How we are fighting financial crime

We're putting our efforts into four areas:

The right controls

Ensuring our compliance systems match the risks inherent in the markets in which we operate.

Our point of view

"We want to be the best international bank, and we recognise we cannot be that bank without being a leader in fighting financial crime. It's not one or the other. And a core part of getting that right is developing controls that take into account the risks that we face as a bank around the world."

Patricia Sullivan, Global Co-Head Financial Crime Compliance

The right controls

Ensuring our compliance systems match the risks inherent in the markets in which we operate.

Our point of view

"We want to be the best international bank, and we recognise we cannot be that bank without being a leader in fighting financial crime. It's not one or the other. And a core part of getting that right is developing controls that take into account the risks that we face as a bank around the world."

Patricia Sullivan, Global Co-Head Financial Crime Compliance

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We’re working hard to ensure our business is backed by robust financial crime compliance efforts that address the inherent risk of the people, companies and markets that we serve. To enhance our financial crime controls, we’ve made substantial investment in new systems and processes, in training for our frontline and compliance staff, and in our people. But we know that we need to continue to innovate in order to help to keep the financial system secure from criminals and terrorists.

2018 saw the roll-out of some important new tools and processes that have the potential to transform the efficiency and effectiveness of our approach, following a number of successful proof of concepts.

New machine learning technologies offer possibilities to crunch vast quantities of data quickly and to finetune our financial crime surveillance tools; crucially freeing up time for specialists to investigate potentially suspicious behaviour and transactions.

And as technology gives criminals a growing arsenal of digital tools to generate and conceal illicit funds, we’re responding by bringing together specialist disciplines inside the Bank across cyber and financial crime. This is spearheaded in the US by our integrated ‘CyFi’ Intelligence unit.

 

Progress

"The financial crime landscape continues to evolve, and we recognise the need to be vigilant against new and transforming threats as well as adapting to changes in relevant regulation and sanction regimes. In 2017 we built a dedicated Cyber Financial Intelligence team in the US."

Mark Smith, Group Chief Risk Officer

Financial Crime Fighters

Financial crime professionals across the Bank work every day to implement the enhanced controls that we are putting in place. This is one story from across our network.

Using financial data to fight illicit organ trafficking | Financial Crime Compliance Analyst, Pakistan

During the transaction surveillance process, it came to light that a client – a jeweller, based on the Bank’s record – had received frequent SWIFT remittances over a short period. Each of these had been credited to his local currency account, and had been immediately withdrawn as cash. A review of the payment details revealed the funds were received from a hospital abroad as commission payments for liver transplants.

Our analyst followed up. The client stated that he is a doctor using his account for remittances from his patients. Yet he was unable to produce any documentary evidence to back this up – such as a medical degree, agreements with the relevant governments, or patient details.

Our analyst escalated the inconsistencies along with the fact that the client had initially not disclosed his actual profile. He also raised his suspicion that the client was carrying out an illegal activity: receiving remittances as commission against human organ transplants. The Bank’s employee disclosed this to Pakistan’s Financial Monitoring Unit, which leads efforts to fight against Money Laundering and Terrorist Financing. The client’s account was exited from the Bank and our systems updated to restrict his on-boarding in the future.

Our Annual Financial Crime Risk Symposium

Speaker at the Annual Financial Crime Risk Symposium

At Standard Chartered, we’re committed to developing our teams working in Financial Crime Compliance. In 2016 we established an annual event, bringing together over 2,000 analysts from our Financial Crime Surveillance Unit and Customer Due Diligence teams to explore new imperatives and opportunities in the fight against financial crime.

A speaker at the Financial Crime Risk Symposium

Instead of sending a few analysts to an external conference, we deliver a high calibre event for our staff, including interactive case studies and external speakers such as Mr. Khoo Boon Hui aka Paul Khoo (former president of Interpol) and Rick McDonnell (former Executive Secretary of the Financial Action Task Force).

