Tue 18 - Thu 20 November 2008 - Frankfurt am Main, Exhibition Grounds, Hall 5.1
No money for terrorists
E.B.I.F. presents IT solutions to counter money laundering
26 October 2004, Frankfurt - The financing of terrorism through money laundering – a problem which has been the focus of increasing public attention in recent years.
Since the beginning of 2004, banks and insurers have had to satisfy even more stringent conditions to put a stop to money laundering. Technical solutions for this delicate task can be seen at the leading trade fair for finance IT, the European Banking & Insurance Fair (E.B.I.F.), in October in Frankfurt.
Bomb attacks, hostage-taking, assassination attempts – since 11 September 2001, the seemingly endless spiral of terror continues to turn, in part because clever money-laundering operations are making the sources of funding for terrorist and criminal organisations hard to pinpoint and dry out. “Criminals are increasingly trying to funnel the proceeds of their crimes into the mainstream of legal financial and business transactions,” according to Dr. Thomas Spies, anti-money-laundering officer at the Deutsche Bank Group. This has devastating consequences which far exceed the direct effects of acts of terror and serious crime.
The International Monetary Fund estimates that between US $ 590 and US 00 billion is “laundered” worldwide each year. This means that the proceeds of criminal activities – through bogus transactions, opaque company network structures or complicated transfers from one account to the next – are so radically transformed that their actual origins are no longer discernible. Money laundering is vital to terrorist and criminal organisations: only with the aid of money laundering can illegal gains be put to legal use. With these proceeds, in turn, new crimes can be financed and investments made in the legal economy. Thus, the extent of financial power continues to grow; new markets and fields of operation are developed and new weapons purchased. Once it has begun to circulate in the legitimate economy, the laundered money causes distortions on capital markets, turbulence in the financial system and the bankruptcy of entire companies. Measures to combat money laundering contribute toward hindering illegal activities on financial markets and making them less profitable. In political terms, money laundering undermines democratic structures; in extreme cases, it can mean that financially weak countries become dependent on criminal and terrorist organisations.
Over the past few years, wide-ranging measures to curb money laundering have been launched worldwide. In Germany, the Money Laundering Act [Geldwäschegesetz (GWG)] went into effect as early as 1993 before being tightened even further from 1 January 2004. This law stipulates that financial institutions and insurance companies are required to take special precautions to combat money laundering. For instance, records must be kept of every deposit of EUR 15,000 or more, and no one may undertake such a transaction without furnishing proof of identity. The Act also places the institutions under an obligation to file a report on suspected money laundering for any case arousing suspicion. Furthermore, each institution now has a designated anti-money-laundering officer committed to dealing specifically with this issue. If negligent conduct is proven in a case of money laundering, he or she faces up to five years’ imprisonment. The various measures are being co-ordinated and monitored by the Federal Institute for Financial Services Supervision [Bundesanstalt für Finanzdienstleistungsaufsicht (BAFIN)].
All of these measures are in the banks’ and insurance companies’ own interest since money laundering, the financing of terrorism and fraud wreak massive damage on the reputation of individual institutions, and on Germany itself as a financial centre. On the other hand, the new rules lead to a considerable additional burden on the entire industry. “Even ten years after the GWG went into effect, a vast number of questions remain unanswered for insurance companies,” according to Bettina Huppenbauer, anti-money-laundering officer of the German Insurance Association [Gesamtverband der Deutschen Versicherungswirtschaft]. “Most problematic of all are the lists of terrorists against which we are required to compare our own data. These lists are often imprecise and require constant updating.”
In the absence of technical “upgrading”, the institutions cannot meet the new tasks they are called on to perform. “In actual fact, only IT-supported systems can meet the BAFIN guidelines,” says Thomas Schütz, Managing Director of Messe Frankfurt Ausstellungen. “Basically, anyone who dispenses with that is already involved in negligent conduct and, if the worse comes to the worst, will have to reckon with legal consequences.” The spectrum of IT solutions for monitoring foreign payment transactions in particular has broadened considerably in recent years. For the most part, the monitoring tool is placed as an electronic filter between payment transaction systems. Here, lists of suspicious persons and recipient countries are then imported electronically and brought up to date based on the state of knowledge of the bank as well as of the investigative authorities at home and abroad. The filter intercepts conspicuous payments for subsequent further review by specialists.
At the E.B.I.F., visitors can find out about the "SMARAGD" family of products offered by Cellent AG, one of the leading consulting firms in the field of information management and information services. These solutions incorporate the latest developments for monitoring terrorist financing operations, embargos and money laundering. "Together with our partner, CSK Software, we've developed an integrated SWIFT gateway for use with SMARAGD/Monitor. For every bank that manages its foreign payments using the SWIFT system, this represents a rapid and cost-effective way of integrating processes for monitoring embargos" says Klaus Spiesshofer, Sales Manager at Cellnet's Finance Solutions division. At HVG Group International, this solution has already been successfully implemented for the full range of foreign bank payments. And as Béla Steingassner of IBM also notes: “Due to the current spate of international terrorist activity, there has been an absolute increase in the need for technical solutions in the money-laundering area. We’ve been registering a marked increase in the demand for our products.” At this year’s E.B.I.F., the computer giant will be presenting its comprehensive fraud-detection solution, consisting of hardware, software and consulting. Likewise, TONBELLER, another exhibitor at the E.B.I.F. 2004, is not suffering from slack demand. “Our SIRON anti-money-laundering software is proving a big hit,” according to company spokesperson Renate Jalbert.
