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.

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.

05 Aug 2022

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What does it mean by upskilling for cybersecurity?

Government agencies are becoming quite proactive about security measures because they face the same hacking risks as other companies. However, such agencies must be more cautious about their cybersecurity because any data breach in another country’s hands can harm their national integrity.

We live in an antagonistic environment, and a lack of security can have immense repercussions. Due to every government organization becoming accessible through the website, their database has become vulnerable to cyberattacks. Hence, government agencies must ensure comprehensive upskilling in cybersecurity for their employees at all levels.

There are also problems caused because employees access websites on mobile phones. These devices are more accessible to hackers easily than laptops; therefore, government agencies’ IT personnel must be trained to handle security configurations on smartphones.

Not only the government information is at risk, but also the data pertaining to its employees when the systems are hacked. The data of such employees was accessed when the government computer systems in the Office of Personnel Management in 2014 were hacked, which contained all their details, such as addresses, phone numbers and social security numbers.

What are the reasons for such upskilling?

Outdated systems:

Technology has progressed rapidly, and the legacy systems used by the government are no longer sufficient to tackle attacks. These systems need to be replaced because the government is also spending a lot on maintenance.

Supersensitive information:

In addition, government employees need upskilling in cybersecurity because such agencies store much confidential information like social security numbers and driver’s licenses of citizens.

Such information is enough to hack their internet banking accounts.

Upskilling is also crucial for government employees because they handle the most important infrastructure in the country, such as the national and state power grids.

Moreover, the US government organizations have a hacking risk because there are no measures taken due to reckless work culture.

Human error also arises because employees don’t work, due to which server downtime also happens apart from security breaches.

There is also insufficient training that employees cannot understand and hence fail to meet the compliance standards.

Measures for upskilling all employees

Government employees should be upskilled in cyber awareness and trained in taking the following precautions:

Information of Defense agencies:The Department of Defense(DoD) has established a security protocol(DoD 8140 ), under which it’s mandatory for the cyber security workforce who get in touch with the DoD systems to get IT certifications.

These certifications are required for everyone in the Defense department, including personnel, contractors, and foreign employees. These certifications involve teaching them about the principles employed by the DoD to protect its data from all kinds of cyberattacks. According to this directive, all the employees of the Dod must have the designated certifications.

Using cloud-based servers: Government employees need to be trained in using the most advanced technology, which can make them resilient to cyber-attacks. For example, they should use cloud servers instead of in-house servers.

The cloud-based servers mean using a third-party organization, and it means extra security because they don’t have a fixed location and 24/7 accessibility of the organization’s website. Also, in case of any data breach, the risk of a hacker asking for ransom is eradicated since the data is backed up in a cloud-based server. The vendor takes care of the cloud-based server and ensures it’s protected with the best security patches.

Not using personal emails: Hackers succeed when some employees use their personal email IDs to communicate sensitive information. Hence, they should be able to log in to their official email ID through two-factor authentication, which means no one can access their account without the OTP. In addition, if a certain password is compromised, the government official must change it.
Using designated machines: The upskilling can help government employees understand why they need to use official PCs to conduct their work matters. These devices have VPN enabled so that no one can access the government IP addresses and send malware or phishing emails to government email addresses. In addition, government organizations should get the web application scanning done or are upskilled to detect any system bugs, so they can be removed.

The government officials must learn how to remove the malware from the system. This is only possible if the malware code has been analyzed by an IT firm so that it can be debugged properly.

Hence, the officials can be trained to implement all the measures to mitigate the risk of cyberattacks.

What to do when a ransomware attack happens?

Government officials should also be given upskilling about how to handle such incidents that have happened. They should immediately notify CISA (The Cybersecurity & Infrastructure Security Agency) about it, which can take remedial action.

Upskilling is also necessary in case the hacker has installed ransomware and wants a ransom so that the government officials can take necessary action whether to comply with his demands or not. The ransom must not be paid because it’s not a guarantee that the hacker will yield the credentials of the hacked system. The CISA can only let the government agency the actions to be taken when ransomware has been installed.