Speaker at the Annual Financial Crime Risk Symposium

The theme of 2018’s symposium was “The Analyst of the Future” and the event looked back on the Bank’s journey to strengthen its financial crime controls and ahead to new challenges and the need for analysts to continually learn new skills and knowledge to meet emerging threats. The programme included a keynote speech from Paul Khoo on the financial crime landscape and a focus on the risks of FinTech products and how the Bank is innovating and investing in RegTech to mitigate these risks and make its financial crime controls more effective and efficient.

Supporting governance through board level oversight

Some reflections from Sir Iain Lobban, Independent advisor member of Standard Chartered’s Board Financial Crime Risk Committee and former Director of the British Government Communications Headquarters (GCHQ)

Next steps

“We've improved our controls and we want to go further. That means using state-of-the-art technology and data analytics to try and identify those persons and transactions who are really trying to abuse this organisation and launder criminal proceeds. We have a lot more to do and we are committed to completing the job that we have started.”

Patricia Sullivan, Global Co-Head Financial Crime Compliance

Our point of view

"Ensuring we live by the high standards we set for ourselves is not only the right thing to do, but is an essential part of how we do business. Everyone at the Bank has a meaningful contribution to make in the fight against financial crime."

Tanuj Kapilashrami, Group Head, Human Resources

At Standard Chartered we have the privilege, opportunity and responsibility to be a force for good in the markets in which we operate. Given the important role the financial system plays in the lives of our customers, and the development of economies and societies around the world, the conduct of the banking industry matters.

Ensuring we live by the high standards we set for ourselves is not only the right thing to do, but is an essential part of how we do business.

Everyone at the Bank has a meaningful contribution to make in the fight against financial crime.

A key component of this is making sure that we are equipped to identify and respond to the financial crime risks arising out of the work we do. That is why we are committed to helping every member of our staff to understand how conduct, including preventing and detecting financial crime, is integral to our day-to-day work.

As part of this effort, we’ve launched a multi-year internal campaign - ‘The Whole Story’ - to engage our staff through the use of real-life examples and by showing them the human cost of financial crime. The Whole Story goes beyond rules and regulations, and demonstrates the real and positive difference our staff can make.
We believe that helping our people to behave in a way that meets the expectations of clients, stakeholders, regulators and the communities in which we operate is a true competitive differentiator for Standard Chartered.

Our ‘Whole Story’ Campaign

Strengthening our conduct so that each and every one of us sees preventing and detecting financial crime as integral to our day-to-day work.

The cost of failing to prevent financial crime is high. Behind the dollars and cents there are real human stories. But more often than not, those stories are untold. The Whole Story, Standard Chartered’s internal campaign, aims to bring these stories to life and ensure that all of our staff understand the role we play in combating financial crime.

The first phase of The Whole Story launched in late 2015 and highlighted some of the stark realities - and often hidden nature - of crimes such as human trafficking, forced labour, drug trafficking and terrorist financing, and explained how the proceeds of this illegal activity are laundered through the financial system.

Download the PDF here

The cost of failing to prevent financial crime is high. Behind the dollars and cents there are real human stories. But more often than not, those stories are untold. The Whole Story, Standard Chartered’s internal campaign, aims to bring these stories to life and ensure that all of our staff understand the role we play in combating financial crime.

The first phase of The Whole Story launched in late 2015 and highlighted some of the stark realities - and often hidden nature - of crimes such as human trafficking, forced labour, drug trafficking and terrorist financing, and explained how the proceeds of this illegal activity are laundered through the financial system.

Download the PDF here

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The campaign was rolled out globally to staff across our 67 markets. It created wide debate across the Bank due to the hard-hitting and often shocking nature of the stories it told. With that came an increased understanding of the role that we as a firm – and as individuals - play in the fight against financial crime.

A year later we launched the second phase of The Whole Story, featuring real life examples of staff from across the Bank who had acted on their suspicions. We wanted to recognise the contribution these individuals have made, whether it’s by spotting a discrepancy in a client’s source of income, following sanctions procedures when processing payments, or simply by remaining alert to possible bribery and corruption risks.

Download the PDF here

The campaign was rolled out globally to staff across our 67 markets. It created wide debate across the Bank due to the hard-hitting and often shocking nature of the stories it told. With that came an increased understanding of the role that we as a firm – and as individuals - play in the fight against financial crime.

