06 Feb 2023

banking training to prevent antimoney laundering

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Can banking training help in antimoney laundering?

With the international environment in a precarious state, the banks must work hard and impart banking training to ensure they keep up with the antimoney laundering laws.

The black or illegal money is often earned through nefarious activities such as extortion and drug smuggling. Money laundering ensures that the black money seems to originate from legal proceeds.

Banking training must ensure that the bank employees know about money laundering.

Hence, banks and financial institutions must ensure that such money does not enter their systems. The banks must have a complete idea of where the money submitted into their bank accounts has come from.

The Bank Secrecy Act is important for banks to follow to prevent this money from getting legalized. As per this Act, all the national banks and branches of foreign banks must maintain records including name, date of birth, address etc. about their customers. When such records are maintained, no problems arise for banks. The banks must also verify such information some time after an account has been opened with them.

Going further, there are three stages to money laundering, placement, layering, and integration.

Placement

In the first stage of money laundering, placement which involves depositing money into banks so that it enters the financial system of a country, the criminals deposit that money into small amounts in different accounts so that it does not invoke any suspicion.

It’s because the government has prohibited deposits of large amounts to prevent any money laundering. It’s the job of the banking officials to check whether the invoices and receipts of money are original or not. Hence the first stage of placement of money laundering requires banks to be extra cautious about the origin of funds.

Therefore the banking training must ensure that the banks must do the KYC of the depositors before allowing them to open bank accounts.

Layering

In the second stage of money laundering, called the layering, the criminals introduce illegal foreign currency into another country. In the second stage, they use the money to buy such businesses in another country. The holding period of deposits in bank accounts is a tactic to ensure that the depositors don’t withdraw the money before a period of 5 days has elapsed since opening the account.

They buy such businesses, because the criminals can show their black money proceeds to be occurring from casinos and hotels because these sources often generate a large amount of revenue. They can also show fake companies through which they have received such money, i.e., through the sales of their products or services.

Integration

Integration is the last stage of the money laundering business; in this stage, the criminals introduce money back into the economy. They buy real estate in a country. For example, they have to prove that they are buying this real estate with legal money and show fake purchase receipts.

The criminals withdraw the money from the local bank accounts of a foreign country and then buy letters of credit, bonds, and money orders with it. They lend that money to someone and, in exchange, get a letter of credit. Integration can also be done by purchasing luxury goods; e.g., someone can buy jewelry in another country to be sold later.

Apart from luxury goods, they could also transfer this money to a terrorist organization.

To prevent this, for example, the UK anti-money laundering laws have prohibited withdrawing 10,000 Euros. This rule has established that the money which has originated from the terrorist countries can’t be withdrawn to the maximum of 10,000 Euros in one transaction. This law applies to all financial institutions across European Union.

If any financial institution disobeys such laws, it’s penalized by the European banking authority, which has set this law. If the money of this amount is withdrawn, it’s immediately reported to the authorities, and action is taken.

How can banking training stop anti-money laundering?

Get rid of obsolete technology:

Technology can be quite useful to banks in preventing money laundering. For example, all the banks should use similar kinds of technologies, and their systems should be integrated with one another. Integrating the data is tough when one bank operates on a different technology, like spreadsheets, and one on another, such as ledgers. Hence all banks should use cloud software to prevent such problems.

Research about the customer:

Apart from the KYC process, the banks must also carry out due diligence on the customer. This implies that the information given by the customer is checked against the database. Such databases include those people who have been banned from conducting transactions in any country by their own governments. They are included in international watch Lists created by several governments. The banks must check these lists before allowing customers to open an account.

Screening of weird transactions:

Banks must also check the size of transactions between them and another bank. If the transaction is more than a certain amount, they must stop it immediately. If the bank cannot regulate such transactions in time, it has to pay heavy fines. Apart from checking the size of such transactions, it must also detect who is the recipient of such funds, which could be a terrorist organization. Any black money criminal might be making such a transfer of funds earned through his so-called legitimate activities, and the bank must keep a check on it.

Suspicious activity report:

Banking training for antimony laundering must involve training such officers to screen transactions of more than the permitted amount. They must also be updated with the new methods adopted by criminals to carry out transactions.

