The role of the banking sector in the fight against money laundering - findings from the FIU Annual Report 2023

In its 2023 annual report, the Financial Intelligence Unit (FIU) highlighted significant progress and challenges in the fight against money laundering and terrorist financing. The banking sector plays a central role in this, both as an actor in compliance with legal regulations and as a partner in international cooperation. This article looks at the most important information from a banking perspective.

1. quality instead of quantity: the new era of suspicious activity reports

In 2023, the FIU recorded more than 322,000 suspicious activity reports, a significant proportion of which came from the banking sector. Despite a 4.33% decrease in total reports, the FIU emphasizes that the quality of reporting has increased. This is not least the result of workshops and feedback discussions with particularly high-reporting obliged entities.

Banks benefit from this development by reducing the workload of their compliance departments: Fewer immaterial reports mean a better focus on the remaining analyses. At the same time, the requirements for the quality and precision of the submitted data are increased.

2. the impressive figure: 310 million euros in frozen funds

A key success of the FIU in 2023 was securing €310 million (compared to €3.7 million in the previous year) through 60 emergency measures. These measures are designed to stop illegal financial flows immediately and protect the financial system from damage.

How do emergency measures work?

Immediate measures allow the FIU to freeze suspicious funds and prevent them from being passed on. Banks play a key role in this:

• Suspicious transaction report: Banks recognize suspicious transactions and report them to the FIU.
• Analysis: The FIU reviews the report and identifies an urgent need for action.
• Measure: Suspicious funds are blocked in cooperation with banks and international partners.

3. the risk-based approach becomes the norm

The amendment to the Money Laundering Act introduced in November 2023 allows the FIU to apply an automated, risk-based filter for suspicious activity reports. Banks must adapt to this standard by focusing their internal monitoring systems more strongly on high-risk transactions.

The advantage: automated feedback from the FIU on submitted suspicious activity reports enables banks to react more quickly and optimize compliance processes.

4 International cooperation: the key role of banks

The FIU emphasizes that the cross-border exchange of information is an essential pillar in the fight against money laundering. Banks play a decisive role in this:

• Avoiding sanctions: Compliance with international sanctions, for example against Russia and Belarus, requires banks to precisely monitor and report conspicuous transactions.
• Counter Terrorist Financing Taskforce: Banks received clear information from the FIU on how to identify suspicious payment flows in connection with terrorist financing.

5. sensitization and cooperation

The Anti Financial Crime Alliance (AFCA) established itself in 2023 as a platform for the exchange of knowledge between authorities and banks. Workshops and conferences have focused on current risks, new threats and associated procedures. This open dialog enables banks to keep their compliance strategies up to date.

One outstanding area was the analysis of investment fraud and account takeover cases. Banks played a key role here by submitting suspicious activity reports at an early stage, which led to successful investigations.

6 Technological developments and data quality

In 2023, the FIU made progress in digitizing its processes, which also benefits banks:

• Automated data access: In future, banks will receive automated feedback on the relevance of their suspicious activity reports. This information can then be taken into account in the bank's own risk analysis.
• Data quality: Banks were encouraged to further optimize their reporting formats and bring them up to date with the latest technology.

These developments enable banks to work more efficiently with the FIU and at the same time modernize their internal processes.

Conclusion: The banking sector as a partner in the fight against money laundering

The FIU Annual Report 2023 clearly shows that banks are not just reporting offices, but active partners in the fight against money laundering. From the introduction of the risk-based approach to international cooperation and the digitalization of compliance processes - banks are facing new challenges that also offer great opportunities.

By adapting their systems to the new standards and seeking dialog with the FIU and other stakeholders, banks can further consolidate their position as an indispensable pillar of financial security. The report has a clear message: quality, cooperation and technology are the keys to effective anti-money laundering.