ANTI-MONEY LAUNDERING FOR FINANCIAL INSTITUTIONS
RC: Could you provide an insight into how the global problem of money-laundering is climbing the political and regulatory agenda?
Caruso: Anti-money laundering (AML) compliance has been at the top of the regulatory agenda for a number of years now, and not just in the US. We have seen regulators in every region of the globe stepping up their efforts in oversight of financial institutions in their jurisdictions. Regulation has evolved steadily since 2001, but the exam front has been particularly challenging for global institutions. Whereas in the past institutions could count on a probing review from their home regulator, and also in the US if they have operations there, over the past several years we have seen a rise in exam activity from multiple jurisdictions where a firm has operations, and from multiple regulators in a single jurisdiction. As a result, it is now more common to have multiple examinations hitting an institution at the same time, often making demands of the same personnel who are responsible for responding to the examiners. Those same individuals, in most institutions, are also responsible for running the day-to-day program. The political climate around AML has changed even more dramatically. Congress has had this as an area of focus going back to October 2001 with the enactment of the PATRIOT Act. But the landscape hit a real turning point in the summer of 2012, when a Senate Subcommittee held hearings to investigate AML compliance issues at a major global banking institution. The hearing, and written report of the matter, garnered worldwide attention. And not only was the bank’s AML program an area of focus, the hearings dedicated significant attention to the Office of the Comptroller of the Currency’s oversight of the bank. Many in the industry believe that the combination of these matters has had a profound impact on the manner in which banking regulators now interact with the banks they regulate, stepping up the level of scrutiny and the severity of any resulting sanctions for inadequacies that are detected.
Apr-Jun 2015 Issue