REGULATORY ESCALATION – AN ALTERNATIVE VIEW?
There was a time when managing financial crime risk was a law enforcement responsibility. Police officers understood their role in upholding the rule of law, investigating allegations of crime and bringing offenders to justice. This is no longer the case.
Successive governments have, over the last decades, in large part outsourced responsibility to combat money laundering and wider financial crime to the private sector. Along with this responsibility to manage the threat comes accountability.
This article considers how businesses, and key individuals within them, are being punished for failing to meet required standards, how this is evolving and unintended consequences this may already be giving rise to. Along the way it touches on the effectiveness of the global approach to anti-money laundering (AML) and the absence of effective controls governing the activity of businesses as they investigate their customers or potential customers.
The migration of financial crime risk ownership from the public to private sector can, for the UK, be traced back to the 1993 Criminal Justice Act that introduced the requirement to report suspicion of money laundering. Since then, regulators have doubled down on the sectors they supervise, issuing ever more complex and nuanced requirements. The current Joint ‘Money Laundering Supervisory Group Guidance’ for the UK financial sector, for instance, runs to 215 pages augmented by a further 282 pages sectoral and 79 pages specialist guidance.
Apr-Jun 2024 Issue
International Compliance Association (ICA)