The Employees must be trained in an AML compliance program which ensures that they know how to prepare a suspicious activity report. This report has to be provided to apex financial authorities if any conspicuous transaction has happened in a bank. The transaction might not violate antimony laundering laws, but it still must be brought to the government’s notice.

This is how banks can prevent any money laundering and severe punishment by keeping due checks on transactions and their customers.

20 Jan 2023

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What must be banking training for mortgage lending?

Banking training is crucial so that the employees don’t cause any loss to the consumers.

For example, banks have to be careful while extending loans to consumers because any unlawful practice can land them in trouble.

For example, banking training must include the Truth In Lending Act(TILA) which states that loan providers must disclose certain facts to the borrower while issuing a credit card to him. This is necessary for the borrowers because hiding any charges from them is not ethical. This includes disclosing what the interest rate on such credit cards is. When consumers know what the APR on a credit card is, they can compare it with similar products.

Also,credit card companies also can’t levy an unusually high amount of penalty on the customers when the payments are delayed unless they have been disclosed before.

This kind of disclosure requirement also exists for other kinds of loans such as car loans which are close-ended because a borrower has to repay a specific credit amount.

Who is a loan originator?

A loan originator is also a very important person in a mortgage and HELOC. The loan originator can be a loan officer of the bank or any person working for a mortgage broker who has links with several lenders. He is the one who helps home buyers get the correct kind of loan depending on their income.

Also, the loan originator must provide the borrower with loan options with different kinds of lenders with whom he works. Generally, the borrower has no idea about which kind of mortgage options are present in the market and it’s the loan originator’s responsibility to make him aware of the same.

The loan originator is an important component of the mortgage agreement because there are various complications included. The lenders need various procedures to be completed. They can complete all the formalities which include submission of the financial documents and answering the relevant questions by the borrower.

With the loan originator at their end, the borrowers are easily able to close the loan.

They must help the customer and should not suggest those loans to the customers where their compensation is the highest. When the borrower is providing compensation to such a loan originator, he should not get compensation from any other party for the same loan.

Also, the banks that have hired such originators and pay compensation to them for closing the loans must have such records for 2 years so that no confusion is caused later.

Regulation Z about mortgages:

Transparency in transactions:

The banking officers have to be cautious with their advice.

As per this regulation, they can’t advise the customers about mortgage loans and home Equity line of credit(HELOC)which means paying a higher rate of interest even when making the latter get such a loan means a higher commission/compensation for the former.

In HELOC, the borrowers and lenders can establish a credit line at the time of the former taking a loan. When he repays his loan amount, his credit line is recharged. But he can only take a loan against the equity in his house till a certain time (draw limit). After that, he has to start repaying the debt portion of his house (repayment period).

Duties of the loan originator:

The loan originator must provide the buyer with the correct loan options as per his repayment capabilities and budget. It’s the duty of the loan originator as per regulation Z of the TILA act to prescribe the loan with the best options to the borrower. These options include a loan that has the cheapest interest rate and also no penalty on the borrower in case he prepays the loan. Also, the options must include the loan with the lowest compensation for origination.

Ability to cancel/rescind the loan:

The banks must also impart banking training to loan officer to inform customer of the right to rescission. The TILA also protects the customers in the case when they feel that the lender has pressurized them into getting a loan.

They can immediately give up all the rights to the loan and withdraw from it. For example, if the home buyers have taken a loan against the existing equity in the loan, they can back from this loan before the closing period. The borrowers have the right to cancel the loan 3 days before the closing period. This is an excellent option for home loan borrowers who have a certain amount of equity in their purchased property.

Banking training can protect the banks from suffering any jail term due to violations of the TILA act which can be 3 years.

17 Jan 2023

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What are the challenges in a VILT course?

VILT might be a cost-effective proposition for companies because so many employees don’t have to be assembled at the same place. They get taught virtually, and anyone can come other than arranging a venue for them. Apart from not arranging a venue, the organizations are also saved from the hassles of arranging accommodations for traveling students and teachers. This is advantageous for the company.

There is also a work-life balance for employees because their time to travel to the training venue is eliminated. They can easily attend the training from any place.

