Global financial crime: information-sharing between the public and private sectors is essential

Cooperation between the public and private sectors is essential for identifying, analysing and neutralising potential financial crimes. This is reiterated in the report ‘Information sharing to combat illicit finance: global overview of public and private sector partnerships and data protection arrangements’, published on 8 July by the Financial Action Task Force (FATF), the intergovernmental body that works to protect the financial system from threats posed money laundering, terrorist financing and the proliferation of weapons of mass destruction.

This is demonstrated by a number of case studies cited in the report: in South Africa 60 current accounts, with a total value of 458,000 US dollars, were frozen following the dismantling of a pyramid scheme. In this case, the fraudsters impersonated a well-known online shop and asked their victims to pay money to join the remote working group. Participants in the Ponzi scheme would then have earned money – so the promise went – thanks to sales commissions.

In Singapore, meanwhile, a bank reported some suspicious activity by a company: invoicing at a value lower than the actual value of the goods, phantom shipments and the suspicious use of shell companies. Thanks to the information-sharing system, other banks also submitted reports of suspicious transactions. After analysing the banks’ findings, the financial intelligence unit forwarded the reports to the economic crime unit, and investigations began, focusing primarily on the company’s chief financial officer. The executive was subsequently sentenced to 20 years’ imprisonment for defrauding 16 financial institutions of a total of more than 469 million US dollars.

Worldwide, there are at least 84 public-private partnerships: of the jurisdictions surveyed, 52 reported having at least one and 18 reported having more than one. Such collaboration, in fact, proves to be a lasting and effective tool when supported by a solid legal framework, clear governance and technological innovation. More than 75 per cent of the jurisdictions covered by the survey use public-private partnerships to share strategic information, whilst more than half share operational information such as indicators of suspicious transactions or due diligence.

Technology is essential for these operations: encrypted platforms, and the involvement of digital platforms and telecommunications operators. According to the FATF, however, greater cooperation is needed with financial institutions, virtual asset service providers (VASPs), as well as with the non-financial sector and non-traditional stakeholders.