Calendar year reviews at work tend to be fairly artificial but traditional. Similarly, as people close down a year, we like to look ahead and even try “resolutions” that, unfortunately, are often broken.
So, let me try a little bit of both.
What were the key 2013 AML challenges?
And what are some recommended areas of improvement for the AML community in 2014?
Looking back on 2013
No one can convince me that financial institutions are not trying to comply with the plethora of demands from federal, state, and local “overseers.” (The term includes supervisory, law enforcement and prosecutorial entities.) This is not a call for sympathy, but for recognition that there can be no simplistic review of 2013 deficiencies.
We have also seen increased conversation about use of “big data”; challenges with understanding virtual currency; tax evasion; beneficial ownership (although that’s been a theme for quite sometime); and many attempts to determine how best to perform a “risk assessment.”
Finally, some policy makers and media types have called for jailing individuals for money laundering deficiencies (not committing the act mind you, for not complying with rule) without any discussion of whom they would target.
All in all, a tense year for AML compliance professionals who fear responding to regulatory supervisors because, as our noted singer/songwriter above once said, “You don’t tug on Superman’s cape.” *
2014 AML resolutions
In no particular order and in the spirit of “moving ahead so life won’t pass” us by, here are some areas of focus for 2014:
• Advocating for more resources: With competition from the consumer compliance side of an institution—think of all those mortgage regulations banks have been prepping for— it may be a difficult task. But it is essential that management understands that AML remains a regulatory priority and that gaps in this area will not be tolerated.
• Expanding your understanding of the AML universe: Whether you’re an entry level analyst or AML officer, being in this area now demands a working knowledge of financial crime, corruption, sanctions, and a litany of predicate crimes for money laundering.
Be curious, ask questions, read, research, and never assume you understand it all—because you don’t.
• Keeping up with the latest: For the regulatory side of the AML profession—while you have a job to do and must assess compliance with regulations, laws and (sometimes) guidance, you must remember that no one can comply if they do not know what’s required.
So, don’t simply say something is in the FFIEC manual. Make an effort to understand the bank’s program and its interpretation of what’s required. If the goal is compliance, communication that is open and candid (on both sides) will benefit both sides.
• Stop kvetching: For the private sector, complaining about being targeted and the examiner being unreasonable will never work. While both may seem (and could be ) true, keeping your management informed on examination progress and providing examiners with all relevant documentation, as well as proper response to all questions, is essential. It all comes down to communication as it does for the regulators—we all could use more effective communications.
• Learn from law enforcement and financial institution partnerships: I have mentioned many times in these blogs the importance of the private and public sector in working together to address such disparate crimes as human trafficking, elder abuse, terrorist financing, and many forms of corruption.
Whether the task is creating typologies, red flags, or simply awareness of these and other issues, there is no substitute for working together. Make sure management and, in the government, the senior level, recognize the value of these partnerships to AML: detection and prevention, not simply compliance.
• Sharing information: Let’s ensure a rational process for sharing data within all parts of a financial institution and from government to the private sector. The current regime is incomplete and not as effective as needed.
• Prioritizing a top-down review of U.S. money laundering laws: Despite the labors of several working groups in and outside of the government, will there ever be a candid and open debate of AML?
Many of us believe that the laws and rules governing this area, developed over the last 30 years, are a patchwork put in place in reaction to events or congressional calendars (and agendas). The time is now for a dispassionate look at goals, systems, and finite resources.
Frankly, this should be the AML community’s collective #1 resolution.
To all, a very Happy New Year and a safe and rewarding 2014!
*Jim Croce died in a plane crash 40 years ago just after hitting it big. He left a legacy, albeit limited, of songs that looked at working-class characters. The refrain in the blog title comes from “I Got a Name,” released a week or so before he passed.