Question

. How does private banking intersect with money laundering? How can bankers safe-guard their institutions to avoid becoming involved in shady financial transactions through their private banking operations?

Answer 1

Private banking institutions are providing their clients with a higher amount of confidentiality and they will not reveal the nature of the transaction to any outsider so due the clause of the confidentiality the money which are deposited by investors into these private banks are highly confidential in nature and hence these banks are prone to money laundering because there can be illegal money which can be channelized into the system and invested and deposited into the private banks and hence, the confidentiality clause will be prohibiting the outsider to have access to the information about source of the money, & Money laundering becomes easier in private banking.

Private banking institution need to adopt anti money laundering rules which will be required in this institution to reveal the nature of the transaction and they can help the authorities in order to connect to the money trail and they should be trying to abide by all the rules and regulation regarding the disclosure of the source of the money which had been set by the government so depositors should be required to mention the source of the money before depositing into the bank so there will be a better transparency and money trail would be established in case of a fraud.

Private banking need to adopt better disclosure policies and it also needs to check source of money and it will be helping them in order to check with the trail of the money and establish the high level of transparency and maintain a balanced confidentiality so that interest of various parties are protected and hence private banking system are needed to abide by laws and regulation and they should be accommodating the regulatory agencies and they should not be countering the regulatory agencies and providing them support in case of a fraud and money laundering, and they can prevent themselves from shady transactions as well and they can be active in reporting the transactions to the regulatory authorities at times