WHAT IS THE IMPACT OF REGULATORY ACTION ON THE POSITION OF THE AML COMPLIANCE OFFICER?

WHAT IS THE IMPACT OF REGULATORY ACTION ON THE POSITION OF THE AML COMPLIANCE OFFICER?

By IAGR Media

Multi-million dollar fines abound and there is one person ‘in the gun’ answering questions of responsibility. 

Caught between a rock and a hard place the Anti-Money Laundering (AML) Compliance Officer (AMLCO) who oversees the AML/CTF operations for a large reporting entity is faced with many difficulties.  An optimist would say “challenges”, and a realist would say “difficulties.” Often reporting to senior management or a Board who don’t understand the purpose of the regime or the implications for not providing appropriate human and technological resources, the AMLCO must do their best with what they have.

Many entities, in the gaming and gambling sector as well as other sectors, choose to simply add the AML/CTF compliance function to the duties of a current staff member who has no choice, and little or no experience. At best, the organization will get a consultant to write a Program or even perform an independent review. Yet when considering the need for ongoing assistance to embed the necessary improvements, many organizations choose to see it as only an additional expense with little benefit to the business. This results in a fundamental failing of the regime and sets the scene for a vicious cycle. The AMLCO is then required to implement systems and improvements with insufficient support and must rely upon “bandaid solutions”. Finding non-compliance issues is then like shooting fish in a barrel for a skilled AML advisor as bandaid solutions are never fit for purpose, and when the regulator performs an audit the organization is found to be woefully under-prepared and at real risk of regulatory penalties. When this occurs, who is left holding the bag? The AML Compliance Officer.

So what happens next?  The AMLCO resigns seeking greener pastures. It is a common story heard by AML advisors - “I couldn’t continue to work for an organization which didn’t listen to me. I was sick of banging my head against a brick wall. I was concerned for my personal reputation and if it would affect me getting another job.” This now creates a void in the corporate knowledge and the incoming replacement must start all over again - working with a C-suite who remain unprepared to take action.

So now the organization is under the eye of the regulator – across the world we are seeing regulators flexing their muscle – and the new AMLCO continues the struggle. Multi-million dollar fines are reported on a weekly basis around the world so our newly unemployed AMLCO is thinking about an entire career change rather than take on the stress of performing a function that is not understood nor respected by the hierarchy and is at a growing risk of being held personally liable for the shortcomings of an organization. Then who takes up the mantle? A junior staff member seeking early promotion, an inexperienced AML Analyst from another organization, or another AMLCO who is escaping a similar situation from a different organization. Looking into the future, the AMLCO role could be seen as a poison challis and the vicious cycle will continue.  

We need a fundamental paradigm shift where AML/CTF compliance is no longer seen as a cost centre but a meaningful and important role standing at the front of the business performing a role of protection. Protecting the organization from criminal actors using the business for nefarious activities, protecting the Board from regulatory enforcement, protecting the corporate brand and reputation that in turn protects the ongoing viability of the business. When it’s done properly we have a greater ability to interdict criminal actors, disrupt crime syndicates, save children from sexual predators, reduce the money movement for corruption and hit the illegal wildlife trade.

Let’s not allow the AMLCO be the single point of failure. Let’s not allow this to eventuate into a negative for entire regime. The impact reaches far beyond the enterprise level.

AUTHOR

Todd Harland is the Chief Executive Officer of AML Solutions International, an organization that assists foreign governments and their Financial Intelligence Units (FIUs) to develop and implement anti-money laundering and counter terrorism financing (AML/CTF) legislation, policies, procedures and training components.

Todd has an extensive 30 year career in law enforcement, intelligence and counter terrorism.  As part of that he spent five years with AUSTRAC managing teams in both the Supervision and Intelligence Divisions.

Todd has provided technical assistance and training to law enforcement and intelligence agencies in various countries including Saudi Arabia, Jordan, Lebanon, Qatar, Tanzania, Uganda, Namibia and Ethiopia.  Combine this with his practical experience managing the AML Operations team for a 2nd tier Australian bank Todd has now developed a unique point of view on AML/CTF.

Todd can be contacted to discuss this topic further through the AML Solutions website.

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