H. Pierson

Oct 10 – Canada’s TD Bank (TD.TO), agreed to pay a combined $3 billion in penalties on Thursday as part of a settlement with U.S. authorities over charges it failed to monitor and prevent money laundering.

The issue highlights a recurring challenge in the financial industry. Intermediaries like banks are required to prevent the flow of funds for illicit activities, but in some cases, they have failed to detect crimes because of inadequate compliance systems or huge transaction volumes.

Here is an overview of some of the largest penalties imposed by U.S. regulators to resolve money laundering probes in the last decade:

BINANCE:

Binance chief Changpeng Zhao stepped down in November 2023 and pled guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement resolving a years-long probe into the world’s largest crypto exchange.

DANSKE BANK (DANSKE.CO)

Denmark’s Danske Bank (DANSKE.CO), opens new tab agreed to pay more than $2 billion in January 2023 to end probes into anti-money laundering failures as part of a guilty plea. The payout was divided between the U.S. government and Danish authorities.

SOCIETE GENERALE (SOGN.PA),

France’s Societe Generale committed to pay $1.4 billion in 2018 to settle investigations into its handling of dollar transactions in violation of U.S. sanctions against Cuba and other countries, and a separate dispute over anti-money laundering regulations.

GOLDMAN SACHS (GS.N)

Goldman Sachs agreed to pay $2.9 billion over its role in Malaysia’s 1MDB corruption scandal in 2020. The settlement with the U.S. Department of Justice and other U.S. and overseas regulators resolved a probe into the role its bankers played in helping steal cash from the Malaysian state fund, which Goldman helped raise.

STANDARD CHARTERED (STAN.L)

Standard Chartered settled on paying $1.1 billion to U.S. and British authorities in 2019 for conducting illegal financial transactions that violated sanctions against Iran and other countries.

The bank also paid U.S. authorities $667 million in 2012 for illegally moving millions of dollars through the U.S. financial system on behalf of customers in Iran, Sudan, Libya and Myanmar.

DEUTSCHE BANK (DBKGn.DE),

Deutsche Bank agreed to pay $630 million in fines to U.S. and UK regulators in 2017, for failing to prevent around $10 billion in suspicious trades being laundered out of Russia.

COMMERZBANK (CBKG.DE),

Commerzbank agreed to pay U.S. authorities $1.45 billion in 2015 to resolve an investigation of its dealings with Iran and other sanctioned countries as well as a separate probe of its money laundering controls.

Source: Reuters.com

It comes with encouraging news and a note of caution: Overall dollar losses are down $9 billion from the previous study year, but two decades of studying identity fraud show that the ups and downs require financial services providers and consumers’ ongoing vigilance to protect personally identifiable information.

The report sponsors share Javelin’s commitment to fraud prevention and education. Sponsors are AARP, Equifax, and FIS at the platinum level; TransUnion at the gold level; and BioCatch at the silver level. Javelin maintains independence in its data collection, analysis, and reporting.

The downward movement of the loss figures is a testament to the relentless efforts of the financial services industry to keep criminals at bay. However, criminals continually adjust their tactics, so much work remains to dramatically reduce the impact of identity fraud across the industry.

“Describing the current state of identity fraud trends as the butterfly effect is fitting,” said John Buzzard, Javelin’s lead fraud and security analyst and the report’s author. “Even minor occurrences can set off a chain reaction that has a significant impact on the daily lives and habits of identity fraud victims who may also be feeling ambivalent in the wake of a handful of recent bank failures such as Silicon Valley Bank.”

Highlights From This Year’s Report:

Total identity fraud losses were $43 billion. That’s down from $52 billion the year before, a decline of 17%.
Identity fraud scams victimized fewer people. Javelin credits this to consumer outreach by financial services and consumer advocacy groups, and stronger fraud prevention tactics at banks and credit unions. The decline in number of victims was 2 million, even as significant challenges persist in the overall battle against identity fraud and scams.
Identity fraud has a disproportionately severe impact on non-white households. Exposure to data breaches affects 27% of Hispanic households and 26% of Black households—a considerable difference from White households—and the gap widens when compared with Asian households. The report describes the heavy toll identity fraud exacts on its victims, explores several contributing factors, and provides recommendations based on these findings.
Significant reduction in new-account fraud. This is an indication that financial service providers are focusing more intently on identity and authentication practices through the use of fraud detection technology.

