Compliance With A Commitment And Employee Moral Obligation

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Maureen Mutua

Maureen Mutua

AML Compliance Manager
Maureen Mutua has over eight years’ experience in AML and KYC compliance. She possesses extensive knowledge of laws and regulations relating to compliance such as The Bank Secrecy Act, FinCEN, Council of the EU, FATF, and OFAC with oversight for monitoring, reporting and analyzing compliance risk and creating strategies for risk mitigation. Her technical skills enable her to help financial institutions in risk identification, risk assessment, controls and development, her experience and understanding of regulatory requirements, allows her to train and provide advisory services to financial institutions to adhere to regulatory laws and supervisory requirements. Maureen is a published author of an AML/CFT book titled “Mastering Anti- Money Laundering, What I Have Learned About Dirty Money and What You Need to Know”. In 324 pages, the book covers topics such as; the role of artificial intelligence and regulatory technology in preventing ML, the risk-based approach, trade-based money laundering, suspicious transaction reporting and the Wolfsberg group standards, EU, GIABA, UN regulations with respect to KYC and AML.

Every employee in a financial institution needs to understand the firm’s policies and procedures on AML/CFT. This emphasis on making sure all employees are on board is because it prevents employee complicity. Due to the severity to society of the effects of money laundering and terrorist activity, employees should be held morally accountable and can no longer be allowed to feign ignorance.It’s not surprising to find that many compliance practitioners are not aware of the local legal requirements, let alone global requirements for their industry.

Therefore, it is worse off for employees in other departments. Knowledge should be provided over what constitutes complicity and what action will be taken in case an employee is in violation. Employees should know and be trained on local and global policies on anti-money laundering, global guidelines, criteria and how to adhere to best practice. This is so that in the event of a risk, they can have the knowledge on how to manage and mitigate it.

In 2017, a compliance officer was fined £75,000 for giving bad advice to customers of a pension scheme. In the same year, the Securities and Exchange Commission fined a compliance officer $30,000 for providing false information about an investment adviser. In 2015, FCA UK fined a compliance officer and an internal auditor working for the Bank of Beirut £29,500. The compliance officer was fined for not having an AML system that met the regulator’s standards and the internal auditor was fined for insufficient audit controls and negligence in reconciling pending internal audit issues. 

Anyone with a key compliance oversight role is responsible for the implementation of AML procedures and providing correct information. Providing misleading information is considered a breach of regulatory ethics. The lack of knowledge of what your actions or inaction can do is a risk that would rather not be taken. Bank employees have been known to assist criminals in money laundering. The most recent case of bank complicity is seen in Denmark’s Danske Bank. It is reported that the bank the bank’s CEO resigned and was quoted saying that he “holds the ultimate responsibility” and acknowledging that the bank “did not live up to expectations,”

A bigger consequence is that the link between the bank, coupled with the recent Latvian banking AML issues and imposed U.S sanctions can have a boomerang effect on the overall financial and economic wellbeing of the EU.  Organization-wide awareness on the impact of monetary penalties on a FI and an employee’s lack of compliance or in the aiding thereof should be known. AML and Compliance training accomplishes this goal. 

Money laundering techniques are evolving, as one risk is counteracted, another one emerges; therefore, every employee should know their role in preventing and in safeguarding the firm. To better illustrate that it’s not just banking professionals that are complicit, a study conducted in 2012 scrutinized the level of compliance worldwide and the results were appalling because it revealed that it was easy to set up shell companies without conducting proper due diligence. Impersonating consultants, the producers of the study asked 3,700 company incorporation specialists in 182 countries to form firms for them.  Taking everything into account, 48% of the specialists who replied failed to ask for appropriate identification documents. Almost half of these did not want any documents at all.

Contrary to conventional wisdom, providers in tax havens, were much more likely to comply with the standards than those from OECD countries. Even poor countries had a better compliance rate, suggesting the problem in the developed world is not cost but unwillingness to follow the rules.

Only ten out of 1,722 providers in the U.S required notarized documents in line with the FATF standards. Providers were often conspicuously aloof even to allow palpable risks. The authors sent three main types of e-mail: the first email was sent from a low-risk country such as Norway. The second email was sent by a high-corruption risk individual purporting to work in government procurement in countries such as Kyrgyzstan and Equatorial Guinea; the third a terror-financing risk, working for a Muslim charity in Saudi Arabia. Providers were less likely to respond to the corruption category than the low-risk one. Finding takers for the terrorist financier was harder, but not impossible. One in every 17 providers was willing to set up an anonymous shell for him. To fight money laundering, we need all hands-on deck.

Featured image: Unsplash

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Maureen Mutua

Maureen Mutua

Maureen Mutua has over eight years’ experience in AML and KYC compliance. She possesses extensive knowledge of laws and regulations relating to compliance such as The Bank Secrecy Act, FinCEN, Council of the EU, FATF, and OFAC with oversight for monitoring, reporting and analyzing compliance risk and creating strategies for risk mitigation. Her technical skills enable her to help financial institutions in risk identification, risk assessment, controls and development, her experience and understanding of regulatory requirements, allows her to train and provide advisory services to financial institutions to adhere to regulatory laws and supervisory requirements. Maureen is a published author of an AML/CFT book titled “Mastering Anti- Money Laundering, What I Have Learned About Dirty Money and What You Need to Know”. In 324 pages, the book covers topics such as; the role of artificial intelligence and regulatory technology in preventing ML, the risk-based approach, trade-based money laundering, suspicious transaction reporting and the Wolfsberg group standards, EU, GIABA, UN regulations with respect to KYC and AML.

Compliance With A Commitm…

by Maureen Mutua time to read: 3 min
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