2018-9-24 14:59 |
Faith in the banking industry went down during the 2008 financial crisis in the US. The Dodd–Frank Act and its counterparts were implemented around the world to make banking safer for users.
However, a banking fraud in Denmark is unfolding to be on of the biggest that Europe has ever seen. An internal investigation report suggests that the scam’s total value could be ˆ200 billion ($234 billion). The majority of transactions involved in this scam were claimed to be “suspicious.”
What Led to the Huge Banking Scam?Kilvar Kessler, the chairman of Estonia’s Financial Supervision Authority (FSA), said that the Estonia branch of Danske Bank, the bank where the irregularities were found, had serious shortcomings in terms of risk appetite and risk control. The Danske Bank branch did not have adequate antimoney laundering measures in place. The investigation closed in May with no action, but the Danish FSA is reopening the case.
Reuters suggests that the matter involves “15,000 customers and 9.5 million payments between 2007 and 2015,” with allegations of “criminal activity in its pure form, including money laundering” estimated at “billions of rubles monthly.”
No action has been taken on the matter since 2007, even after a whistleblower raised issues about the Estonian branch in 2014.
Are Our Banking Systems Safe?The amount of money that gets wasted in our current banking system through “suspicious” transactions is huge. It is tough to figure out how much more money could be floating around in the system like this. The scandal shows that law enforcement in the banking industry isn’t adequate, and financial surveillance is still not very effective.
One of the foremost reasons why blockchains became popular was to move away from financial “unaccountability” of banking institutions. Public blockchains make financial systems more transparent and introduce the world to more sophisticated tracking systems that could ascertain accountability and answerability more easily. A bank on a public blockchain system exposes itself not just to institutional scrutiny but public scrutiny as well.
Blockchains could be the answer to corruption as the transparent, immutable system could help in avoiding grey transactions and provide concrete evidence of fund transfers via its distributed ledger. The global banking system, when operated on blockchains, could be more efficient, error-free and sustainable.
Could Large-Scale Banking Fraud Be Avoided With Blockchains? was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.
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