4 ms·

Financial institutions are not interested in being good at catching money laundering operations. They are interested in avoiding expensive fines. False positi

Financial institutions are not interested in being good at catching money laundering operations. They are interested in avoiding expensive fines. False positives are really bad for customer relations.

msdos 10y ago
When a bank loses money they pay for it. It happens often, for millions, says a friend who works in fraud analysis.
- mifreewil 10y ago
  You are talking about fraud (I'm assuming wire fraud, chargebacks, stolen accounts, etc.) which I would put in a different category of risk for a financial institution than money laundering. These activities would lead to direct losses, whereas money laundering would not. I assume allowing laundered money through your institution is of less concern, since it would not lead to a direct loss to the institution. This is assuming you are not knowingly allowing the laundering to occur and you are following all AML and KYC regulations meant to prevent money laundering. If these standards are not met, it may lead to fines and having regulators watch your institution more closely.
  - PeterisP 10y ago
    Wire fraud and stolen account schemes generally get eliminated/caught because of laundering issues, not because of how they do the actual fraud; and for large cases of fraud / large stolen accounts, the laundering capacity limits the total amount. Good AML provisions help reduce your fraud losses, even if you decide to make some "exceptions" for your VIP customers.
  - ellius 10y ago
    It's actually the opposite of fraud, because laundering money involves transactions which frequently make a great deal of money for the bank. Look at the fat fees Goldman Sachs earned setting up the 1MDB transactions for Malaysia. There was a lot of speculation around the financial crisis that banks opened their doors to money launderers because it was the only available liquid asset available in sufficient quantity to keep them solvent. So the bank actually has an incentive to launder money, so long as it can do so without being caught and fined or having its employees go to jail. The point below is true though. Many of the same markers of fraud indicate money laundering, and having a good risk program can reduce both if that's your intention.
- mahyarm 10y ago
  Fraud and money laundering fine avoidance are two different things.
MichaelGG 10y ago
Certainly the only moral thing to do is the absolute minimum to avoid being shut down. Money laundering is not ethically wrong and making it a crime is a great example of government overreach.
- r00fus 10y ago
  Money laundering is not a crime? It's required to finance certain crimes, or to cover them up. It's not victimless.
  - MichaelGG 10y ago
    It's like civil forfeiture. It's LE being lazy or saying they can't figure out the real crime, so they'll just go after people's assets instead.
  - Pinckney 10y ago
    Private communications are also required for certain crimes, or to cover them up. Should we require that Apple monitor phone conversations for evidence of crime?

msdos 10y ago

When a bank loses money they pay for it. It happens often, for millions, says a friend who works in fraud analysis.

mifreewil 10y ago
You are talking about fraud (I'm assuming wire fraud, chargebacks, stolen accounts, etc.) which I would put in a different category of risk for a financial institution than money laundering. These activities would lead to direct losses, whereas money laundering would not. I assume allowing laundered money through your institution is of less concern, since it would not lead to a direct loss to the institution. This is assuming you are not knowingly allowing the laundering to occur and you are following all AML and KYC regulations meant to prevent money laundering. If these standards are not met, it may lead to fines and having regulators watch your institution more closely.
- PeterisP 10y ago
  Wire fraud and stolen account schemes generally get eliminated/caught because of laundering issues, not because of how they do the actual fraud; and for large cases of fraud / large stolen accounts, the laundering capacity limits the total amount. Good AML provisions help reduce your fraud losses, even if you decide to make some "exceptions" for your VIP customers.
- ellius 10y ago
  It's actually the opposite of fraud, because laundering money involves transactions which frequently make a great deal of money for the bank. Look at the fat fees Goldman Sachs earned setting up the 1MDB transactions for Malaysia. There was a lot of speculation around the financial crisis that banks opened their doors to money launderers because it was the only available liquid asset available in sufficient quantity to keep them solvent. So the bank actually has an incentive to launder money, so long as it can do so without being caught and fined or having its employees go to jail. The point below is true though. Many of the same markers of fraud indicate money laundering, and having a good risk program can reduce both if that's your intention.
mahyarm 10y ago
Fraud and money laundering fine avoidance are two different things.

MichaelGG 10y ago

Certainly the only moral thing to do is the absolute minimum to avoid being shut down. Money laundering is not ethically wrong and making it a crime is a great example of government overreach.

r00fus 10y ago
Money laundering is not a crime? It's required to finance certain crimes, or to cover them up. It's not victimless.
- MichaelGG 10y ago
  It's like civil forfeiture. It's LE being lazy or saying they can't figure out the real crime, so they'll just go after people's assets instead.
- Pinckney 10y ago
  Private communications are also required for certain crimes, or to cover them up. Should we require that Apple monitor phone conversations for evidence of crime?