But since the employees are logged in from their homes, they can also get distracted by family members. There could be guests arriving at their homes and children who want their parents’ attention.

These are the ways in which the problems of a VILT session can be mitigated:

Onus on teachers:

So it’s the teacher’s responsibility to ensure employees concentrate completely during VILT sessions. The trainers can ensure that the employees turn their cameras on during work. If they don’t, they can be during other activities during the session.An employee can mute himself, turn the camera off, and do something else while attending the session.

The trainers can also ask employees questions to know whether he is present or not. The trainer should also include games and polls so that the learners don’t feel bored in the sessions. Instead of lecturing the learners, the documents should be used in teaching them. They can be explained with the help of a whiteboard where the teacher can draw on them. This way, the learners feel engaged throughout the session.

Another way is to use infographics that contain the information in brief. Even animated videos shown during a webinar/VILT session are a better way to get the learner’s attention.

VILT should not be long sessions because this way, the learners’ attention can deviate.

Hence it’s better to have short sessions.

A trainer must be best prepared for the session and know the learners’ first names. If the trainer feels that the learner is not paying any attention, then he should be asked to explain all the concepts to the whole group. This is known as the teach-back option.

The organizations also have much software, allowing them to easily manage employees for such webinars. They can notify them in time and also schedule the trainers.

Companies’ Responsibilities:

VILT allows you to deal with a colossal workforce living in distinct parts of the world. They can’t reach the venue at the same time due to traffic and other constraints. But can definitely attend the webinars.

However, VILT does not do away with the difference of time zones, and learners have to attend the session even if there is a night in their country.

If the learners don’t feel they have the best possible concentration during a certain time interval, they can watch the recorded session.

Although the learners might be willing to take the lessons in different time zones, this may lead to a compromise in their quality of work due to lack of sleep. Hence it’s the company’s job to ensure that such learners can log in late for work if they have attended a VILT at night.

If still, it’s not feasible, then the company must be willing to provide housing arrangements for those who have to travel to another time session.

Conduct sessions in the UCT (Universal coordinated time):

It’s also better that sessions are conducted in different time zones for both kinds of participants. The native and the foreign participants should have VILT sessions conducted at their convenience. This is only possible when the participants are willing to collaborate with one another.

Instead of using the IST or the EST for holding such sessions, it’s better to use the universal coordinated time. Using such time is better because it does not mean sacrificing any sleep for both kinds of participants, i.e., those living on either side of the equator. Therefore, attending sessions per the UTC is feasible for all participants.

Also, all participants should be ready for the VILT session because if they are not, it means explaining things to them. This means wasting the valuable time of the other participants who might have to leave for a business meeting after attending the VILT session.

06 Jan 2023

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Three ways to impart banking training successfully

Banks have faced complicated situations due to the Covid 19 pandemic. It’s because people stopped visiting the banks due to social distancing. In this situation, the banks had to learn how to provide remote banking. The banking tellers had to understand how to provide good services to customers, including financial advice and back office operations, all remotely. Since banks had to shift people to those areas due to a new business need, banking training was needed. Banks had to segregate teams for specific tasks and train more active employees to handle a multiple-channel environment. All operations had to be digitalized in the covid and post-pandemic phases.

Therefore, banks had to think of ways to strategically capitalize on this change through services and products and reskill the workforce for it via banking training.

These are the effects of automation in the banking sector:

What has been the impact of automation in banking?

Banking automation has been happening rapidly, so the staff needs to be trained to cope with these changes. With the need to use lesser services, banks have been able to focus more on suggesting investment-based services. Automation in banking is getting used in many sectors, such as money transfers and purchasing travel insurance. This kind of automaton has also been happening due to smartphones through which customers are able to make transfers anywhere via net banking. Their customers can check their balance through mobile apps rather than going to the bank in person and checking it through an assistant. Hence, automation has led to the following changes in the banking system now:

Lesser manpower needed:

Since the requirement for banking clerks is not the same anywhere due to customers not using checks to transfer money, they had to be shifted to other roles. For withdrawals also, customers use ATMs, eliminating the need for a banking clerk. With the use of software in banking, there is no scope for errors because it knows which data has to be inputted into the system. This prevents banks from making compliance-based errors because no details about a customer are ignored. Therefore, the banks don’t commit crimes like money laundering even unknowingly. In fact, with the aid of software, banks can detect customers with riskier profiles and be more cautious about accepting their money and transactions.