This year, for the first time, the report gathered victim impact statements, putting a human face to crimes that often shatter confidence, shred credit, and harm long-term financial well-being.

“It’s devastating to read impact statements from identity fraud victims, especially people who say things like, ‘After my identity fraud experience, my accounts were overdrawn, and I couldn’t pay my utility bills or buy food,’” added Buzzard.

This year’s report includes a 20th-anniversary retrospective that illustrates how technical innovations, societal changes, and economic indicators have influenced the past two decades of identity fraud activity and Javelin’s subsequent research.

The Growing Imperative for Robust Compliance

Financial crimes, identity fraud, and money laundering are escalating at an unprecedented rate, threatening the integrity of global financial systems. With over $10 billion in AML-related fines imposed annually and identity fraud losses exceeding $52 billion globally, financial institutions, fintech companies, and corporate entities must adopt stringent compliance frameworks. Regulators worldwide continue to tighten KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements, making governance and risk management an essential board-level priority.

Understanding KYC/AML and Digital Identity Verification

KYC and AML compliance involve rigorous processes to verify customer identities, assess risks, and monitor transactions to prevent financial crimes. Digital identity verification further enhances these efforts by leveraging AI, biometrics, and blockchain technology to authenticate identities in real time, reducing fraud and improving compliance efficiency.

Key Components of Effective KYC/AML Compliance:

Customer Due Diligence (CDD) & Enhanced Due Diligence (EDD): Ensuring thorough vetting of clients to detect suspicious activities.

Transaction Monitoring: Identifying anomalies and red flags that could indicate illicit transactions.

Sanctions & PEP Screening: Screening individuals and entities against regulatory watchlists.

Reporting & Record-Keeping: Ensuring compliance with legal requirements for documentation and reporting.

The Rising Cost of Non-Compliance

Failing to adhere to regulatory mandates has severe consequences, including:

Heavy Financial Penalties: Institutions collectively paid over $5 billion in AML-related fines in 2023 alone.

Reputational Damage: High-profile compliance failures erode stakeholder trust and investor confidence.

Legal & Regulatory Consequences: Non-compliance can lead to business restrictions, loss of licenses, and even criminal prosecution.

How Board Members & Executives Can Strengthen Compliance

Given the increasing regulatory expectations, board members and executives must:

Ensure their organizations implement comprehensive AML policies and risk-based frameworks.

Oversee the adoption of digital identity verification tools to enhance fraud detection.

Stay informed about evolving compliance regulations and emerging risks.

Foster a culture of compliance through continuous training and organizational awareness.

Board evaluation is a critical process that helps organizations assess the effectiveness of their boards of directors. In Nigeria, board evaluation is becoming increasingly important as the country’s corporate governance landscape continues to evolve. However, despite its importance, board evaluation in Nigeria faces several challenges. This article highlights some of the key challenges of board evaluation in Nigeria and proposes solutions.

Challenges of Board Evaluation in Nigeria

1. Regulatory Framework

The regulatory framework in Nigeria also poses a challenge to board evaluation. While the Nigerian Code of Corporate Governance recommends that boards should be evaluated regularly, there is no clear guidance on how to conduct these evaluations.

2. Cultural and Social Barriers

Cultural and social barriers also pose a significant challenge to board evaluation in Nigeria. In some cases, board members may be reluctant to criticize or evaluate their colleagues due to cultural or social norms. This can lead to ineffective evaluations and a lack of accountability.

3. Lack of Awareness and Understanding

One of the major challenges of board evaluation in Nigeria is the lack of awareness and understanding of the process among board members and stakeholders. Many boards in Nigeria are not aware of the benefits of board evaluation, and as such, they do not prioritize it.

4. Limited Expertise and Resources

Another challenge facing board evaluation in Nigeria is the limited expertise and resources available to conduct effective evaluations. Many organizations in Nigeria lack the necessary skills and resources to conduct thorough board evaluations, which can lead to ineffective evaluations.

Solutions to Challenges of Board Evaluation in Nigeria

1. Regulatory Guidance

To address the challenge of regulatory framework, it is essential to provide clear guidance on how to conduct board evaluations. The Nigerian Corporate Governance Code should be reviewed to provide more specific guidance on board evaluation.

