Financial Crime World

Financial Crimes in Banking Industry in Grenada: Evolving Risks and Regulatory Focus

Introduction

Regulators in Grenada are increasingly concerned about the evolving risks of financial crimes in the banking industry. These risks include terrorist financing, beneficial ownership, sanctions/tax evasion, consumer scams, and compliance violations.

Key Areas of Focus for Regulators

  • Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) frameworks: Preventing illicit exploitation of access to the U.S. financial system through shell companies and all-cash real estate purchases.
  • Fraud models, operations, and investigation processes: Ensuring robust systems are in place to detect and prevent insider corruption, cybercrime, and other types of fraud.
  • Digital assets: Expanding AML regulations to include assessing customer due diligence and suspicious activity reporting related to NFTs and DeFi platforms.

Emerging Risks

  • Cryptocurrencies and non-fungible tokens (NFTs): Money laundering and terror financing risks associated with these digital assets.
  • Sanctions and price cap compliance: Ensuring banks are compliant with all relevant sanctions and price caps, including those related to virtual currency mining and dark net markets.

Consumer Protection

  • Vulnerable populations: Identifying and mitigating fraud/scams directed at the elderly and servicemembers.
  • Robust systems in place: Establishing a culture of compliance and ensuring that all employees are aware of their roles and responsibilities in preventing financial crimes.

Addressing Evolving Risks

  • Mature conduct risk program: Ensuring banks have a mature conduct risk program in place, with a culture of compliance and clear roles and responsibilities for all employees.
  • Analytics and automation: Using analytics and automation to monitor activity and detect suspicious behavior.
  • Proactive identification: Identifying trends and vulnerabilities, and taking steps to mitigate these risks.

Recommendations for Banks in Grenada

  • Add analytics and automation to client onboarding processes
  • Eliminate antiquated technology that may be vulnerable to cyber attacks
  • Establish a mature conduct risk program with clear roles and responsibilities for all employees
  • Strengthen controls in regulatory focal areas, including AML/CFT and sanctions compliance

By taking these steps, banks can help to prevent financial crimes and maintain trust in the banking system.