You really can’t move for de-risking at the moment.
It’s a super-hot topic. It couldn’t be much hotter if it sat under a magnifying glass at midday in the Sahara. Next to a radiator. Wrapped a blanket.
In recent times we have seen a particular focus on Money Service Businesses (MSBs), with firms such as HSBC and Barclays (in the UK) exiting these customer relationships. Just this week we saw Westpac in Australia take a similar approach.
Managing the risk
But does this help the broader financial system? The answer seems to be agreed as ‘no’. It drives both the ‘good’ majority of MSBs, along with the (potentially) rotten minority out of mainstream systems to a place where there may be less scrutiny.
Consider the old adage ‘keep you friends close, but your enemies closer’ (MSBs are not anyone’s enemies – but it helps illustrate my point I think).
I think this is a really interesting conundrum and it’s one I’ve been reading/thinking about.
So why the blog?
I posted an item about the owner of an MSB in the UK being jailed for failing to comply with ML regulations in a few AML groups on LinkedIn. Where possible I try to add a point/view rather than just post. So my comment here was ‘As de-risking continues apace in big firms, this probably doesn't help...’
My thinking? That if Dave Bank is considering de-risking and exiting its MSB relationships, discovering that an MSB owner has been jailed for non-compliance isn’t going to instil Dave Bank with confidence.
What was great was that it got a comment. Even better - it didn’t agree: Actually, I think it will have the opposite effect. Banks complain that one of the reasons that they have to de-risk is because they have no confidence in the way the regulations are enforced, this case shows that HMRC have developed a much more robust approach, which is to be applauded (thanks Simon).
You might be surprised I’m happy it didn’t agree, but for me this is the best bit of LinkedIn - the venturing of opinion and debate.
Unfortunately, there is now so much on LinkedIn (and people have so little time) that on a lot of occasions a quick scan is all you do. I’m guilty of this too. I’m a member of circa 40 groups and regrettably don’t visit many of them very often.
But an opinion – especially when it’s different from your own – it’s one of the best things that LinkedIn can deliver.
As LinkedIn posts love to tell you (with endlessly nauseating variations - one of my less enjoyed features actually), you learn more from stuff by being challenged than not. It has a point.
So whether you have a view on de-risking or anything else, why not share it?
(You can find various AML Groups on LinkedIn, but ICT also has its own dedicated Group where we post stories, blogs etc: https://www.linkedin.com/groups?mostRecent=&gid=4246170