Preventing AML/CTF Breach: Strategies For CBA - Essay.

In this assignment, we would like you to locate and research scholarly references that will support your analysis and recommendations. You will need to identify five references that will help you to address the case study issues. You will present your references and justifications on their relevance, with proper referencing techniques.

Between 2012 and 2015, the CBA breached the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (AML/CTF) over 53,000 times. Imagine you are the CIO of CBA. What will you do to prevent breaches such as these from happening again?

1. Explain why the CBA rolled out the Intelligent Deposit Machines (IDMs).Discuss the business benefits that the IDMs provide. Identify the competitive strategies that the CBA were following and any relevant competitive forces.

2. Explain how the AML/CTF breaches occurred. Your explanation should be at a level of detail that uses the concepts and terminology from this unit.

3. Discuss the application of four CoBIT components that are most relevant to the AML/CTF breaches.

4. Discuss any deficiencies in aspects such as hardware, software, people, processes and strategy that contributed to the breaches.

5. It is conceivable that the IDM development team followed an Agile development methodology (itnews.com 2014). Assuming they did, discuss how an Agile development methodology might have contributed to the breaches. Identify strategies that could be employed to help prevent such breaches despite the use of an Agile development methodology.

6. Discuss if, and if so, how a data warehouse could have been used to mitigate the breaches

Business and Competitive Strategies of CBA

Commonwealth Bank of Australia (CBA) is known to be an Australian Multinational bank which has branches in a different region of the world. CBA is considered to be leading providers of various integrated services which are inclusive retail, premium and banking institutes, insurance and broking products. CBA is involved in a scandal which allows various terrorists and criminals to launder lump sum amount of money. The financial agency of Australia filled a case against CBA in the last week.

In the coming pages of the report various all the necessary six question has been addressed. The business benefits of CBA have been discussed in details. All the competitive strategy of CBA has been provided. An explanation has been provided that how the breach took at that place. An explanation has been provided regarding how AML/CFT breach occur.

Intelligent Deposit Machine is capable of accepting large value cash deposit. IDM is considered to the heart of Commonwealth Bank money scandal. The bank dumped it just because of risk and operation reasons (Schlagwein, Thorogood and Willcocks, 2014). In May 2012 CBA rolled out their intelligent Deposit machines. IDM is the type of ATM which automatically counts the amount of cash which goes into CBA account. This machine is convenient and saves the money of the bank as only fewer human tellers are needed.

Intelligent Deposit Machine (IDM) provides a large number of benefits like:

Reduction of cost: Generally, a recycler is needed for doing large things like balancing and till prepping which is cost-effective and labor saving. It ultimately allows various banks and other institutes to move their employee to other task resulting in more effective work and saving of money.

Increases the speed of transaction: IDM is considered to be time-effective as it reduces the time which is spent on counting cash.  With the help of this machine, the bank will allow the employee to do another task.

Improves Security: The security in the bank can be improved by replacing cash drawers with cash recyclers. This particular machine provides the ability to store cash in a secure machine which improves their on-site security.

The competitive strategy of CBA is its customers which is its first priority. The customers are considered as the heart of the organization. CBA focus on securing and improving the financial stability of the customers (Schlagwein, Thorogood and Willcocks, 2014). It generally focuses on the various things which are aimed to provide outstanding customer experience.

Details of AML/CTF Breach

This particular source is selected because it provided us with detail information regarding the fact how CBA rolled out Intelligent Deposit Machine (IDM). Along with it provided us with various business benefits of IDMs. Lastly, it provided us with strategies used by CBA.

AML/ CTF is a part of a legislative package which is designed to align with best practices for preventing money laundering and terrorism facing. This particular ACT was established in the year 2006 for stopping money laundering and terrorism. This particular Act has been implemented which works beyond various business and financial services (Worthington, 2016). The breach took place due to negligence on the side of CBA (Common Wealth Bank of Australia). The bank does not provide limit the number of the transaction which can be made by the customer in a single day. IDM allowed only 200 notes per transaction in a single day. IDM allowed anonymous deposit of cash which ultimately created a platform for abusing criminals. So various criminals can easily put millions of dollars through a machine in a single day. The bank to keep a track of transaction over the given which passed through the ATM in the last three years.

There are mainly four components which are considered to be relevant to AML/ CTF breach are the tone of the top, policies, and procedure, monitoring and testing and risk assessment.

