designed to fight money laundering will seem outdated, as crime organizations begin to hire specialists to circumvent the newest technologies. This, in effect, will make money laundering easier and the related tasks facing bankers even more challenging.

The USCIB and IMAG also identified money laundering "hot spots" -- Russia, the Eastern Bloc, Afghanistan, Pakistan, Laos, Thailand and Mynamar are countries whose transactions should be monitored. It was also stressed that bankers should continue to stay apprised of the latest legislation, probably the most recent of which is the "Recordkeeping Rule" of May 28, which mandated that financial institutions collect and keep information regarding wire transfers over $3,000.

According to the experts, one of the best ways banks can lay the groundwork for enlightenment on money laundering is to make staff familiar with the "Know Your Customer" regulations, which will be published by the U.S. Treasury Department in the very near future. The regulations will state that a banker should know the entire history of the accounts held at their bank, from its origins to past banking references to sources of deposit. The banker should also set up a calendar for reevaluating customer information. The experts inferred that it's this type of recordkeeping that may save the institution from scrutiny under the demands of the Money Laundering Control Act.

The U.S. Council on International Banking (USCIB) is a national association representing more than 320 U.S. and foreign financial institutions with operations or subsidiaries in the United States. One of the oldest U.S. banking associations, the USCIB works to standardize international banking rules and practices, serves as advocate to U.S. and international regulatory bodies on policy issues that affect its membership, and provides training and information to bankers throughout the United States.

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