Written by Martin Woods, Compliance Week on Tuesday April 6, 2021
First published by Compliance Week on 1 March 2021
It’s no privately held belief that our collective anti-money laundering (AML) endeavours are failing. Even with multiple laws, regulations, rules, and guidance that work alongside armies of AML professionals funded with billions of dollars, we continue to seize less than 1 percent of funds laundered. Some parties ponder how and where can we improve.
Every year there is an increase in the number of suspicious activity reports (SARs) submitted to the authorities. The more SARs filed may mean there is less likelihood authorities will have the capacity and resources to act on the intelligence provided. Public sector resources devoted to the processing, evaluating, and actioning of SARs have not increased at the same rate.
In February, the Wall Street Journal reported on the increase in the submission of SARs for cash values that fall under the mandatory $10,000 cash transaction reporting threshold. Cash continues to be the lifeblood of crime, regardless of COVID-19 affecting our spending habits and use of physical currency. The closure of shops, bars, and other businesses, as well as travel restrictions, have presented difficulties for launderers who seek to send funds back to foreign suppliers and criminal connections. This has pushed more cash in the direction of the bank, where launderers are well aware of the $10,000 threshold.
It was the author Jeffrey Robinson who said, “Dirty money is like water, it always seeks the course of least resistance.” Ordinarily, the place of least resistance is not a well-regulated bank, but when most other routes are blocked, the bank is perhaps the only option.
And banks must be credited with recognizing the changes and reacting to the actions of the launderers. While banks are not compelled to report cash transactions under the $10,000 threshold, they are legally obliged to report all SARs, irrespective of value. In 2020, banks identified an increased flow of dirty money, albeit a flow of smaller batches, by design. It is not the role of the banker to stop or reject the cash, but one can hope the increased number of SARs has provided more intelligence that might lead to the arrest and conviction of more launderers.
The increase in SARs also suggests there is a lot of criminal cash out there seeking a place of low resistance in need of being laundered. The questions are where, when, and how it will go.
In 2021, we need to move beyond a process of reporting suspicions via SARs to stopping money laundering. As the administration of COVID-19 vaccines increases and we move closer to the easing and ultimate removal of restrictions upon our lives/businesses, we should be mindful of the potential for inflows of dirty cash, which has itself been restricted. All this information should be factored into staff training, as well as transaction monitoring.
On the other side of this laundering saga, authorities have identified an increased criminal use of cryptocurrencies because they enable launderers to move funds and value across borders at the push of a button. AML professionals are connecting the dots between the crimes, the changing business environment, restrictions, cash, and a crypto exit strategy.
This reminds us that to defeat the launderer we need to think like a launderer. That means making our businesses more hostile, resistant environments to dirty money.
Built on extensive practitioner knowledge, this course provides tips and advice on managing investigations that are practical and have real-life relevance.
This article has been republished with permission from Compliance Week, a US-based information service on corporate governance, risk, and compliance. Compliance Week is a sister company to the International Compliance Association. Both organisations are under the umbrella of Wilmington plc. To read more visit www.complianceweek.com
Thank you. Your comment is awaiting moderation and should appear on the site shortly.
Required fields are not completed, please ensure all required fields (*) have been filled in properly.
You can leave the name empty should you wish to remain Anonymous.
Help and support
Alternatively contact us on: +44(0)121 362 7534 / firstname.lastname@example.org (Course information)
or +44(0)121 362 7533 / email@example.com (Enrolled learners)
or +44(0)121 362 7747 / firstname.lastname@example.org (Membership)
or +44 (0) 121 362 7503 / email@example.com (End Point Assessment)