A year later we launched the second phase of The Whole Story, featuring real life examples of staff from across the Bank who had acted on their suspicions. We wanted to recognise the contribution these individuals have made, whether it’s by spotting a discrepancy in a client’s source of income, following sanctions procedures when processing payments, or simply by remaining alert to possible bribery and corruption risks.

Download the PDF here

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Our approach to conduct

How we conduct our business is integral to everything we do – from how we work as an organisation, to how we support our clients and each other. To help our people meet the high standards of conduct and behaviour that we expect of them, we have developed a set of principles that outline how good conduct is embedded into the way we do business and explains how the different elements of conduct fit together.

This includes the governance arrangements or business practices we have in place, protecting confidential information, the resilience and security of our systems, fighting financial crime, the examples our leaders set, the diversity of our workforce, and how we are rewarded for good behaviour.

All of this impacts on our clients, the service and products we provide, the markets and communities in which we operate, and the trust and confidence we instil.

We have sharpened our focus on all aspects of conduct, not simply on combating financial crime. Some of the additional work we have been doing in this area includes:

#knowtherules – an internal campaign aimed at ensuring all our staff understand and follow our policies, what is expected of them and the risks to the Bank of non-compliance, to help our staff do the right thing.

Refreshing our Group Code of Conduct, a document that helps all of us to understand the standards of behaviour we should demonstrate in our day-to-day work.

It Matters - an internal education programme that uses real examples and dilemmas from our businesses to help our people make better judgements and decisions around conduct.

Speaking Up – encouraging all staff to speak frankly, escalate problems, and be courageous. We provide a secure, independent and confidential channel to support this.

#Doingtherightthing – an internal campaign moving beyond rules and policies, thinking more broadly about the way we do business and how we can be more of a ‘force for good’, something to which we continuously aspire.

Next steps

"We want to create a culture in which people are empowered to make the right decisions, exercise good judgment and do the right thing in all aspects of their jobs – especially when the decisions they’re making aren’t clear cut. Together, we will continue to aspire to the high standards we set for ourselves and, in so doing, ensure the success of our business in the long term."

Tanuj Kapilashrami, Group Head, Human Resources

Helping to raise industry standards

Working hand-in-hand with client banks across the world to improve practices.

Our point of view

"By sticking with our local correspondent banking customers we can safeguard their access to the financial system, support our commercial footprint and build strong relationships with clients. We can protect and enhance financial inclusion around the world by working with local partners and bringing them into our risk framework.”

Heidi Toribio,  Managing Director and Global Head, Banks and Broker Dealers

Helping to raise industry standards

Working hand-in-hand with client banks across the world to improve practices.

Our point of view

"By sticking with our local correspondent banking customers we can safeguard their access to the financial system, support our commercial footprint and build strong relationships with clients. We can protect and enhance financial inclusion around the world by working with local partners and bringing them into our risk framework.”

Heidi Toribio,  Managing Director and Global Head, Banks and Broker Dealers

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De-risking through education

We have developed a unique strategy called ‘de-risking through education’ which aims to manage the financial crime risk in our correspondent banking portfolio, support growth in emerging markets and promote financial inclusion. As part of this initiative, we partner with our respondent banks who are looking to improve their financial crime controls, and share our tools and experience to help them build robust controls for managing financial crime risk.

This is done through a series of events called ‘Correspondent Banking Academies’, where we educate our clients on international best practices in financial crime compliance as well as giving clients access to the eLearning materials we use at Standard Chartered.

“We take our responsibility as a leading international bank seriously and continue to invest significantly in improving standards across our markets through our correspondent banking and new NGO academies.”

Bill Winters, Group Chief Executive

The MENAP Correspondent Banking Academy

Standard Chartered hosts a series of Correspondent Banking Academies across the world to share our tools and experience to help our respondent banks build robust controls for managing financial crime risk. One example was the Academy we hosted in the Middle East, bringing together more than 100 representatives from respondent banking clients, regulators and law enforcement.

