In Focus Risk
Ignoring AML regulations is a costly mistake
In the light of recent fines, is it worth the risk to take an ostrich approach to anti-money laundering work?
John Dobson UK managing director, SmartSearch
john.dobson @
smartsearchuk.com
The recent news that the Financial Conduct Authority (FCA) has fined Standard Chartered Bank £102.2m for anti-money laundering (AML) breaches, the second largest financial penalty of its kind ever imposed by the FCA, raises so many questions about overall understanding of the regulations surrounding AML.
Serious and sustained shortcomings The latest high-profile case where AML has come under the spotlight revealed that the FCA had found “serious and sustained shortcomings” in Standard Chartered’s AML controls. Whilst in March estate-agency chain
Countrywide received a record fine from HMRC of £215,000 for failing to ensure its money-laundering procedures and record- keeping were in line with regulations. Complying with AML regulations is a
cumbersome process and, with regulations changing all the time, it can be difficult to keep up with the latest rules. It is already over nine months since the 5th Money Laundering Directive was passed and yet many businesses that come under its remit are still unsure, or ignorant, of its powers and their own responsibilities.
The ostrich approach It appears that, although many companies do take AML seriously, there are still those that have adopted an ostrich like ‘head in the sand’ approach to the matter. However, when you consider the reasons
that money is being laundered in the first place, to fund illegal activities across the
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globe, this is not something that can be ignored, and neither should it be. The range of industries within the
financial-services arena that come under AML regulations means that it is difficult for many to understand and keep up to date with changes, which are happening all the time. One thing that the 5th Money Laundering
Directive stipulates is that electronic solutions be used wherever possible and, thanks to a booming regtech industry in the UK, there are now a huge number of electronic solutions. On the back of this, there are now
thousands of banks, estate agencies, law firms, and other regulated businesses turning to electronic AML platforms to complete their AML checks, global sanctions, and PEP screening. The onus then falls on the service provider
to ensure that their systems are up-to-date with current regulations and are completely compliant. For example, our platform offers
a one-stop shop AML verification system that guarantees to recognise fraudulent documents and AML activity and offers ongoing monitoring – which was one of the issues highlighted by the FCA in the Standard Chartered Bank case.
Compulsory When the 5th Money Laundering Directive is taken into law it is likely that electronic AML checks will become compulsory and, with technology like this already available, there is no reason for regulated businesses not to have correct AML processes in place. For any business that has to carry out these
checks it is also important to understand that electronic AML platforms save time, money and are more reliable than manual checks ever can be. It is evident that the regulators are taking
AML controls very seriously and, with fines like those that have been handed out recently, for not complying with AML regulations, is it really worth the risk? CCR
It is already over nine months since the 5th Money Laundering Directive was passed and yet many businesses that come under its remit are still unsure, or ignorant, of its powers and their own responsibilities
www.CCRMagazine.com May 2019
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