Of course, it is easier to understand what an account used for money laundering will look like. But is it enough?
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Following the 2008 financial crisis, corporate culture has become a hotly debated topic in the area of ​​compliance. Many commentators have blamed banking culture, especially investment banking, for the stock market crash.

Regulators have talked a lot about the need for change and the relevance of culture, which plays an important role in the success of the fight against money laundering in the Middle East. Many states have gone to great lengths to raise awareness among relevant parties about the importance of cultural change in the fight against money laundering – but there is still a lot to be done here.

Culture depends on people understanding why it is important and what the consequences are when, as individuals, they ignore the perceived cultural norms of a company. At the individual level, people make decisions based on several factors, most of which are influenced by personal gain and loss.

With nothing to lose, individuals are more inclined to make selfish decisions and take increased levels of risk, as the drawbacks are minimal compared to the potentially huge benefits. So what’s the answer? More individual responsibility?

It will help, but at a higher level, strategy is key. In the world of financial crime compliance, companies have spent huge sums of money, and employed armies of financial crime officers, to continue to fail.

A failure of priorities

We try to stop money laundering, but too often our efforts do not reflect this fact. Some companies and banks seek to meet regulatory expectations, while others seek not to get caught. Some try to do too much and ultimately fail.

In the world of financial crime and in particular the fight against money laundering (AML), the causes of this failure are multiple. The main cause, for me, is a flaw in the broader conception of AML. Most countries began to draft and implement anti-money laundering laws from the mid-1980s, and in many cases legislation was rushed.

Almost all laws are based on the “40 recommendations” provided by the Financial Action Task Force. Law enforcement agencies around the world have adopted and applied the mantra: “To catch a thief, you have to think like a thief”.

I dare say that when the 40 recommendations were made, no one really knew what a launderer thought, and many still don’t. So while law enforcement agencies have focused their strategies on catching a thief, the AML community adheres to the idea that all people are potential money launderers.

Secure on account

Despite our continued inability to determine what a money launderer actually looks like, we now have a much better understanding of what a money laundering account looks like. The distinct advantage of this knowledge is the ability to identify and separate accounts that do not have the characteristics of money laundering.

It is a step in the right direction, but too small to grasp the big picture.

New thinking, new strategy

Collectively, it’s time to rethink and reset the AML strategy. One option: to make customers responsible for what goes into their bank accounts. This approach would require the customer to notify the bank / business of changes, including advance notice of large deposits.

Failure to notify would allow the business / bank to block the account and charge a fee to it. This strategy allows for better targeting of resources and will undoubtedly generate better results, reduce failures and promote success.

Assuming we all agree that we are failing, we must keep looking for ways to improve ourselves. The Smart AML Practitioner should actively identify low-risk accounts, while the Daring AML Practitioner should seek to identify new ways to re-energize the fight against financial crime.

The same is true of our approach to culture. To think that the activities that led to the 2008 crash are behind us is to be naïve. We must continue to encourage individuals to do better, to think outside the box but within the rules. Only then could real progress be made.