Frauds, terrorism, and bathtub curve

Lessons from reliability and bathtub curve for busting crimes

Photo by Andrea Lambrecht on Unsplash

Frauds and terrorism

Formidable military cantonments with awe-inspiring security have existed for centuries. Treasure, including notes and coins, have also moved for centuries. Banks have time-honoured systems and processes for internal control and audit.

Nevertheless, we hear of security breaches in military establishments. The choice of time, location, and other details point to a high level of planning. Daring and well-planned train robberies involving sovereign treasure make some Western flicks seem like minor pickpocketing. Bank frauds the size of several Satyam frauds point to governance failures from top to bottom. Investigations followed, and responsibility fixed. The immediate causes were familiar. System failures, noncompliance with laid down procedures, and ignoring established norms. One rarely identified root causes to see why noncompliance took place. And what actions could prevent them in the future. Continue reading “Frauds, terrorism, and bathtub curve”

Bank of Russia in War and Peace

How Bank of Russia and Russian Central Banking is coping with war and other political expediencies

Central Bank of Russian Federation Head Office building
Bank of Russia

War and Peace

War and Peace, Tolstoy’s enduring masterpiece, starts with a party scene. Set in the St Petersburg of 1805, the main characters are introduced here. Most of us would have read the ‘novel’ (Tolstoy did not call it one) in English. Lost in translation is the fact that almost the entire conversation, page after page, is in French. It was the preferred language of the Russian aristocracy. For Tolstoy, it was a literary device. He was making fun of the nobles of the day who spoke French to flaunt their exclusivity. He wanted to show how disconnected they were from core Russian values and the world around. Continue reading “Bank of Russia in War and Peace”

The Wolfsberg Group and Effectiveness in AML Compliance

Château Wolfsberg

The Wolfsberg Group is a private initiative of thirteen global banks aimed at developing frameworks and guidance for the management of financial crime risks, particularly with respect to Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies. Continue reading “The Wolfsberg Group and Effectiveness in AML Compliance”

The Swedbank case

Out of the several money laundering cases in recent years, two of the most disturbing were those of Danske Bank and Swedbank, mainly because they were headquartered in Nordic countries where such cases were rare. Moreover, these countries are known for high standards of living, and very low levels of crime and corruption. Continue reading “The Swedbank case”

25 years after Barings: Have the lessons been learnt?

“Around the World in 80 Days” by Jules Verne

(Note: A much shorter version of this article appeared in Mint dated 13 July 2020. You can read it here.)

In 1872, when Phileas Fogg, Jules Verne’s enigmatic character, wagered with his whist partners at the Reform Club, including an Assistant Governor of the Bank of England, to travel round the world in eighty days, he issued a cheque for £20,000, drawn on Baring Brothers. That was security enough. That was the standing of Baring Brothers, which always paid his cheques “on sight and his account remained invariably in the black.” Moreover, he was accepted as a member of that distinguished society on the recommendation of Baring Brothers with whom he had an unlimited overdraft limit. Continue reading “25 years after Barings: Have the lessons been learnt?”

IMF’s Global Financial Stability Review, April 2020: Markets in the Time of Covid-19

The IMF released yesterday the first chapter of its half-yearly Global Financial Stability Review (GFSR) for April 2020. The GFSR “provides an assessment of the global financial system and markets, and addresses emerging market financing in a global context. It focuses on current market conditions, highlighting systemic issues that could pose a risk to financial stability and sustained market access by emerging market borrowers. The Report draws out the financial ramifications of economic imbalances highlighted by the IMF’s World Economic Outlook.” Continue reading “IMF’s Global Financial Stability Review, April 2020: Markets in the Time of Covid-19”

IMF’s World Economic Outlook, April 2020: Effects of the Great Lockdown

The IMF released yesterday the first chapter of its half-yearly World Economic Outlook (WEO) which is due only in May/June 2020. The world has changed significantly since the publication of the last WEO in January this year. The Great Lockdown, as the report calls it, will result in the worst recession since the Great Depression, shrinking the global economy dramatically by -3%, thus surpassing the effects of the Great Recession of a decade back. Continue reading “IMF’s World Economic Outlook, April 2020: Effects of the Great Lockdown”

Reforming Deposit Insurance

This is an old article going back to 2000. It is a comment on the recommendations of the Committee on Deposit Insurance in India (Chairman: Jagdish Capoor, 2000). Continue reading “Reforming Deposit Insurance”

Separating Banking Supervision

In this article, published in 1998, I argued that there is no evidence to suggest that separation of banking supervision from central banks will enhance the effectiveness of either supervision or monetary policy. On the contrary, it could be detrimental to both. The article was published in the Op-Ed page of Economic Times dated 5 October 1998. Continue reading “Separating Banking Supervision”

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