Extra vigilance needed

In this new era of extreme financial market volatility, vigilance when it comes to compliance and risk management has never been more important.

That was the message of John Atkinson, a speaker at this year’s Global Compliance Solutions: ‘Addressing the Trilogy: Regulatory Compliance, Risk Management and Anti-Money Laundering’ conference, held Monday at the Grand Cayman Marriott.

Mr Atkinson is a Director with Protiviti in the firm’s Regulatory Risk Consulting practice and a former regulator, having spent 30 years at the Federal Reserve Bank of Atlanta, and serving nearly 20 years as an assistant vice president in the Division of Supervision and Regulation.

His topic at the annual GCS conference – now in its fourth year – focused on global developments and money laundering trends and highlighted some important areas into which compliance officers and anti-money laundering personnel in Cayman need to be channelling their efforts right now.

Looking at the economic turmoil seen across worldwide markets in recent weeks, and in particular the consolidation of so many household-name banks, Mr Atkinson said that 15 to 20 years worth of activity had taken place in a period of a couple of weeks and he predicted another decade’s worth of movement could still take place in the near future.

‘For years we have seen a steady state across the markets but now the changes we have recently witnessed simply have not been built into current economic forecasting,’ he stated.

Mr Atkinson said that AML and compliance systems needed careful monitoring because typical cash flows that had been seen regularly in the past no longer represented the norm and could create false positives when assessing risk.

He went on to say that a result of government intervention, with bank and other financial institution bailouts taking place across the globe, would undoubtedly result in an increase in government intervention.

‘The trade off for banks receiving guarantees on their deposits and increased liquidity will be a slew of new banking regulations which will come about as a result of the current turmoil,’ he stated.

In addition, Mr Atkinson said that regulatory oversight would also increase in the future.

He predicted ‘massive changes’ as to how regulatory oversight would be conducted and that regulations and rules would be changed.

‘Financial stability won’t just be about ‘know your bank’ it will now be about ‘know your country.’ In a situation where everyone is in trouble, finding a safe haven for your money is not obvious. You may well experience new account activity from areas that you have not previously dealt with,’ he confirmed.

Looking specifically at how the economic turmoil may affect institutions in Cayman, Mr Atkinson said he had no reason to believe that retail banks in Cayman should be affected however there may well be knock-on effects from the consolidation of overseas banks with branches established in Cayman.

He concluded by saying that the most successful entities would be those who ‘know the risks; know the rewards.’