Money Laundering Scandal Emphasizes Need for Better Procedure Management

News breaking about the money laundering scandal in South Africa serves as a harsh reminder that even the most sophisticated organizations are susceptible to corruption. As the BBC reports, information has come to light that major global banks “may inadvertently have been conduits for laundered money.” The reports allege that £400M was illegally transferred through the banks by South Africa’s President Jacob Zuma and an affluent Indian-born family.

How is this type of exploitation even possible? While it’s very likely the banks employ Anti-Money Laundering (AML) Software, which is developed to help prevent and/or report money laundering, it may not have been enough to raise flags about suspicious activity.

AML Software can help companies meet compliance and regulatory requirements mandated by global policing organizations, but it’s not enough to manage the thousands of policies and procedures banks must rely on to manage and react to daily activity.

If true that the banks in the scandal in South Africa were “inadvertently” a conduit, the implication is one or more of the following:

  • There were missing or out-of-date procedures that address the business being conducted
    • These may have been human errors, or possibly transactions without much human oversight – either way there was a gap between the execution of the transactions and proper business management
  • If there were appropriate, existing procedures defined, they were not followed
    • The procedures may have been difficult to find, access, and/or connect to the business transactions (either via a human, or through financial software management implementation)
    • Or because of intentional or possibly unintentional employee negligence

The only path that does not put banks at risk in this situation requires:

  1. Well-documented procedures that are up-to-date and provided in a timely manner
  2. Procedures that are easy to find and apply to the correct business transactions
  3. Consumption of procedures tracked through usage analytics and reporting, as well as frequent content and usage audits

If any of these three critical operating procedures processes cannot be proven by the bank, then the bank will likely be at risk even if there was intentional, individual employee negligence.

Global banking has some of the most complex and dynamic procedures of any business context and this story is yet another proof point that it’s not just about pushing files around a content management system. The content within policy and procedure files, how and when the procedures are used, and how easily the procedures can be associated with the appropriate business transaction is critical to the successful operations of regulated businesses.

But, it doesn’t require an enormous amount of complexity to ensure policies and procedures are effective. It’s time for global banks to adopt smarter and more automated content processes and move beyond simple word processing documents and PDFs. From content analytics, through contextual application of content, to AI and Machine Learning applications in content processing, Content Automation with Smart Content for procedure management is a requirement for modern businesses to be successful and mitigate costly risks.