Tone on the top: Leaders of CBA should give priority in popularizing the culture of AML/CFT by providing an example for other organization (Lovelock and Patterson, 2015). An organization should empower their employees and make them feel like a part of the organization. The organization should incentive to the organization if they will report any kind of suspicious transaction.

Policies and procedure: It is considered to be an important part of AML/CFL program. Policies can easily check any kind of issues or behavior which is earned by the organization. So, this policies and procedure are developed, updated and lastly implemented on regular basis (Lovelock and Patterson, 2015). For dealing with the various allegation of AML one need to have a specialized response team which is useful for dealing with the allegation in the much better way.

Monitoring and Testing: White-collar criminals are educated and come up CBA should be committed to testing its programs on regular basis. It can be achieved to plan an exercise conducted on two platforms that are internally or externally. The review should be done without any conflict of interest.

Preventing Breaches using Components

Risk assessment: It is an important feature will help a various organization like CBA to have an idea regarding the impact on AMT/CFT goals. The ultimate goal of risk assessment is to analyze the fact that how risk assessment can be done in a much better way.

This particular source is selected because of it provided us the four components which are considered to be relevant to AML/CTF breaches.

The organization should make various layers which are used for building up traditional method of projects that is waterfall model (Serrador and Pinto, 2015). CBA claims the fact their culture has grown which has result in delivering possible outcomes and the needs of the market. The market is changing at a much faster rate because of the need of customers. Properly working on agile provides a way which helps in making a decision in a quick way.

This particular source has been selected because it provides us with detail idea regarding the fact that how agile development methodology can help to prevent any kind of breach in CBA.  Apart from agile methodology, the source provided us with methods which can be used for preventing a data breach.

Data warehousing is a well-known technique which is used for the collection and management of data from various sources (Blake et al., 2017). It helps in providing meaningful insight into the business. This particular technology is a well-known component which helps the strategic use of various data. In other words, a large amount of information by a business that is used for designing query and analysis of the transaction. It mainly focuses on the transformation of data into information and making it available to users.

Data warehouse mainly ensures the fact that sensitive kind of data does not fall on the hand of wrong people. If some vital data falls on the hand of people, then it can easily lead to a malicious attack. Data security mainly focus on three important aspects that are confidentiality, integrity and lastly availability.  

This particular source has been selected because it provides the possible ways of a data warehouse which can be used for mitigating any kind of breach.

References 

Blake, L., Francis, V., Johnson, J., Khan, M. and McCray, T., 2017. Developing Robust Data Management Strategies for Unprecedented Challenges to Healthcare Information. Journal of Leadership, Accountability, and Ethics, 14(1), pp.22-31.

Booth, S. and Whelan, J., 2014. Hungry for change: the food banking industry in Australia. British Food Journal, 116(9), pp.1392-1404.

Goswami, R., Bhattacharyya, D.K., Dutta, M. and Kalita, J.K., 2016. Approaches and issues in view selection for materialising in data warehouse. International Journal of Business Information Systems, 21(1), pp.17-47.

Lees, G., Winchester, M. and De Silva, S., 2016. Demographic product segmentation in financial services products in Australia and New Zealand. Journal of Financial Services Marketing, 21(3), pp.240-250.

Lovelock, C. and Patterson, P., 2015. Services marketing. Pearson Australia.

Reddy, K. and Clinton, V., 2016. Simulating Stock Prices Using Geometric Brownian Motion: Evidence from Australian Companies. Australasian Accounting, Business and Finance Journal, 10(3), pp.23-47.

Schlagwein, D., Thorogood, A., and Willcocks, L.P., 2014. How Commonwealth Bank of Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model. MIS Quarterly Executive, 13(4).

Serrador, P. and Pinto, J.K., 2015. Does Agile work? —A quantitative analysis of agile project success. International Journal of Project Management, 33(5), pp.1040-1051.

Wang, Y., Kung, L. and Byrd, T.A., 2018. Big data analytics: Understanding its capabilities and potential benefits for healthcare organizations. Technological Forecasting and Social Change, 126, pp.3-13.

Worthington, A.C., 2016. Financial literacy and financial literacy programmes in Australia. In Financial Literacy and the Limits of Financial Decision-Making (pp. 281-301). Palgrave Macmillan, Cham.