The foreign exchange markets were rocked by fraud again last week. UBS was fined £350m by the US Department of Justice for manipulating exchange rates. Although £350m is hardly pocket change, the fine was less than it could've been because UBS went to the DoJ and admitted what they'd been doing. They were only able to do this because they had detected the fraud themselves by spotting irregular patterns in their data.
Having compliance rules and procedures to stop fraud and money laundering, and to manage risk is obviously important. It's not just a legal obligation, but a moral one too. But, in this case, it seems that a group of people decided to break the law and there is precious little that rules can do when people deliberately ignore them. Instead, as a compliance manager or business owner, you need to understand how your business operates and what is normal for it.
You need to monitor your data very closely to be sure that there aren't any telltale signs of bad behaviour. Our CRM systems come with some automated tools to help detect fraud, but that should be only the first step in the process. It's just as important to have a human being looking over the data to spot the subtle shifts that could indicate a problem.
This isn't the first time that UBS have been in trouble for exchange rate manipulation. It's clear that they took the lessons they learned from their previous experience and used them to develop better systems and improve their fraud-detection methods. If it's impossible to stop people from manipulating exchange rates, the least you can do is to ensure you detect the manipulation as quickly as possible. That's why UBS is only facing fines of hundreds of millions of pounds, not billions.
If you are struggling to manage and understand all your data, get in touch with us and we'll discuss how we can help.