The Laundry Man by Kenneth Rijock ( Penguin/Random House UK)

Tuesday, May 16, 2023


If we are to point to a single reason why money laundering has been so successful since the passage of the USA PATRIOT Act in 2001, as one who has been involved in anti-money laundering compliance for the past thirty years I must point to the lack of comprehensive understanding of the specific money laundering techniques employed by laundrymen each day, as they continue to exploit the global banking system.

We are now blessed with the advent of advanced AML/CFT platforms, employing Artificial Intelligence, using Machine Learning, to extract information not previously available to compliance, but that data, in the hands of individuals who are not sufficiently trained to instantly recognize advanced money laundering techniques, is not going to result in the identification, and timely interdiction of financial crime, in real-time.

The exponential increase of regulatory scrutiny of financial institutions has resulted in the accelerated hiring of a large number of frontline compliance staff, but most have not been trained at the level necessary to literally stop money laundering cold at the banks where they are tasked to quickly approve customers at Account Opening, and to also be effective gatekeepers at Transaction Monitoring on active accounts, where most laundering occurs.

I am painfully aware of the huge costs of operating compliance programs at international banks, but unless compliance directors take the time, trouble and expense to fully train their staff in advanced techniques, what are referred to as money laundering Tradecraft, the laundrymen will continue to achieve success 90% of the time, if not more. Teach your people please; when I write an article about a single advanced technique, the responses I generally receive confirm what I can only describe as money laundering illiteracy among compliance officers with less than a decade of hands-on experience.

Whether the failure to adequately train frontline compliance staff will ultimately result in the personal liability of compliance directors, or the banks themselves, I cannot say, but in an increasing regulatory and law enforcement climate, it could be the shape of things to come.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.