AML

Do multinationals have robust enough compliance procedures?

By February 11, 2015 No Comments
compliance procedures

Given the plethora of recent compliance mishaps by multinational banks, highlighted most recently by HSBC’s tax evasion scandal, the question arises as to whether multinational companies have robust enough compliance procedures. HSBC’s admission that “we review all Politically Exposed Persons annually at the highest levels within the group” suggests that the answer is not affirmative.

Despite the ambiguity as to whether HSBC are reviewing all existing clients or only reviewing current PEPs on their books, is it acceptable to only screen on an annual basis?

As PEPs are more likely to be involved with bribery, corruption and money laundering due to their positions, power and influence, multinationals should be doing more to ensure that their exposure to PEPs is effectively managed.

Additionally, with the release of the 4th amendment to the Anti-Money Laundering Act (AMLD4) the definition of PEPs will be expanded to include ‘domestic’ PEPs. Consequently, multinationals will be subject to an increased regulatory burden due to greater scrutiny being placed on PEPs.

Modern technology offers a solution. Online screening platforms allow companies to automate their PEP screening process. By using an automated service companies can screen their entire client portfolio instantly and on a daily basis.

Thus, given the risks PEPs pose, the implementation of new regulation and the fact that a solution is at hand the current compliance activities carried out by multinationals is below what is acceptable.

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