Banks in the firing line over AML practices
Recent reports have shone a light on how failure by banks in relation to international money transfers can allow paedophiles in Australia to finance child sexual slavery in other countries. Online child sexual abuse is a growing form of modern slavery, and financial services businesses can expect ever-increasing scrutiny from regulators and the public as to how they prevent having their services utilised to enable these abhorrent practices.
The Westpac case, where the bank suffered a record $1.3billion penalty for AML/CTF breaches, involved, among other things, allegations that the Bank failed to take appropriate action to detect and prevent money transfers suspected to involve child sexual abuse. Some 3,000 payments totalling almost half a million dollars were alleged to be involved.
The regulator, AUSTRAC, has a continuing focus on the use of international money transfers to participate in and facilitate child sexual slavery. The Fintel Alliance, AUSTRAC’s public-private partnership, reports that in 2019-20 one of its major achievements was
hardening the Australian border to child-sex offenders resulting in 25 detections of child exploitation material, the arrest of ten individuals for child related offending, and the rescue of children from harm
The prevalence of online child sexual abuse has grown markedly during the COVID pandemic, for a number of reasons that would appear obvious: more time spent online, restricted ability to travel to access child slavery services in person, a sense of greater anonymity during lockdowns. GRC Solutions’ Senior Compliance Adviser, Deidre Grover, highlighted this growing problem in a LinkedIn post in May 2020, and unfortunately in all likelihood these heinous crimes are no less prevalent in 2021.
As Deidre Grover points out,
The submission of high-quality, accurate and timely anti-money laundering suspicious matter reports is an extremely useful tool to assist in the detection, deterrence and disruption of online child exploitation. Likewise, effective customer due diligence is vitally important during the pandemic.
For that to happen, there needs to be better awareness of, and focus on, Modern Slavery across all staff in financial services businesses.
Unfortunately, Modern Slavery is still poorly understood in Australia, including by banking staff. The recent GRC Solutions Financial Services Benchmarking Report includes data that indicates that staff undertaking modern slavery training had a “misplaced confidence” in their existing understanding of modern slavery (page 32).
Reporting entities must provide AML/CTF risk awareness training to staff. It is a compulsory inclusion in their AML/CTF program and our experience is that AUSTRAC audits of reporting entities include close scrutiny of the adequacy of the training actually delivered: including its relevance to the particular staff and the particular ML/TF risks of the business, the staff to whom it is given, and the frequency it is repeated.
GRC Solutions offers the following resources to assist reporting entities in meeting their compliance obligations
Modern Slavery Resources
Suitable for a wide variety of staff including those working in procurement, compliance or risk roles as well as those working in a front-line capacity.
Modern Slavery Australia – incorporating content on the Australian Modern Slavery Laws
Our resources have been updated where appropriate to cover these recent developments.
AML/CTF Training for finance sector – covering the particular responsibilities of ADIs
Anti-Money Laundering– covering the responsibilities of financial services and other businesses in general