The MENAP Correspondent Banking Academy

Standard Chartered hosts a series of Correspondent Banking Academies across the world to share our tools and experience to help our respondent banks build robust controls for managing financial crime risk. One example was the Academy we hosted in the Middle East, bringing together more than 100 representatives from respondent banking clients, regulators and law enforcement.

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Halting the decline of correspondent banking

“As banks, regulators, policymakers and law enforcement agencies address the challenge of tackling money laundering and the financing of terrorism, one outcome is that some banks are choosing to de-risk their business by exiting correspondent banking in certain markets, with very real implications for the global economy.”

David Howes, Global Co-Head of Financial Crime Compliance


The Wolfsberg Group Secretariat has published a New Correspondent Banking Due Diligence Questionnaire along with a set of guidance material (Completion Guidance, Frequently Asked Questions (FAQs) and Glossary)

February 2018


The WSJ’s Samuel Rubenfeld on Sigma Inc. the New Ratings Firm Measuring Banks' Financial-Crime Vulnerability (paywall)

October 2017


Heidi Toribio, Standard Chartered, Managing Director and Global Head, Banks and Broker Dealers on Building up the capabilities of respondent banks in FT Letters to the Editor (paywall)

September 2017


The WSJ explains: Standard Chartered Turns to Education to Manage De-Risking (paywall)

July 2017


Rolling up the welcome mat – the Economist reports on how A crackdown on financial crime means global banks are de-risking (paywall)

Charities and poor migrants are among the hardest hit.

July 2017


Our perspective on ‘Promoting financial inclusion with safe and secure correspondent banking’, in the Global Banking & Finance review

David Fleet, Managing Director, Client On-boarding and Management, Standard Chartered sets the scene: “Access to safe, high-quality banking is something often taken for granted”.

June 2017


Chatham House research paper on ‘The Impact of Banking Restrictions on UK NGOs

RUSI researchers find that banks are seen to be restricting the work of humanitarian NGOs and “impeding the effectiveness of the UK government's aid budget” through de-risking activity.

April 2017


Standard Chartered’s perspective on ‘Managing risk in emerging markets

Report offering companies currently conducting business in emerging markets, or seeking to do so, tips and advice.

20 October 2016


IMF and World Bank event on ‘Financial Inclusion not Exclusion: Managing De-Risking

Fintech innovation and successes from emerging countries and the private sector show tangible progress toward Universal Financial Access 2020, but de-risking is undermining these efforts.

7 October 2016, Washington D.C.


Standard Chartered’s perspective on ‘Promoting financial inclusion in correspondent banking

Anurag Bajaj, Global Head of Banks, Transaction Banking on efforts being made to ensure that correspondent banking remains a lifeline of commerce, facilitating and financing trade and cross border financial flows.

September 2016


Oxfam and the Global Centre on Cooperative Security on ‘Understanding bank de-risking and its effects on financial inclusion

Report based on a four-month exploratory study on the impacts of bank de-risking practices on financial inclusion, carried out between November 2014 and February 2015.

November 2015

Forging new partnerships

Taking the lead on establishing new collaborative models to tackle financial crime.

Our point of view

"Money laundering facilitates pernicious crimes such as human trafficking, terrorist financing and the illegal wildlife trade. So it is essential for banks to improve the detection and reporting of suspicious activity. Efforts are underway but broad public and private collaboration is required if we are to transform the financial system into a more hostile environment for criminals."

David Fein, Group General Counsel

Forging new partnerships

Taking the lead on establishing new collaborative models to tackle financial crime.

Our point of view

"Money laundering facilitates pernicious crimes such as human trafficking, terrorist financing and the illegal wildlife trade. So it is essential for banks to improve the detection and reporting of suspicious activity. Efforts are underway but broad public and private collaboration is required if we are to transform the financial system into a more hostile environment for criminals."

David Fein, Group General Counsel

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Our approach

We're working with regulators, law enforcement, civil society and other global banks to forge new models for combating financial crime. By bringing together banks and governments, and breaking down traditional silos, we can improve the effectiveness of existing frameworks to combat financial crime and create more actionable intelligence.