2. Use of Technology

o address the challenge of cultural and social barriers, it is essential to leverage technology to facilitate board evaluations. Online evaluation tools can help to reduce bias and ensure that evaluations are conducted objectively.

3. Awareness and Education

To address the challenge of lack of awareness and understanding, it is essential to educate board members and stakeholders on the importance and benefits of board evaluation. This can be achieved through training programs, workshops, and seminars.

4. Development of Evaluation Framework

To address the challenge of limited expertise and resources, it is essential to develop a board evaluation framework that is tailored to the Nigerian context. This framework should provide guidance on how to conduct effective board evaluations.

Conclusion

Board evaluation is a critical process that helps organizations assess the effectiveness of their boards of directors. In Nigeria, board evaluation faces several challenges, including lack of awareness and understanding, limited expertise and resources, cultural and social barriers, and regulatory framework. However, these challenges can be addressed through awareness and education, development of evaluation framework, use of technology, and regulatory guidance. By addressing these challenges, organizations in Nigeria can conduct effective board evaluations that lead to improved governance and performance.

Short-Term

1. Market Research and Analysis: Understand demand and supply dynamics.

2. Diversification of Portfolio: Explore residential, commercial, industrial, and hospitality sectors.

3. Land Acquisition and Development: Secure strategic land banks.

4. Partnership and Collaboration: Foster partnerships with local and international investors.

5. Regulatory Compliance: Align with the regulatory bodies

Medium-Term

1. Affordable Housing: Develop affordable housing solutions.

2. Sustainable Development: Incorporate green building technologies.

3. Technology Integration: Leverage PropTech for efficient operations.

4. Expansion into New Markets: Enter new geographic markets.

5. Talent Development: Invest in staff training and capacity building.

Long-Term

1. Integrated City Development: Develop self-sustaining cities.

2. Infrastructure Development: Invest in supporting infrastructure (e.g., roads, utilities).

3. Real Estate Investment Trusts (REITs): Explore REITs for capital raising.

4. International Expansion: Enter global markets.

5. Innovation and R&D: Invest in new technologies and construction methods.

Regulatory and Policy Considerations

1. Housing Policy: Align with government initiatives.

2. Land Use regulation: Understand and navigate land ownership regulations.

3. Environmental Regulations: Comply with environmental standards.

4. Taxation and Fiscal Policy: Navigate tax regulations.

5. Industry Standards: Establish and maintain professional standards.

Financial Considerations

1. Access to Finance: Explore funding options (e.g., debt, equity).

2. Risk Management: Mitigate market, credit, and operational risks.

3. Cost Optimization: Improve operational efficiency.

4. Return on Investment: Optimize profitability.

5. Investor Relations: Foster strong relationships with investors.

Operational Efficiency

1. Project Management: Enhance project delivery timelines.

2. Supply Chain Management: Streamline procurement processes.

3. Customer Service: Improve customer satisfaction.

4. Maintenance and Facilities Management: Ensure quality maintenance.

5. Performance Monitoring: Track key performance indicators (KPIs).

Digital Transformation

1. Digital Marketing: Leverage online platforms for marketing.

2. Property Technology (PropTech): Adopt innovative technologies.

3. Data Analytics: Utilize data-driven insights.

4. Online Platforms: Establish online presence for sales and rentals.

5. Cybersecurity: Ensure data protection.

By addressing these strategy issues, real estate companies in Africa can:

– Enhance market share

– Improve operational efficiency

– Increase profitability

– Align with regulatory requirements

– Achieve sustainability

And ultimately achieve their 2025 business goals.