The banking employees can also be made aware of any large transactions so that they can supervise who is behind them.

They can monitor the source of funds and whether they have not originated from any unscrupulous means. There is also a sanctions list of national and international organizations and governments that contains those people who are not allowed to conduct transactions in any country.

Adherence to compliance rules:

The bots can screen all the potential customers of a bank against such lists and ensure that no one present on them gets approved for any transaction. ATMs also didn’t replace the tellers in banks completely because someone could lose his card and ask the bank to block it, for which human discretion was needed.

When software is used to prevent antimoney laundering, it detects large cash transfers and deposits. In that case, the bank officers are notified by the program when the transaction levels exceed a minimum. The bank officers know very well what to do in such situations when they have been given banking training.

Although banks could have fired people due to the lesser services offered due to the pandemic period, they chose to redeploy them by providing banking training. Also, it’s not healthy for a brand’s reputation to lay off. So the banks have to reskill people, but how should they go about it.

The following measures ensure that a bank’s reskilling program is successful:

Conducting a needs analysis is essential for effective banking training

When the banks do not have their reskilling targets properly decided, their decisions won’t be successful. Even employees in general roles need to be taught other roles as well. However, before making any reskilling effort, banks have to do a need analysis. It can help them know what skills are in demand in the future. For example, banks need skills for financial advice now because many of their customers want to save more than before. Since remote financial advice is a common feature of banks, it needs to train for it.

Skill closeness:

As far as reskilling is concerned, it has to be expedient so that banks don’t need to lose business at all. Therefore, they need to reskill those employees whose skills are the same as the roles for which the bank requires manpower. By assessing skill closeness, the banks find the best resources for training and save time and money on banking training. In fact, such kind of reskilling requires the least time(1- 2 days) and can deliver brilliant results. It also saves the bank cost of hiring new resources.

For example, during the pandemic, banks had to do severe resource readjustment because the tellers had to act as customer representatives. A teller had to learn how to handle customer calls about products. The bank tellers were also trained to handle KYC verification because customers opened bank accounts online. The banks could only choose people for customer representative roles based on skill assessment.

Introducing a learning culture:

The next element of making a banking training program successful is encouraging a learning culture. This can be done by top-level management only. The employees must be alerted about any content upload through notifications, and even senior management can participate in such initiatives.For this, the bank employees must be sent messages about the reskilling from the top management. When the employees receive messages from the top management about a banking training program, it enhances their morale.

Moreover, if the banks’ seniors assert the need for talent development, the banking employees take it seriously. The employees get the idea that the entire enterprise is committed to promoting talent development in the organization.

It’s not easy to make employees adjust to new roles; hence training should be provided consistently. Banks need the help of various elearning vendors to provide content through various channels, including emails, intranet, and webinars.The employees must be evaluated for engagement levels to know whether the L&D content is successful.

Involving the HR professionals:

But help from HR is also needed, which can help a bank determine the kind of talent it needs for its growth. It requires distinct skill sets to attain the right talent for its growth strategies. With adequate help from HR, the business can also recognize the right people who need training for future bank roles. It is because HR is specialized in tasks such as skill mapping. A banking training program needs to deploy the right subject matter experts to pass the right skills to the right people.

27 Dec 2022

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What is the future of elearning in 2023?

Elearning will see a big change in 2023 because it will tremendously involve virtual reality now. So far, elearning has been used in a linear format with hurdles.

In this format, the learners must attempt a quiz before reaching the end of the module. Such tests are important to ensure whether the users have learned anything. After every 3–4 modules, there is a knowledge check to verify whether the learner has absorbed anything. When the learners are unable to clear any quiz, they can’t proceed to the second lesson consisting of more modules and hence have to go through the first lesson all over again. Including such tests can only ensure that learners can be trusted with work because they have completed a certain elearning assignment. In the future, following trends will be a part of the L&D:

Classroom training will be extinct:

Self-paced training will be the need of the hour because the employees prefer to work and learn from home. This has also become easier with so many elearning authoring tools becoming available so that the learning can be designed as per the course’s difficulty levels. Therefore, elearning is the need of the hour, and the days of classroom training are over.

