Scotiabank’s chief risk officer on the state of anti–money laundering
09 Oct 2019

Twenty years ago, anti–money laundering (AML) was an afterthought for most banks. Today, it’s at or near the top of the executive agenda. Daniel Moore is group head and chief risk officer at Scotiabank, one of Canada’s top five banks, with 99,000 employees and more than $1 trillion in assets. Recently, McKinsey’s Erez Eizenman spoke with him in Toronto about Scotiabank’s efforts to combat financial crime. An edited transcript of their conversation follows.

McKinsey: As chief risk officer, it’s your job to stay awake at night worrying about various risks. Where does money laundering rank?

Daniel Moore: I think the biggest challenge for banks these days is strategy and brand. There’s a lot happening on various fronts: regulation, competition, data, and technology. And in a low-rate environment, margins are challenged. But our main concern is to understand our industry’s competitive advantage, embrace it, and enhance it. One such advantage is customer trust. We have that today, and we need to value it. Customer trust derives from brand. AML, which is really about ensuring responsibility in our banking capacities, is critically important to upholding the value of brand and enhancing customer trust. So getting AML right is of critical strategic importance to our bank.

McKinsey: How is the industry doing at maintaining that customer trust and managing the money-laundering risk?

Daniel Moore: The industry is on the early part of that arc. Even though banking has worked at this for years, it takes a long time to move beyond regulatory compliance and into effectiveness. That’s the journey the industry is on: discovering the abilities of data and technology to get to effective outcomes, as opposed to regulatory compliance. We see this in the headlines every day. We are still focused on regulatory compliance.

It’s critical to understand that the landscape is changing on two frontiers. One is the regulatory frontier, and the other is the environment in which we operate. We talk often about how the bad guys change how they operate every single day. And they are as sophisticated as banks, make no mistake. But the regulatory environment is also changing. Keeping pace with both effectively isn’t always easy; sometimes you need to decide which you want to pay more attention to.

Read the full interview at McKinsey & Company

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