Short-Term

1. Crop Diversification: Explore new high-demand crops.

2. Mechanization and Technology: Adopt efficient farming equipment and technology.

3. Irrigation and Water Management: Develop sustainable water management systems.

4. Market Access and Linkages: Establish strong market relationships.

5. Regulatory Compliance: Align with Agricultural Quarantine Service and other regulatory bodies.

Medium-Term

1. Value Chain Development: Integrate processing, storage, and logistics.

2. Investment in Research and Development: Develop new crop varieties and farming techniques.

3. Partnerships and Collaborations: Foster strategic partnerships with local and international companies.

4. Capacity Building: Enhance staff skills and training.

5. Sustainability and Environmental Practices: Implement environmentally friendly farming practices.

Long-Term

1. Integration into Global Value Chains: Participate in international agricultural production networks.

2. Agricultural Industrialization: Develop agro-industrial parks and processing zones.

3. Regional Cooperation: Collaborate with neighboring countries.

4. Digital Agriculture: Leverage technology for precision farming.

5. Youth Engagement and Empowerment: Attract and train young farmers.

Regulatory and Policy Considerations

1. Agricultural Policy Framework: Align with the government’s agricultural policy.

2. Land Reform: Understand and navigate land ownership regulations.

3. Trade Agreements: Utilize bilateral and multilateral trade agreements.

4. Environmental Regulations: Comply with environmental regulations.

5. Taxation and Fiscal Policy: Navigate tax regulations.

Financial Considerations

1. Access to Finance: Explore funding options.

2. Risk Management: Mitigate market, credit, and operational risks.

3. Insurance and Crop Protection: Develop risk management strategies.

4. Cost Reduction: Improve operational efficiency.

5. Return on Investment: Optimize profitability.

Operational Efficiency

1. Supply Chain Management: Streamline input procurement and output marketing.

2. Inventory Management: Optimize stock levels.

3. Equipment Maintenance: Implement predictive maintenance.

4. Quality Control: Enhance product quality.

5. Performance Monitoring: Track key performance indicators (KPIs).

Digital Transformation

1. Digital Farming Platforms: Leverage technology for precision farming.
2. Data Analytics: Utilize data-driven insights.
3. E-Commerce Platforms: Establish online market presence.
4. Automation: Implement process automation.

5. Cybersecurity: Ensure data protection.

By addressing these strategy issues, agricultural companies in Nigeria can:

– Enhance productivity

– Increase market share

– Improve operational efficiency

– Align with regulatory requirements

– Achieve sustainability

And ultimately achieve their 2025 business goals.

Short-Term

1. Diversification of Export Products: Identify new high-demand products.

2. Market Expansion: Explore new international markets.

3. Compliance with Regulatory Requirements: Align with Nigerian Export Promotion Council (NEPC) and other regulatory bodies.

4. Logistics and Supply Chain Optimization: Improve efficiency and reduce costs.

5. Currency Risk Management: Mitigate foreign exchange volatility.

Medium-Term

1. Value Addition and Processing: Develop processing capabilities for raw materials.

2. Investment in Technology: Leverage digital platforms for trade facilitation.

3. Partnerships and Collaborations: Foster strategic partnerships with local and international companies.

4. Capacity Building: Enhance staff skills and training.

5. Brand Development: Establish strong Nigerian brands.

Long-Term

1. Integration into Global Value Chains: Participate in international production networks.

2. Diversification of Export Markets: Reduce dependence on traditional markets.

3. Development of Export-Oriented Infrastructure: Invest in ports, transportation, and storage facilities.

4. Research and Development: Invest in product development and innovation.

5. Regional Cooperation: Collaborate with neighboring countries.

Regulatory and Policy Considerations

1. The Export Promotion Guidelines: Comply with export regulations.

2. African Continental Free Trade Area (AfCFTA): Leverage opportunities.

3. World Trade Organization (WTO) Agreements: Understand and comply.

4. Taxation and Fiscal Policy: Navigate tax regulations.

5. Trade Agreements: Utilize bilateral and multilateral agreements.

Financial Considerations

1. Access to Finance: Explore funding options.

2. Risk Management: Mitigate market, credit, and operational risks.

3. Foreign Exchange Management: Optimize FX transactions.

4. Cost Reduction: Improve operational efficiency.

5. Return on Investment: Optimize profitability.

Operational Efficiency

1. Supply Chain Management: Streamline procurement processes.

2. Inventory Management: Optimize stock levels.

3. Shipping and Logistics: Improve delivery times.

4. Quality Control: Enhance product quality.

5. Performance Monitoring: Track key performance indicators (KPIs).

Digital Transformation

1. E-Commerce Platforms: Leverage digital trade platforms.

2. Data Analytics: Utilize data-driven insights.

3. Digital Payment Systems: Adopt secure payment solutions.

4. Automation: Implement process automation.

5. Cybersecurity: Ensure data protection.

By addressing these strategy issues, exports trading companies in Africa can:

– Enhance competitiveness

– Increase export volumes

– Diversify products and markets

– Improve operational efficiency

– Align with regulatory requirements

And ultimately achieve their 2025 business goals.

