Anti-Money Laundering (AML) now on top of the Compliance hotlist
Financial institutions have to make significant changes to respond to global AML regulatory changes. Amongst the most important AML regulatory compliance components include the Financial Action Task Force's recommendations, the U.S. Foreign Account Tax Compliance Act, and the Fourth European Money Laundering Directive. Therefore, AML has never been higher on management's agenda to avoid the damaging regulatory fines and regulatory oversight actions could even be a threat to the license-to-operate.
Most companies have now come to the conclusion that minimum compliance with regulatory obligations is no longer enough to stay out of the focus of the oversight authorities. All trades and industries regulatory compliance initiatives must continually strive to meet a higher standard.
Embed, integrate, and automate
Regulatory compliance initiatives are continually changing and so are the compliance processes: from the traditional check-the-box standalone role under the compliance officer to an increasingly complex, across the departments and board to a transaction oriented reporting function that includes legal, risk, operations, and tax departments.
If management has further taken the decision to automate the underlying transactions that generate disclosure reports and a documented all-encompassing approach to each AML transaction and component the AML compliance procedure is on the right track, if not AML compliance could be even more cumbersome in the short run.
High risk areas
AML issues are at the top of the financial services agenda and the AML fines may have increased across the board. Therefore, AML issues are discussed by the board of directors, requiring increasing reporting and developing regulatory due to individual prosecutions by the oversight authorities in some jurisdictions.
The top three expenditures in AML budgets are:
- Transaction monitoring systems,
- Know Your Customer reviews and maintenance, and
- Qualified consultancy and staff recruitment.
Regular & consistent changes
Applying globally consistent AML procedures across all global locations is another challenge within the financial services industry. When going thru the AML program and the volume of regulatory changes experts often question whether it can be possible to run a fully compliant AML program.
Annual AML compliance expenditure is likely to exceed $10 billion in a global context, in the next couple of years as financial institutions continue to struggle with the regulatory compliance expectations with consistent changes more regularly than in the past.
