As the European Union weighs a new raft of data protection standards, some bankers believe that they can't meet both anti-money laundering demands and Europe's privacy expectations, according to an academic.
Amendments to Hong Kong's data privacy law could restrict financial institutions from sharing data on suspected money launderers with branches outside of the special administrative region.
Even prior to the disclosure last month by HSBC Holdings Plc that it would "likely" be the subject of a formal enforcement action related to anti-money laundering (AML) and other violations, things did not look good for the bank, according to Saskia Rietbroek, a partner with nomoneylaundering.com.
HSBC Holdings Plc could pay as much as $1 billion for Bank Secrecy Act and U.S. sanctions violations, an amount that would overshadow previous fines for similar infractions, say sources.
Countries should ease their privacy restrictions that hinder cross-border data-sharing on suspicious transactions, according to a Toronto-based intergovernmental group of financial intelligence units.
Banks will receive fewer law enforcement data requests during the early stages of financial crime investigations as the result of new rules on cross-border transaction reporting, according to the head of the U.S. Treasury Department's financial intelligence unit.
A renewed emphasis on customer data privacy in the European Union is making it difficult for U.S. financial institutions to conduct background checks on EU customers, and in some cases has exposed them to fines, according to legal consultants.
Because data protection laws in Europe and elsewhere make it difficult for a multinational financial institution to share data among all of its branches, the laws "will be the biggest impediment to protection from terrorism," the officials said.
Legislation setting the new cross-border cash declaration rule is aimed at stopping cash smuggling across the EU which is becoming more prominent as financial institutions tighten their anti-money laundering initiatives.
A study of cross-border transactions in the Middle East issued by a regional task force disappointed anti-money laundering professionals who say it offers few strategies for combating the criminal schemes it identifies.
Plans for a national identification system that would require personal information to be stored in state-controlled databases will boost bank costs associated with large-scale data breaches, according to privacy consultants and information policy analysts.