The face of fraud -
how to spot a money launderer

Money laundering has always been a serious concern for U.S. financial institutions. As companies become more global in their reach, it is becoming increasingly difficult for organizations to properly and efficiently monitor business dealings for signs of financial misconduct.

The ultimate goal for any company is to prevent this crime from affecting the success of their business by first detecting and then reporting valid instances of money laundering as quickly as possible.

In a recent study conducted by ACAMS in partnership with Thomson Reuters, Anti-Money Laundering (AML) professionals cited concerns about properly monitoring fraud due to increasing workloads. Companies today face a real challenge of volume – from the enormous amount of information they receive to the number of transactions that occur, the quantity of fraud, and the speed of fraudulent activity.

AML compliance challenges faced by organizations

Increased regulations, a lack of properly-trained staff, and budget constraints are the greatest AML compliance challenges cited by respondents to the ACAMS/Thomson Reuters survey.

Regulatory enforcement actions

  • 31% of respondents have experienced an AML/CDD enforcement action
  • 53% have not experienced regulatory actions,
  • 16% didn't know

Regulators around the globe have made examples of many institutions with improper or inadequate AML processes, further showcasing the importance of a proper defense against financial crime. Over one third of the ACAMS survey respondents have experienced an AML/CDD enforcement action, showing just how prevalent regulatory pressure is.

The serious cost of money laundering

Money laundering is a major problem for financial institutions: an estimated $800 billion to $2 trillion gets laundered every year through the global financial industry, turning these businesses into the unwitting financier for terrorist networks, drug cartels and other criminal groups threatening national security.

As more institutions expand global operations, the challenge of thoroughly and efficiently monitoring business dealings for financial misconduct grows exponentially. The price of failing to do so effectively can be costly. Take the $17 million fine issued by the Financial Industry Regulatory Authority against a major broker dealer in May 2016 or the $184 million civil penalty FinCEN assessed in 2017 against a money service business that “failed to implement and maintain an effective risk-based AML program” and delayed the filing of suspicious activity reports (SARs).

Over the past decade, fines have racked up to become a substantial weight on banks. Regulators in the United States and Europe have imposed $342 billion in fines on banks since 2009 for misconduct, including violation of AML rules, and that figure is expected to top $400 billion by 2020.

Both the Department of Justice and FINRA have highlighted the role of individuals in management positions, emphasizing the need to properly train staff and ensure procedures are in place to investigate any transactional red flags. More and more, regulators are holding individuals accountable if they fail to do their jobs adequately. For professionals in the compliance industry, a public record of a fine and/or suspension could end their career.

Having proper AML defenses in place is now essential, both for the long-term survival of a financial institution and for the reputations of its staff.

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