WHY COMPANIES NEED STRONGER ANTI-MONEY LAUNDERING CONTROLS?

It is tempting for many organisations to view AML training programs as 'just another compliance burden'. As a result, part of the focus of the new AML regime to date has been on the large individual and corporate penalties that may be levied for non-compliance under the Act. In fact companies can be fined as much as $ 11 million for a breach of a civil penalty provision and individuals can be fined up to $2.2 million. These fines may also quickly escalate if multiple breaches are involved.

For companies which have yet to realize the importance of implementation and training of AML programs it is worth considering the potential costs and risks of having an inadequate approach to money laundering. Besides financial lose due to penalties companies face various other risks such as reputational risks, regulatory risks, legal risks and concentration risks as result of non-compliance with AML policies. Companies conducting business internationally have a higher risk factor especially those subject to the AML regimes of the UK and the US. Such companies are increasingly looking to deal with other companies with a strong AML program in place in order to help meet their own AML regulatory requirements and to avoid guilt by association. The biggest risk for any organisation besides financial lose is potential damage to its reputation arising from the organisation’s alleged involvement in money laundering or even worse, terrorism. In today’s world no organisation can stand the risk of association with terrorism. Clearly its up to the organisation’s chartered secretaries and MLRO (Money Laundering Reporting Officer) to promote the message and its importance within the company.
As costly and time-consuming AML compliance will be for an organisation, there are a range of real benefits to be gained from a robust AML compliance program that has been endorsed by its governing body including:

• Increased revenue and marketing opportunities through the acquisition of more comprehensive and reliable customer information through KYC and Due Diligence.
• Reducing bad debts and fraud losses as a result of enhanced customer due diligence
• Improving operational efficiencies through more integrated and automated management of financial crime
• Reducing the risks of exposure to corruption, identity crime, terrorist financing and a range of other potentially damaging criminal activities
• Enhancing the overall control and risk environment by tightly linking AML to broader operational risk measures with potentially favourable outcomes for capital adequacy requirements.

Every organisation with a strong knowledge and objective to support and implement AML program should have a plan in place including an efficient software for risk assessment, generation and dissemination of related policies and procedures and training of employees on regular basis.