Short-Term

1. Metering and Customer Enumeration: Achieve 100% metering coverage.

2. Network Upgrade and Expansion: Improve distribution infrastructure.

3. Loss Reduction: Minimize technical and non-technical losses.

4. Revenue Collection Efficiency: Enhance billing and collection processes.

5. Customer Engagement: Improve customer service and experience.

Medium-Term

1. Smart Grids and Technology: Leverage technology for efficient distribution.

2. Renewable Energy Integration: Prepare for decentralized power generation.

3. Energy Efficiency: Promote energy-saving practices among customers.

4. Regional Cooperation: Collaborate with neighboring DISCOs.

5. Regulatory Compliance: Align with Nigerian Electricity Regulatory Commission (NERC) standards.

Long-Term

1. Decentralized Distribution: Explore mini-grids and embedded generation.

2. Electric Vehicle Integration: Prepare for EV adoption and charging infrastructure.

3. Grid Modernization: Upgrade transmission and distribution infrastructure.

4. Innovation and R&D: Invest in new technologies.

5. Capacity Building: Develop local expertise in power distribution.

Regulatory and Policy Considerations

1. Regulations: Engage with the Electricity Regulatory agency.

2. Government Policies: Align with Federal Government’s power sector reforms.

3. Environmental Considerations: Comply with environmental regulations.

4. Community Engagement: Foster positive relationships with host communities.

5. Investor Confidence: Ensure transparency and stability.

Financial Considerations

1. Investment Attractions: Access funding from local and international investors.

2. Cost Recovery: Ensure tariff stability and revenue assurance.

3. Risk Management: Mitigate operational, financial, and regulatory risks.

4. Public-Private Partnerships: Explore collaborative financing models.

5. Return on Investment: Optimize profitability.

Operational Efficiency

1. Outage Management: Minimize downtime and improve response times.

2. Maintenance Optimization: Implement predictive maintenance.

3. Supply Chain Management: Streamline procurement processes.

4. Workforce Development: Enhance staff skills and training.

5. Performance Monitoring: Track key performance indicators (KPIs).

Short-Term

1. Increase Generation Capacity: Invest in new power plants to meet growing demand.

2. Diversify Energy Sources: Explore renewable energy (solar, wind, hydro) to reduce dependence on fossil fuels.

3. Improve Plant Efficiency: Upgrade existing infrastructure to increase capacity factor.

4. Reduce Gas Constraints: Develop strategies to ensure reliable gas supply.

5. Enhance Maintenance: Implement predictive maintenance to minimize downtime.

Medium-Term

1. Invest in Smart Grids: Leverage technology for efficient grid management.

2. Expand Renewable Energy: Achieve 36% renewable energy target by 2030.

3. Develop Energy Storage: Integrate energy storage solutions for stability.

4. Regional Cooperation: Participate in West African Power Pool (WAPP) initiatives.

5. Private Sector Participation: Encourage PPPs and IPPs.

Long-Term

1. Decentralized Power Generation: Explore mini-grids and embedded generation.

2. Electric Vehicle Integration: Prepare for EV adoption and charging infrastructure.

3. Grid Modernization: Upgrade transmission and distribution infrastructure.

4. Research and Development: Invest in new technologies (e.g., hydrogen fuel cells).

5. Capacity Building: Develop local expertise in power generation and transmission.

Regulatory and Policy Considerations

1. Regulations: Engage with the Electricity Regulatory Agency.

2. Government Policies: Align with Government’s power sector reforms.

3. Environmental Considerations: Comply with environmental regulations.

4. Community Engagement: Foster positive relationships with host communities.

5. Investor Confidence: Ensure transparency and stability.

Financial Considerations

1. Investment Attractions: Access funding from local and international investors.

2. Cost Recovery: Ensure tariff stability and revenue assurance.

3. Risk Management: Mitigate operational, financial, and regulatory risks.

4. Public-Private Partnerships: Explore collaborative financing models.

5. Return on Investment: Optimize profitability.

Market and Competition

1. Market research: Identify emerging markets and trends.

2. Competitive analysis: Analyze competitors’ strengths and weaknesses.

