Swedish tv station SVT has investigated suspected money laundering by Russian and Ukranian customers of Swedbank. Oligarchs used accounts at Swedbank’s Estonian branch to move money offshore. The documentary is available online in English: part 1 and part 2.
At the end of part 2, Daria Kaleniuk, executive director of the Anti-Corruption Action Center in Kiev is asked “why do you think they [i.e., the bank] let this happen?”. Ms. Kaleniuk replies “because it’s profitable!”.
In my opinion, criminals succeed in money laundering because compliance with AML regulation was (is?) not a priority for top executives.1 A lack of funding and management attention for compliance leads to a mentality of “just check the boxes, so it looks like we did what we had to do”.
Stronger enforcement, including higher fines and other sanctions, might change that situation.
How international is the European banking landscape?
Jamie Dimon, CEO of American bank JPMorgan Chase, says that European banks need mergers across borders in order to become more competitive. I created the map below to illustrate that Dimon has a point (that’s why he’s richer than you).
I used to commute to Brussels by train. The usual experience: full compartments, sometimes people had to stand if they didn’t want to wait for the next train.
When I went to a conference about the financial crisis (slides) last month, the train was almost empty.
As recently as five years ago, few companies allowed telecommuting. If your supervisor was OK with it, you were lucky to work from home once a week.
Nowadays, almost everybody realizes that a lot of jobs don’t need the physical presence of workers in some central office. With just a laptop, a VPN, and a headset you’re ready to collaborate with your colleagues from the kitchen table.
Credit where credit is due: banks were among the first to institutionalize telework.
The Up to the Mountains and Down to the Countryside Movement was a government policy in the People’s Republic of China during the 1960s and 1970s. From Wikipedia: “privileged urban youth [were] sent to mountainous areas or farming villages to learn from the workers and farmers there.”
A lot of economists and economic historians study aggregated data, e.g. gross domestic product, inflation, trade flows, or productivity.
In his excellent article Who owns a scientist’s mind?, historian Douglas O’Reagan describes how business managers have tried to protect the know-how of their companies. Firms own real estate, machines, software and patents. But how can they control the ideas and experience inside their employees’ minds?
Because the article was written for Physics Today, the focus is on the tacit knowledge of industrial physicists. However, some of its lessons extend beyond engineering.
I just want to comment on one thing. The author describes Knowledge Management (KM) as a fad:
Business interest in controlling tacit knowledge did not fade, however. It would return in several forms, perhaps most visibly in a 1990s business management fad called knowledge management (KM).
It’s true that management gurus and software vendors tend to hype expectations in order to sell ‘solutions’. But good knowledge management is very valuable to companies and most definitely not a fad.
So I was relieved that O’Reagan is more nuanced about KM later in his article. He explains how the focus of KM shifted from technology to human-centered KM1. In addition, some practices seem so obvious now that we don’t think of them as KM anymore:
At a basic level, some of KM’s key insights, such as the value of encouraging employees to maintain informal social networks throughout the industry, became even more a normal part of business than they had been.
In my own courses, I always stress that KM doesn’t imply extra tech or bureaucracy. On the contrary, if you’re doing it right, you’ll have more time to focus on your core competencies.
Several speakers noted that it is important for central banks to communicate with society, not only with the financial sector.
One of the people in the audience remarked that it is not enough that the ECB explains what it is doing. It also needs to respond to the needs of society.
The representative of the ECB replied that his institution has become more transparent in response to feedback from the public. For example, the meeting notes of its board are published.
However, this is a classic case of bike-shedding. Publishing notes is a trivial gesture. The real problems in the euro area are massive unemployment in the southern countries and the poor performance of the European economies compared to the US. A genuinely responsive central bank should do much more to support the well-being of Europe’s citizens.
So I agree, it is time to rethink the ECB. Let’s break some political taboos and rev up the engines.