WASHINGTON - A group of large international banks announced Monday that it has agreed to follow a set of 11 guidelines for combating money laundering in private banking operations.
The agreement, reached after two years of negotiations, commits bank officers who initiate client relationships to identify all the holders of accounts. It also requires the banks to take several other steps to reduce the possibility that their institutions could be used to launder dirty money.
ABN Amro Bank, Barclays Bank, Banco Santander Central Hispano SA, Chase Manhattan Private Bank, Citibank NA, Credit Suisse Group, Deutsche Bank AG, HSBC, J.P. Morgan & Co., Societe Generale, and UBS AG have signed the agreement. Their meetings were brokered by Transparency International, a Berlin nonprofit organization dedicated to fighting global corruption.
The guidelines, known as the Wolfsberg Principles, after the Swiss castle where they were negotiated, also require regular updates of customer files and detailed internal reporting of unusual activity that could signal money laundering.
The group's checklist for such activity includes: accounts identified only by a number, accounts whose owners reside in countries known to have poor money laundering controls, accounts held by individuals whose wealth derives from "high-risk activities" that are "known to be susceptible to money laundering," and accounts held by public officials.
The guidelines commit the banks to establishing "an adequately staffed and independent department responsible for the prevention of money laundering;" an account-monitoring system to uncover suspicious transactions; a written policy that lays out responsibility for different account-monitoring functions; regular reports to management; and training programs for employees.
The banks have agreed to retain all records related to their anti-money-laundering efforts for at least five years and to implement a program for monitoring any exceptions to the guidelines.
Mark Pieth, chairman of the Organizationp for Economic Cooperation and Development's Working Group on Bribery, said the announcement represents the first time a large group of banks have agreed to work together to fight money laundering.
"It helps to make it far more difficult to create slush funds for bribery and to hide corruption money in the regulated banking sector, since the level of awareness is raised substantially and in an internationally standardized way," he said.
Also on Monday, U.S. financial services regulators, in cooperation with law enforcement agencies and the financial services industry, released the first edition of a semiannual review of Suspicious Activity Reports, which banks and other financial institutions must file in cases of suspected money laundering and other financial crime.
The 35-page review, "SAR Activity Review: Trends, Tips & Issues," is designed to address the concern, often raised by institutions that file the reports, that they are simply pieces of regulatory busywork and are never put to use in prosecuting financial crimes.
The review documents the money laundering and other criminal cases that have been successfully prosecuted as a result of the activity reports.
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