If there is a problem with the computer, the employee can access the learning courses rather than sitting idle and zoning out. The scope of zoning out is even more in classroom training, where the environment is noisy, and not everyone can focus.

Necessary implementation of elearning due to a hybrid work culture:

We have embraced digital literacy since a long time now. Employees have started realizing that being digitally literate is no longer just a privilege but a necessity because companies are using hybrid work ways. Companies are now shifting to using more digital technologies at work, due to which employee training is also necessary.

Companies had to adopt a hybrid work model in 2022 despite the pandemic taking a backseat because the employees were not willing to rejoin the offices. In fact, they were leaving their jobs when asked to come to the workplace. 49% of employees consisting of millennials were not ready to rejoin offices, and the companies had to shift to a hybrid work approach because these people form a majority of technical employees.

When the employees don’t have any knowledge of the new software used to facilitate a hybrid work model, the companies can suffer. Hence, empowering employees is the only way before companies.

This is a serious problem because the employees seek those opportunities which provide them with growth opportunities. When the employees can’t get the knowledge they need to perform and grow in a job, they can quit. Every large-scale organization is providing employees with learning opportunities, either through an external vendor or a tie-up with an elearning partner that prepares the course. If the companies don’t focus on training the employees and retaining them, they are very much capable of doing it on their own.

Use of immersive technologies in elearning:

In 2023, extended reality(XR), which involves using AR, MR, and VR, will be used more. It’s because, in the coming year, employee experience will be at the center of learning. Employee training will be done using this technology for all kinds of industries.

In fact, since customer training has taken so much importance in these years, XR will be used for this purpose too. This kind of technology is useful when teaching people about dangerous jobs because it does not involve inflicting any harm. It is also less expensive, unlike actual equipment, getting used to training people for jobs such as operating flights.

Spread of gamification and mobile learning :

Moreover, mobile learning applications will increase because the consumption of mobile phones will enhance even more now. Even language learning applications are now using mobile phones.

Due to such easy accessibility of smartphones, gamification will assume increasing popularity in 2023. Games also provide a person with rewards, which is why people engage with them more to win points, which boost their pride also. It has been popular with people irrespective of age, a trend that will strengthen in 2023.

Immersive Games are getting used now to make people learn any foreign language. For example, gamers can see the background color of an environment change once they guess a new word. Since this involves a color change effect, the gamers are able to retain the word.

Cybersecurity training:

The elearning will become more employees centric in the future because employees are quitting jobs when not allowed to work from home.

With increased digitalization of processes, there will also be a high focus on cybersecurity training because the systems contain much more data than before. The entire customer and employee data is now present in a system that was not the case earlier. Hence, when a company’s systems are compromised, its servers can be used to get the payment information of customers.

Although employees will be trained in using digital processes, they will also be trained on how to keep the systems safe from any attacks. Due to this, cybersecurity training will form a major portion of elearning now. Companies can’t ignore the need for mobile learning solutions because they can be easily accessed by the work from home employees.

When its courses are not accessible in such a format, the work-from-home employees can feel that they are secluded, and the organization does not treat them as equal to the work-from-office employees.

Extensive focus on soft skills training for leaders:

Companies have to make employees stay and provide them with appraisal so that the former doesn’t bear the brunt of quiet quitting. It’s a troublesome scenario for a company when the employee is not willing to perform more than what is needed on the job. The employee has not resigned, but he is doing the least just in order to preserve his job and not be fired. In a Gallup survey that happened in 2022, 50% of the workforce was of quiet quitters.

Companies need productive employees who are willing to do more for them in times of recession rather than just stick to the job. Hence, when the company invests in the elearning of an employee, it’s a win-win situation for them because the employees feel associated with the organization.

Companies will also have to focus on leadership training so that they can prevent this trend of quiet quitting. Employees must get a positive environment at a workplace where the seniors are willing to listen to their problems genuinely. In that case, they can expect them to stay longer rather than leave at the first opportunity. So, leadership training, which ensures employees have positive and compassionate experiences at the workplace, is necessary.