The following AML / CFT Culture and Corporate Social Responsibility (CSR) commentary IS FULLY ENDORSED by Comsure and could not be said any better so we are wishing to spread the message though our net work– IT was Published by Malcolm Wright on December 11, 2016, on Linkedin Head of AML, Thomson Reuters – [link can be found at the bottom of this page] –
IN OCTOBER 2016, the UK financial regulator fined Sonali Bank (UK) Limited £3.2m ($4m USD) for a number of AML systems and controls failures. In its final notice the FCA stated:
- “Financial services firms are at risk from those seeking to launder money. As a result, they are required to maintain robust and risk-focused anti-money laundering (AML) systems.
- The FCA expects regulated firms to promote a culture which supports these controls and which impresses on all members of staff the importance of complying with them.”
Similarly, the FATF is committed to the effectiveness of controls over simply technical implementation:
- “The focus of the effectiveness assessment is therefore on the extent to which the legal and institutional framework is producing the expected results.”
In fact, there are numerous references throughout the industry, including from regulators, that there must be a move away from checkbox compliance towards building a culture of compliance.
In preparing this article I reviewed the public AML / CFT statements of a number of leading banks. Many speak about
- how they are committed to ensuring they follow the AML / CFT rules in the jurisdictions in which they operate, and the types of controls they have put in place.
They covered what they are doing.
BUT, IN THE WORDS OF SIMON SINEK:
- “People don’t buy what you do, they buy why you do it”
- An effective culture then, is born from the ‘why’, not the ‘what’.
It was interesting to note
- the disconnection between an AML / CFT statement that served to demonstrate
- ‘we are doing what we’re told we have to do’,
- and promoting a culture that demonstrates
- ‘we believe that prevention is ethically and morally the right thing to do because illicit activity harms our environment and society’.
That latter approach is something both employees and customers can buy in to – something that can build and promote a culture of compliance.
Illicit activity can take a number of forms such as drugs, guns, kidnap, terrorism, prostitution, people trafficking, slavery, bonded labour, illegal logging, illegal fishing, and animal poaching to name a few.
- Modern slavery is a $150bn industry entrapping 46 million people.
- Even if such activities are local, they utilise the international financial network to mask the benefit of such crimes.
So, whether it is an AML / CFT policy or an approach to investigate the supply chain, every firm should have an ethical and moral responsibility to minimise the risks it might be used to knowingly or unknowingly support such illicit activities.
Which leads me to Corporate Social Responsibility (CSR).
Again, I scoured the Internet looking for AML / CFT references in CSR statements from various regulated organisations, and not just banks. There was little to note. But, wouldn’t a CSR statement be the ideal place to embed a culture that is committed to preventing social and environmental harm?
I did come across one though, from Bank of America’s 2013 CSR report:
- “Our policy is to take all reasonable and appropriate steps to prevent persons engaged in money laundering, fraud or other financial crime, including the financing of terrorists or terrorist operations – popularly known as money laundering – from taking advantage of our products and services to further their illegal activities. In accordance with this policy, we comply with both the letter and the spirit of the anti-money laundering regulatory regimes in the countries and jurisdictions in which we operate”
A nod to Bank of America then on a statement that goes beyond – not only by including it in their CSR statement but by highlighting compliance with ‘letter and spirit’ which goes beyond just technical implementation.
So, perhaps if you are an MLRO or Head of Compliance in a regulated firm seeking to embed a culture of compliance, a great place to start might be to use your CSR statement as a vehicle to demonstrate your firm’s commitment internally and externally as to why AML / CFT is so important and how you will work to prevent your organisation from being a used for illicit activity.
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The views expressed here are the author’s own and do not necessarily represent the views of the author’s employer.
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