Kleptocracy goes mainstream

Product Manager for Global Compliance
Not that long ago, if you were to have said the word ‘Kleptocracy’ at a seminar or presentation, many people in the audience would have frowned, looked at the person next to them and shrugged their shoulders.
Kleptocracy goes mainstreamNow it is on almost everyone’s lips. Why? Because its impact has become immense globally – and that tends to get everyone’s attention.

What is Kleptocracy?

Closely tied to International Money Laundering, Kleptocracy is defined as:
”A society whose leaders make themselves rich and powerful by stealing from the rest of the people.”
Or, to put it another way, ‘thieves’ operating at the top end of the scale. In today’s world, that means having a hand in everything from seizing financial assets to stealing data that confers such power. In a word, we are talking about deep-seated corruption, often on a massive scale. And where there is kleptocracy, there is inevitably money laundering – the effort to legitimise wealth obtained through the commission of a crime. 
A sophisticated global network, including those from the worlds of business and politics - A.K.A. Kleptocrats - send money around the world with the click of a button, aided by those with the expertise to launder it through anonymous offshore companies. According to the International Monetary Fund, as much as 5% of the world's gross domestic product is laundered money and only 1% of it is ever spotted.

How can we conquer the Kleptocrats?

Financial institutions are increasingly being seen as a front line for detecting Kleptocracy. But it’s proving far from easy where they rely on traditional approaches for detection, often working through intermediaries to collect data and obtain a snapshot of what’s happening at any one time. Assumptions are often made, based on ‘how things look’ or seemingly ‘suspicious’ activity,  making it extremely difficult to ‘follow the money’. 

Meanwhile, for every advance made in tracking down the Kleptocrats and money launderers, they reciprocate with new, more sophisticated schemes. 

Those financial institutions that are making real headway in determining what is going on within their businesses are working with organisations like BAE Systems, on  automation and workflow solutions that utilise statistical and analytical techniques to identify patterns of unusual and suspicious behaviour, building profiles on each individual customer and comparing their financial activity against expected and peer group norms. 

At a time when global money laundering transactions are estimated at 2 - 5% of global GDP, or roughly U.S. $1-2 trillion annually , the need to have a global view of financial crime, with the flexibility to monitor and quickly update an organisation’s AML detection strategies, has moved well beyond the realms of ‘nice to do’ but has rapidly become a ‘must do’. 
Brian Ferro Product Manager for Global Compliance 4 September 2017