Anti-money laundering laws are designed to protect communities, businesses and government from the influence of organised crime. The laws do this by placing obligations on our financial institutions and professional services to know their client’s business and to monitor activity throughout the lifecycle of the client’s business relationship. Should a professional service provider or financial institution detect activity that is unusual or suspicious, they are obligated to make a written report to the local constabulary or relevant enforcement agency.
Without money laundering compliance controls operating in businesses, organised cartels would eventually become so powerful from their wealth, corruption and bribery, they could end up having a strong influence in government. Mexico and Colombia are examples of such countries.
As a consequence of this dire result and for the purpose of prevention, anti-money laundering (AML) laws are compulsory across the globe. However, for the global financial community to be successful in reducing the influence of criminal cartels and narco syndicates, governments collectively rely on each country to make reasonable efforts to monitor their financial sector and professional services. Any country that fails to do so, undermines the efforts of other countries.
Given the global importance of AML laws and the frequency of serious breaches from banking institutions, businesses and government need to ensure they are operating with systems to effectively manage their oversight of compliance responsibilities.
Efforts to prevent and detect financial crime have to be implemented in a “top-down” approach. If the management hierarchy and executives treat AML compliance with the priority it deserves, their influence will be impacted upon staff throughout the organisation, including managers and client facing personnel.
Directors of Boards need to be informed of regulatory risks so that they can direct the company. Risk status reports, such as those provided by AML360 software, can be presented in a visual display, negating the need for executives to read lengthy detail.
Being able to evidence that company executives are adequately informed of risks and involved in appropriate determinations, could potentially be the difference between facing or escaping enforcement action and stakeholder criticism.