Banking in the Americas - Compliance and Anti-Money Laundering

The Three Ds - Dilma, Donald and Douglas - Corruption in Politics, Banking and Finance

Keynote opening conference address by Frank Vogl at the FELABAN 49th annual assembly in Miami, November 15, 2015. 

Julia Vogl  "Causeway Bay"     -  from the Hong Kong Jungle-of-Concrete/Moongate series, Hong Kong, 2015. 

Julia Vogl "Causeway Bay" from the Hong Kong Jungle-of-Concrete/Moongate series, Hong Kong, 2015. 

A few days ago, The Financial Times started a major series of articles and posed the following question: Banks, formerly seen as the powerhouses of growth, are under pressure on every side. Regulation is piling up. Competitors are stealing business. And many lenders are shrinking fast. Is banking in terminal decline?”

The answer, I believe, is a qualified no. I would be more confident if bank executives operated to serve their communities and customers first, rather than themselves. This is the most important annual forum of leaders of finance in the Americas and each of you here today has an opportunity to bring change to your institution. As Christine Lagarde, Managing Director of the International Monetary Fund, has said:” Ethical behavior is key to financial stability...We need to address the deficit in ethics in the financial sector. This requires a change in culture.”

One aspect of the challenge relates to money laundering, which is widespread across the Americas. In the decade through 2012, the Western Hemisphere lost about $1.3 trillion through illicit financial flows, according to Global Financial Integrity. Vast sums of illicit finance flow from Latin and Central America into the United States – they are the product of commercial malpractice, corruption, and crime. Just imagine how much more real growth, real employment and real prosperity would exist if money laundering could be vastly reduced? 

Together we can work towards this goal. To achieve this we need to see the crime of money laundering within the broad context of corruption: the abuse of entrusted power for personal benefit.  

Let me start with the three Ds. Dilma Roussef is the President of Brazil; Donald Trump is a candidate for election as president of the United States; and, Douglas Flint is the chairman of HSBC. 

They highlight the fact that we cannot easily separate political, business and financial corruption.

 In each case we see major challenges ahead in 2016. All three Ds are enmeshed in corruption. Dilma, whose public popularity hovers around 10%, cannot evade the Petrobras scandal – a corporate/government corruption scandal of epic proportions. Donald tells us that he is very rich and that makes him qualified for being president of the United States – he is part of what is emerging as the most expensive Federal elections in U.S. history – it might involve $10 billion in campaign spending – much of which will be provided by a small number of very wealthy individuals. Never before has the mixture of money and politics been as prominent as today in the United States, nor has democracy been in such danger. And, Douglas’s bank, HSBC, is the poster child of the multitude of sins that have smashed public confidence in banking.

 The three Ds highlight key aspects of the grim current realities of corruption. They shape the context of our discussion here today.  Public trust is broken in many countries, in governments, in politics, in sport (FIFA) and in business, look at Volkswagen. To understand corruption in banking and finance we need to first set the stage by briefly discussing the political and the security environment in which the corruption thrives. 

..continued -- please see the full text of this keynote speech - Banking and Compliance in the Americas.