How to beat the money launderers

Banks must work with governments to stop financial crime being the world’s most profitable industry

Standard Chartered is a member of The Wolfsberg Group of International Financial Institutions, which first came together in 1999 to address money laundering risks in private banking. At the time, there was a growing concern that private banking was being targeted by kleptocrats to hide illicit funds offshore and that financial institutions needed to do more to fight financial crime.

Since then, the Group’s overarching goal has been to provide practical, effective ways to protect the integrity of the financial system. As regulatory expectations have increased, the need for expert practitioners to provide sensible and effective ways to operationalise these regulations has become essential. This is where the Group plays a key role in bringing together Global Heads of Compliance and Financial Crime Compliance to exchange opinions and share best practices. The conclusions of these collaborative efforts are usually published for information and use by the industry; as well as to inform policy makers, standard setters, supervisors and regulators.

The Group has issued standards and FAQs on many of the key aspects of financial crime compliance, including;

Know Your Customer measures Trade Finance Principles guidance on Politically Exposed Persons (PEPs)

Recommendations on constructing an effective Anti-Bribery and Corruption (ABC) Compliance Programme

Correspondent Banking Due Diligence Questionnaire (2018) an initiative to help address the decline in correspondent banking relationships around the world

Trade-Based Money Laundering awareness video (2018) supplementing the 2009 Wolfsberg Trade Finance Principles and 2017 Trade Finance Paper

As the environment in which we operate is dynamic, it is important to refresh this body of work continuously.

One of the core principles of the Group is the spirit of “Collective Action.” Over the years, members have built up a strong sense of partnership in order to achieve their common goals of effective financial crime risk management and safeguarding the integrity of the financial system. The Group also works with many non-members and remains ready to continue new collaborative efforts within the industry and beyond.

The membership of the Group had not changed since its inception, so we were particularly proud when Standard Chartered was admitted as a new member in June 2015. We see our membership as an honour and a privilege. Our involvement with the Group informs how we address financial crime risks and combat financial crime, while enabling us to play a positive role in shaping better practice in the industry.

Standard Chartered is a member of the Joint Money Laundering Intelligence Taskforce (JMLIT) - the UK’s new model for a collaborative approach to tackling money laundering.

JMLIT is a partnership between the UK government, law enforcement agencies and members of the financial sector, put in place to protect the UK’s financial system against money laundering. It is designed to help create stronger partnerships between governments, regulators, law enforcement, financial intelligence units and business to detect and prevent the flow of illicit funds across the globe and to enable the private sector and the public sector to work more closely than ever before to tackle financial crime.

The taskforce was formally established in May 2016, following a 12-month pilot and there are now over 25 financial institution members. It is organised into a number of groups, including:

The “Operations Group” through which vetted financial sector members of the taskforce meet in person to collaborate with law enforcement on active investigations.

A number of “Expert Working Groups” tasked with building knowledge on key financial crime threats, including generating intelligence bulletins and alerts, and facilitating a coordinated approach to fighting financial crime.

Standard Chartered has been a taskforce member from day one of the pilot. Today we are a member of the Operations Group and all of the Expert Working Groups, and chair the Expert Working Group on human trafficking and organised immigration crime.

You can read more about JMLIT, its objectives and members here.

At Standard Chartered, we want to apply what we've learnt in tackling other forms of financial crime to take the fight to wildlife traders' doors. That’s why we’re working to raise the profile of this crime within the financial sector, strengthen the collective understanding of its financial footprint, and have played a central role in establishing a transnational coalition of partners with the Royal Foundation’s United for Wildlife Financial Taskforce.

Next steps

“No one bank, acting alone, can make the whole difference in the fight against financial crime – just like no one government agency can do it alone. To be more effective, we need a paradigm shift that creates alignment as an industry and between the public and private sectors. By breaking down silos between and among financial institutions and regulators and law enforcement, we can be output-focused and genuinely disruptive of financial crime.”

David Fein, Group General Counsel

"The bad guys aren't standing still. Neither should we."

Bill Winters | Group Chief Executive

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