3. Market positioning: Differentiate products and services.

4. Export expansion: Explore export opportunities.

5. Local content development: Increase local content in mining operations.

Operational Efficiency

1. Cost optimization: Reduce production costs.

2. Process automation: Automate manual processes.

3. Supply chain optimization: Streamline supply chain processes.

4. Energy efficiency: Invest in renewable energy sources.

5. Waste reduction: Implement waste reduction and recycling programs.

Regulatory Compliance

1. Mining Act compliance: Ensure compliance with Mining regulations.

2. Environmental regulations: Comply with environmental regulations.

3. Safety standards: Implement international safety standards.

4. Tax compliance: Ensure tax compliance.

5. Community engagement: Engage with host communities.

Digital Transformation

1. Digitalization of operations: Implement digital technologies.

2. Data analytics: Leverage data for informed decision-making.

3. Cybersecurity: Strengthen security measures.

4. Geographic Information System (GIS) adoption: Use GIS for resource mapping.

5. Automation: Automate mining processes.

Talent Management

1. Skills development: Invest in employee training.

2. Talent acquisition: Attract top talent.

3. Employee engagement: Enhance employee satisfaction.

4. Diversity and inclusion: Foster inclusive work environment.

5. Succession planning: Develop succession plans.

Partnerships and Collaborations

1. Local content partnerships: Partner with local suppliers.

2. Joint ventures: Form strategic partnerships.

3. Research and development (R&D) collaborations: Collaborate with universities.

4. Industry associations: Engage with industry associations.

5. Government partnerships: Collaborate with government agencies.

Solid Minerals-Specific Considerations

1. Mineral resource exploration: Invest in exploration activities.

2. Mining method optimization: Optimize mining methods.

3. Ore processing: Improve ore processing efficiency.

4. Environmental impact assessment: Conduct regular environmental impact assessments.

5. Community development: Invest in community development projects.

Key Performance Indicators (KPIs)

1. Revenue growth

2. Production volume

3. Customer satisfaction

4. Employee productivity

5. Return on Investment (ROI)

Best Practices

1. Conduct regular risk assessments

2. Engage with stakeholders (customers, suppliers, employees)

3. Invest in employee training and development

4. Implement robust risk management systems

5. Develop contingency plans for high-priority risks

By addressing these strategic issues, solid minerals companies in Africa can navigate the complex landscape and position themselves for success in 2025.

Here is an overview of some of the largest penalties imposed by U.S. regulators to resolve money laundering probes in the last decade:

The Growing Imperative for Robust Compliance

Understanding KYC/AML and Digital Identity Verification

Key Components of Effective KYC/AML Compliance:

The Rising Cost of Non-Compliance

How Board Members & Executives Can Strengthen Compliance

Challenges of Board Evaluation in Nigeria

1. Regulatory Framework

2. Cultural and Social Barriers

3. Lack of Awareness and Understanding

4. Limited Expertise and Resources

Solutions to Challenges of Board Evaluation in Nigeria

1. Regulatory Guidance

2. Use of Technology

3. Awareness and Education

4. Development of Evaluation Framework

Conclusion

Short-Term

Medium-Term

Long-Term

Regulatory and Policy Considerations

Financial Considerations

Operational Efficiency

Digital Transformation

Short-Term

Medium-Term

Long-Term

Regulatory and Policy Considerations

Financial Considerations

Operational Efficiency

Digital Transformation

Short-Term

Medium-Term

Long-Term

Regulatory and Policy Considerations

Financial Considerations

Operational Efficiency

Digital Transformation

Short-Term

Medium-Term

Long-Term

Regulatory and Policy Considerations

Financial Considerations

Operational Efficiency

Short-Term

Medium-Term

Long-Term

Regulatory and Policy Considerations

Financial Considerations

Market and Competition

Operational Efficiency

Regulatory Compliance

Digital Transformation

Talent Management

Partnerships and Collaborations

Solid Minerals-Specific Considerations

Key Performance Indicators (KPIs)

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