The Committee of Experts on the Evaluation of Anti-Money Laundering (AML) Measures and the Financing of Terrorism (MONEYVAL) 2022 report makes for interesting reading. 

While there are some elements focusing on improvements over the last couple of years, it is actually the areas that are trailing that are the most interesting. 

The report highlights that money laundering prosecutions and confiscation were the two lowest areas of the eleven areas it was reporting on, whereas international co-operation is the only area meeting the minimum threshold and risk understanding a distant second. 

However, it also worth understanding some statistics for context. The report references that current estimates of money laundered worldwide ranging from $500 billion to a staggering $1 trillion. Whilst no reference is provided, this seems a reasonable estimate. The UK Government alone has estimated that money laundering in the UK could be a up to £100bn per annum. 

Let’s set this against the cost of compliance. Lexis estimated this at $274.1bn for in its 2022 report, which would put costs at a half to a quarter of laundered funds. Whilst compliance costs will be wider than laundering as it does include sanctions etc. as these are predicate crimes, the movement of funds is laundering. 

Now let’s compare that to the level of asset seizures. This is usually estimated at circa 1% of total elicit funds. The UK for example seized or confiscated £354m in 2022 compared to the potential £100bn mentioned above, which is around 0.3%. However, it should be noted that there is significant prevention in the fraud space in places like the UK and also some recoveries, albeit not sufficient.  

Looking just at fraud, less 1% of reported fraud ends up with a prosecution in the UK, so it is fair to say the current economic crime strategies are not working as we might hope. 

So, we have a high level of elicit funds, with a low-level confiscation, but with a very high cost of compliance. This suggests that a change in focus is required, away just from compliance and to greater levels of prevention and disruption. With disruption targeting elicit funds and assets, along with recovery and repatriation. 

One of the ways this can be improved, as is mentioned in the report, is through improved intelligence sharing and data sharing. Fortunately, we are seeing regulatory and legal progress in this regard.  

The European Commission is proposing clarity for fraud data sharing in its new Payment Services Regulation (PSR) and the Brazilian central bank has too with its new Resolution 6. The UK government is also supporting UK Financial Institutions (FIs) to share more from an AML and fraud point of view. And the EU has also recently proposed additional measures around confiscation of unexplained wealth. This covers all sorts of assets including crypto failure to explain how it was obtained will be enough to allow confiscation. 

Having FI’s, regulators and law enforcement agencies sharing, specific, rich data on known bad actors (IBANs, Beneficiary names, PII etc.), amalgamating data sets utilising Privacy Enhancing Technologies (PET) and sharing intelligence globally are all required if the level of prevention, recoveries and prosecution is to increase. 

CYBERA is well placed to support this with its actionable data sourced from victim reports and partnerships with law enforcement. 

About CYBERA   

At CYBERA we’re on a mission to stop money laundering and help protect customers from scams and other financial cybercrime. We close gaps that allow cyber criminals to thrive by sharing crime data in real-time with financial institutions, fintech, and crypto exchanges, and coordinating a global response to support customers who have become victims of financial cybercrime.   

CYBERA WATCHLIST™ helps support firms to reduce fraud and money laundering and meet regulatory requirements as part of a holistic fraud and financial crime strategy.   

Financial Institutions (FIs) can check against the CYBERA WATCHLIST™ for confirmed mule accounts when processing payments. For outbound & inbound payments, where there is a match on either IBAN (Account Number & Sort code) or on Name the transaction can be flagged as high risk.   

At account opening and ongoing CDD, email, phone and name can be used to match to CYBERCRIME WATCHLIST™ to reduce opening new mule accounts.   

CYBERA VSR™ further supports by providing users with alerts of any of their accounts reported as mules directly in their dashboard.   

Unlike other data sources, CYBERA is a global solution, so is well placed to support the increasing levels of cross-border real-time payments.