CEO of Febelfin, Karel Baert, responds to the publications of the FinCEN files. Be sure to read the opinion piece below.
It has been an intense week for the banking sector following the publication of the FinCEN files. Today I have been CEO of Febelfin for half a year. In addition to the corona crisis, this file is one that reverberates. It is good that the FinCEN files have come out, because they keep everyone sharp in the fight against organized crime. But unfortunately the FinCEN files suggest that the banks turn a blind eye to money laundering. This statement ignores the complexity of international payment traffic. Banks make enormous efforts to combat money laundering. They are a crucial link against organized crime, a link in a chain. And that chain always consists of several stakeholders.
No, we do not minimize the FinCEN files. Although this does show that banks have learned from mistakes, because it is thanks to this report that these files have come out. Although I believe we can do more. But we are hitting walls in this complex country. It is time that politicians also take their responsibility. In concrete terms, there must come an end to legislation that goes against the interests of society and there must be more cooperation. With the possible formation of a new government and the writing of a new coalition agreement, that moment has arrived.
Managing savings, granting credit and helping to ensure smooth payment transactions, all these activities contribute to economic growth. But they also entail risks, which banks are expected to manage. That is – without discussion – one of their most important tasks and their social responsibility.
The more complicated the service, the greater some risks become. International payments are a complex system framed by a network of intermediaries and processes based on international legislation and complex market practices. And yes, criminal organizations, drug cartels, money launderers and fraudsters abuse this by setting up structures that make it difficult to trace suspicious money flows. However, this complexity cannot be an excuse for not minimizing or excluding these risks. Never.
Just like notaries, accountants, etc., banks have a signaling function in the fight against money laundering. We are obliged to report suspicious transactions and persons to the anti-money laundering unit (CTIF-CFI). For example, CTIF-CFI received 25,991 reports in 2019.
Those reports must be examined one by one. First by the banks, then by the anti-money laundering unit and, where necessary, by the courts. Each link carries out its task individually. It is crucial that all stakeholders in the process can exchange information about developments in money laundering at the appropriate time. Where does the judiciary see new trends emerging? What new methods are criminal organizations using? In which countries are new front companies being established? Let banks and governments exchange information about suspicious transactions with each other in a secure environment so that they can react more quickly and prevent black money from being laundered.
Let banks and governments exchange information about suspicious transactions with each other in a secure environment so that they can react more quickly and prevent black money from being laundered.
And government must also play its role. The banks can do more if they are given the right tools to do so. New legislation must, on the one hand, embrace new technology and, on the other, under no circumstances undermine the obligations of banks in the fight against money laundering. It is a paradox to ask banks to extensively monitor customers and transactions for suspected fraud and to block them, and on the other hand to oblige the banks to accept any company as a customer (= basic banking service for companies). In doing so, the interests of society as a whole must be served and not of a few companies that have not yet fully adapted their internal operations to all the requirements of good governance.
Just as police officers on the road need a partner to track down criminals, banks also need partners in the fight against financial crime.
Karel Baert, CEO Febelfin