CWU Money Laundering Discussion

Intro

Financial transactions are constantly moving within a big corporation like Padgett-Beale where it may become difficult to track all transactions. Money laundering has become a big issue in the global economy as it has become difficult to track or find these transactions as millions of trades are completed every day. It has been reported that money laundering has ranged between 2 to 5 percent of the global economy, which is roughly 2 trillion dollars (Adler, 2017). As Padgett-Beale continues to grow, we need to ensure that we can identify financial discrepancies that may have been used with illegal intent. With the merger and acquisition of Island Banking Services, we need to be cautious and prepare ourselves to prevent future financial laundering.

To help mitigate these kinds of actions within our organization I would recommend performing a risk modification and integrating blockchain technology into our financial systems. Some of the recommendations and best practices of incorporating blockchain technology in our financial inquiries is that it’s difficult to change any of the transactions, it can resists forms of hacking, and finally it can incorporate AI to help detect abnormalities for further investigations. These practices will better safeguard the company’s finances and lower the risk or money laundering within Padgett-Beale. Now I will be going into more details of my recommendations.

Recommendations

The first recommendation with using blockchain is the ability to prevent the altering or deletion of transactions. Blockchain is a type of ledger framework that stores data cryptographically on a private or open network. Because of this, data can be stored an in open network. All transactions or blockchains are copied into every stored data location. As there are numerous replicas of the digital ledger, it would make it difficult to add, modify, or delete transactions. This can also make it simpler and more proficient to locate and track ownership of transaction. “Each transfer of ownership can go in the ledger, resulting in a trustworthy source of information about almost any type of property” (Pritchard, 2019). As there are multiple sources of the data being collected with every transaction made, using blockchain has become very reliable and secure for organizations to use.

My second recommendation is that since blockchain technology has multiple source locations of where the data can be monitored, it makes it highly difficult to alter, delete, or add false information into the ledger. In order for someone to successfully modify the ledger they would need to be able to compromise more than half of the nodes that have a copy of the ledger. “That would require successfully hacking thousands (or more) of computers simultaneously—which is believed to be impossible (Pritchard, 2019).” This kind of cyberattack would require a super computer being able to penetrate multiple locations with their own network security.

My third recommendation with using this technology is having software monitor the transactions. With millions of transactions done every day, it’s impossible for a us to look at every single one to determine if there was anything wrong with it. Implementing AI to learn what normal transactions look like, it can quickly single out a transaction that is odd and alert financial personnel to investigate. “The reason this would work is because AI will be able to detect patterns in large volumes of data while adapting to changes in criminal activity over time with its machine learning capabilities (McGinness, 2018).” This is essentially an Intrusion Detection System (IDS) where it’ll notify someone if something seems out of the norm. Having this technology can greatly lower or eliminate the possibility of money laundering within the company.

Summary

With the migration and acquisition of Island Banking Service, we need to ensure our company does not partake in the criminal activity that was done before prior to acquisition. I highly recommend the CISO to looking into a risk modification of our financial services and add blockchain technology. This technology allows us to ensure that the transactions reliable and trustworthy as it’s highly difficult to be adjusted, it’s nearly impossible for this technology be vulnerable to cyberattacks, and it can also integrate an IDS to alert someone of any odd transactions. I believe implementing this technology would greatly eliminate the possibilities of money laundering within the organization. It’s vital that we protect Padgett-Beale incorporating this technology into our financial systems would help do just that.

References

Adler, D. (2017, December 15). Blockchain and Money Laundering. Retrieved from

https://news.law.fordham.edu/jcfl/2017/12/15/block…

Davies, A. (n.d.). How to Use Blockchain to Prevent Money Laundering. Retrieved from

https://www.devteam.space/blog/how-to-use-blockcha…

Ishii, Y. (2019, February 20). Blockchain Technology and Anti-Money Laundering Regulations under International Law. Retrieved from

https://www.asil.org/insights/volume/23/issue/1/bl…

McGinness, A. (2018, March 25). Blockchain Technology to Simplify Anti-Money Laundering Solutions. Retrieved from

https://www.idmerit.com/blog/blockchain-technology…

Pritchard, J. (2019, December 2). Here’s How Blockchain Will Transform Banking and Financial Services. Retrieved from

https://www.thebalance.com/how-blockchain-is-chang…

Schreider, T., Svetcov, E., Williams, K., Fitzgerald, T., & Baklarz, R. (n.d.). Certified Chief Information Security Officer [Version 3]. Retrieved from

https://evantage.gilmoreglobal.com/#/