Almost nine months ago, we publishedepisode oneof the first-ever TNW podcast, Forensic Finance.
The second episode is finally here, this time on the topic of how banks detect money laundering.
According to the IMF, money laundering makes up 2-5% of all gross domestic product.
Doesnt sound like a lot?
It’s free, every week, in your inbox.
What does money laundering actually look like on the street?
And are banks part of the problem, or the solution?
How can technology help?Listen to the second episode of Forensic Finance to find out.
Callum Booth: 2 to 5% doesnt sound like a lot.
We cannot imagine such big numbers anyway.
Callum Booth: Because of emerging technologies, money laundering is incredibly difficult to investigate and prosecute.
But what exactly is it?
Im originally from Austria.
Ive been advising many governments regarding anti-money laundering policy.
I sit in EU working groups one on asset confiscation, one on virtual currencies.
The core thing is that you venture to hide the criminal origin of your money or proceeds of crime.
You venture to do this mostly by trying to put it into the financial system.
Callum Booth: The actual term money laundering originates further back, from Americas Prohibition era.
Money from drugs was the first one.
And in 2015 finally, tax crime was added.
They can set their own business next to the legal business and become a criminal business and undermine politics.
Callum Booth: This is still happening around the world.
Callum Booth: But lets zoom in.
Why should you and I care?
Theres unfair competition with honest and committed shop owners.
Callum Booth: The voice youre hearing is Jacqueline Makbouli.
Jacqueline Makbouli: Im a chair of a political party in Beverwijk.
And in Amsterdam, Im an advisor on public order and safety issues.
And I work daily on fighting the excesses of money laundering in the public domain.
So I know a lot about how it works on the streets.
Callum Booth: It was Makboulis work as a policewoman that got her interested in financial crime.
So we were wondering how that worked.
Callum Booth: There are some telling signs when a shop is involved in money laundering.
It doesnt look like somebody really wants to sell something.
You see different personnel there all day.
You dont see a lot of customers.
I have one in Amsterdam that is a butcher and he has a money transfer service.
So thats really strange because its not part of your plan when you start the shop.
Callum Booth: Certain kinds of shops are more likely used as money laundering sites than others.
Criminals like to work from real estate where its common that people walk in and out all day.
Most of the shops I mentioned have additional possibilities for money transfers.
Yet despite not making money laundering illegal until 2001, the Netherlands is considered a leader.
The law has expanded and expanded and becomes sharper and sharper in a very American style.
I dont think this is a good development.
Brigitte Unger: Money laundering depends on the compliance of the whole society.
Jacqueline Makbouli: Money laundering is on the rise.
And I think we should get more tools, easier tools in law to intervene better.
We have to do it quicker.
Because now we have to wait for long, long, long investigations.
Brigitte Unger: At the moment, banks have sophisticated systems to discover money laundering transactions… Anne van Petersen: My name is Anne, and Im a customer due diligence analyst at ABN Amro.
Callum Booth: Anne is part of ABN Amros Detecting Financial Crime department.
Anne van Petersen: I finished my studies and I have always been interested in economics and finance.
But I also want to do something more with a social purpose.
And thats why when I was finishing my studies, I stumbled upon this role as security analyst.
Callum Booth: Technology has been both good and bad for banks detecting money laundering.
But I think that technology will help or can help to detect criminals.
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And with our program, we scan our clients for if theres any negative news about them.
My job would be a lot harder without tech because we would have to do everything manually.
And I think that would be very difficult.
Callum Booth: Anne uses data collected by programs to determine if a client should be investigated.
And if its something suspicious, then eventually it will end up on my desk.
We use several open sources in our investigation.
If we have a full profile of the client, we will have some questions.
And we will reach out to the client.
And when thats done, all of the questions will be written down in a report.
And then in that case, we have to say goodbye to our clients.
Callum Booth: Banks like ABN Amro are increasingly incorporating new technologies, like AI, into their processes.
But ultimately, automation is there to help the banks employees improve effectiveness.
And I think that would be very difficult.
And you gotta think about how to approach clients.
I mean, its a very human job as well.
And you need interpretation.
In the end, its the human brain that has to decide if the risks are manageable or not.
And that can, in my opinion, not yet be replaced by robots.
Wed like to thank Brigitte Unger, Jacqueline Makbouli, and Anne van Petersen for sharing their stories.
Ive been Callum Booth.
Thank you for listening.
