I have been bombarded with questions from Pacific Tycoon investors asking me about the effect The Panama Papers will have on international banking procedures. The answer is simple and difficult. If you come under the microscope of a bank, you have no choice but to provide the information they request, and satisfy their compliance demands. Nothing less will do.
Following the release of the Panama Papers, global banks have been subject to greater regulatory and law enforcement scrutiny To meet an increase in the demands of regulators, banks have had to adapt to changing operating conditions and move swiftly to address new compliance requirements.
The Panama Papers already has banks of all sizes preparing for greater regulatory scrutiny. There will be a temporary employee headcount increase in even smaller banks to handle the volume of work as a result of the new information. – Alan Morley, Head of AML and Compliance Practice at GFT
The changes which began in the aftermath of the global financial crisis, and introduced a stronger focus on compliance procedures, will be amplified by the release of the Panama Papers. The CDD rule for one – which the government hopes will come into effect for all institutions in May of 2018 – requires banks to verify identities, develop adequate client profiles, and conduct regular monitoring to ensure that customer information is current and correct.
Banks and other financial service firms are now expected to proactively gather as much intelligence as is available to them. Exercising prudent skepticism, banks must ensure that they can understand the nature and source of the transactions processed through accounts. Using technology and expertise, banks are investigating identities, uncovering discrepancies, and flagging suspicious customer details.
Banks, as intermediaries, are caught in the regulatory complexity of the financial services industry. This means that as the wake of the Panama Papers sweeps across the sector, even honest banks and customers will be scrutinized under a regulatory magnifying glass.