So , given the serious gaps in the scope and coverage of AML / CTF regulations around the world , including in some major market economies such as the U . S . and the U . K ., banks often face the majority of the blame for not doing enough to prevent breaches in the first place . While some banks do deserve regulatory censure , it is overly simplistic to only point the finger at them , given the holes in the AML / CTF frameworks implemented around the world that we have today . Because of these gaps , a bank can only hold out for so long before villains break through their defenses .
Fighting financial crime is a team sport and requires further integration of enablers in the value chain of global AML efforts . Improved information sharing and better-quality data can be combined to provide a clearer insight into risk . Banks and other enablers can work to mitigate financial crime risk with the right regulatory framework , including the right tools , data and resources .
Illuminating the shadows where criminals like to lurk
It is known that criminals and kleptocrats hide their wealth beneath layers of complex corporate ownership structures that banks and other enablers find difficult to penetrate . Banks try to use public corporate registries , such as the U . K .’ s Companies House , to identify the beneficial ownership of their business banking and corporate clients , among other sources . However , some countries do not have publicly available corporate registries — and those that do , rarely verify the identities of the ultimate beneficial owners ( UBOs ), failing to provide illumination and rendering these sources of data unreliable . Banks have borne the burden of proving who owns what for years when arguably , national governments should really own this information and maintain up-to-date records of who owns and controls companies operating on their soil . Until access to validated and reliable company ownership records are available to regulated entities operating around the world , criminals will continue to lurk in the shadows or hide in plain sight .
An intelligence-led approach to AML / CTF efforts
The global divergence of AML / CTF regulatory requirements also adds to the complexity and confusion when navigating AML / CTF requirements . A global bank headquartered in the U . K . with branches in Germany , the Netherlands and the U . S .
will have complex regulatory requirements to fulfill . Navigating this complexity often leads to voluminous compliance procedures and a “ check-the-box ” mentality that can impair critical thinking , which is when compliance checks begin to fail . If people forget why they are doing the checks , the compliance checks become the end goal .
Compliance with AML laws should not be the end goal but a means to an end . The end goal has to be to deter financial crime and drive effective LE outcomes , such as generating high-value suspicious activity reports / suspicious transaction reports / suspicious matter reports ( SARs / STRs / SMRs ) that can help catch the bad guys and recover assets . Today , in the U . S . and U . K ., there is improved collaboration between banks and LE , with certain banks receiving feedback from LEs . These public-private partnerships have resulted in important wins . However , this type of sharing mechanism is not in place in other jurisdictions yet . In other cases , banks are not always given enough insight into LE priorities , the quality of their SARs or how well SARs have contributed to deterring crime . This is hopefully set to change in certain jurisdictions when new laws conceivably
ACAMS Today June – August 2023 21