There are training materials available that can enable employees to implement the correct incident response plan. This kind of upskilling can be given to third-party vendors working for government organizations and state and federal government employees.

12 May 2022

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How is gamification necessary in the corporate world for preventing obesity?

Online education is taking economies forward now because it helps people learn in the fastest way.

In companies, gamification has become a critical need now to prevent obesity.

There is a lot of use of such education in imparting healthcare knowledge. Ways of taking care of their health can be imparted to people so that they can prevent themselves from adverse health conditions like obesity. It’s important for the working professionals of today that they follow a healthy work-life balance which involves making judicious use of time. The professionals can be taught to step from their seats after every 10 minutes so that they can get some kind of workout.

Benefits of such apps for employees:

- Better health:

When employees are encouraged to exercise regularly because wearables count their steps and they are given such targets through game-based apps, their possibility of taking sick leaves decreases. Such gamification makes sure everyone starts paying more attention to health because at the end of the day they can compare their score with each other like how many calories lost per day. Such apps can ensure that employees devote at least half an hour to some light cardio activity especially those with chronic diseases such as anxiety and depression.

They can also conduct meetings to include activities like walking while addressing their teammates. They also become productive due to robust lifestyles and getting confidence due to better physical appearance. Providing employees with such apps can be a part of the company wellness program.

Fixed schedules:

Healthcare is a crucial aspect of our lifestyles these days because a lot of work happens from home which has led to more sedentary work practices. When employees get gamified apps they can keep a tab on what they eat too. With gamification fitness, related goals are set for employees who start altering their schedules and with time, enhance their efforts in that direction.

Gamification can make sure that online education for health becomes easy for professionals. They don’t have to set timers on their phones to remind them to take some steps down a staircase after brief intervals. Apart from making adults adhere to fitness routines, online education and gamification ensure that those with chronic health conditions also take care of their lifestyle and follow the prescribed medication schedule. Gamification adds more fun to the task of following a healthy lifestyle because it sends a notification when it’s time to sleep, how many glasses of water to drink per day etc.

With gamification, a lot of pressure is relieved on medical health practitioners. The employees can also book appointments through them which it becomes easier for doctors’ assistants also. Such games have a record of the medical data of all the patients which can also be referred by doctors when required. Employers get a lot of benefits when employees are trained through gamification. It’s because employees are not wasting their time on medication due to obesity-related diseases.

Gamification apps can reduce employee insurance costs

It has been found that employees who are obese are more prone to diseases such as psychosocial stress due to workplace exposure. Companies should also consider that apart from modifying the eating and exercise-related behavior of employees through gamification, it’s also crucial to prevent the consumption of harmful substances such as alcohol, and smoking to prevent obesity. Overweight people can also develop diseases such as musculoskeletal ailments such as cervical.

They also have lower chances of recovery from any injuries caused at the workplace and it is costlier than individuals who have average weight.

According to research done by Gallop and Duke University Medical Center, the employees who are obese have a higher chance of suffering from workplace injuries by 25%. As a result, their chances of being absent from the workplace and filing medical claims are also high. When an employee is obese, this has direct repercussions for the employer. It’s because he pays for the workers’ compensation insurance which is a certain percentage of the total compensation.

How are obese employees more prone to accidents and illnesses?

When an employee is absent from work due to some illness they are paid for their lost income through this insurance. Also, if an employee can’t work due to some accident at the workplace they have to be paid through this insurance fund for hospitalization charges.

If an employee develops a disability due to which he has to abstain from work even temporarily, the employer has to pay him compensation for a specified period. It’s a portion of the weekly earnings of the worker.

Therefore, an employer should make sure that employees don’t become obese which makes them prone to workplace accidents and illnesses. Hence an employer must make sure that he provides healthcare-based gamification apps to employees so that they are fit and don’t fall prey to obesity-related diseases.

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