ICT Views

AML in the dock - the dark cloud & the silver lining

by: (Associate Director, Research and Development) on

Wow. It’s been a busy couple of weeks.

For Joe Public, unless you live in a cave (and a very remote cave at that) you will have invariably read or heard something about money laundering in the last week or two.

Even if you didn’t want to, mean to, or find you particularly care about it.

(Actually, you SHOULD care about it, for lots of reasons).

For those of us involved in the financial services industry, there’s been a constant bombardment on the why’s, what’s and wherefores. Of course, HSBC has been the focus for this.

The dark cloud

I don’t propose to go back through the issues here.

ICT Director, Pekka Dare, wrote about them last week in an incisive blog, with a focus on what it means for AML professionals and the US Senate website will give you a lot of multimedia resource around the HSBC case.

There are obviously myriad compliance issues in running a huge multinational financial services company. And these have been exposed in great detail where serious shortcomings have arisen.

The silver lining
So what good can come out of this?


Well I think there are a couple of possible benefits.

Firstly, AML is in the spotlight, and not in a nebulous or generic way. Actual technical issues have been raised, such as high risk customers, bearer shares, sanctions lists, terrorist financing, the quality of customer due diligence.  And people are getting to hear about them.

All these things are of key importance to the AML practitioner and add up to ‘the big picture’ – a situation which you will find a lot of enthusiastic and committed AML professionals want to consider. Often to the chagrin of budget holders who, sometimes, can be accused of merely wishing to tick boxes.

Which brings me to my second point.

Could this be a proverbial kick up the backside for organisations to start taking AML compliance more seriously?  As Pekka mentioned in his blog, training and resource are key elements. Elements which need money spent on them. Money commensurate with the associated risk.

Traditionally, ‘compliance’ areas are not seen as income generating so are not always high up the list in terms of budget allocation.

Maybe this can change. It was reported in the Economist that HSBC's budget for AML compliance in America increased ninefold from 2009 to 2011, to a sum of $244m.

You could argue that this is perhaps a ‘shutting the stable door after the horse has bolted’ situation. Nonetheless it is surely a step in the right direction, whatever the findings of the Senate. Whether it is far reaching or effective enough is another matter.

Where next?

I doubt that this issue will die down anytime soon.

And in a way, I kind of hope it doesn’t.

It is highlighting a hugely important, but sometimes overlooked control issue, which has social and economic ramifications well beyond the financial services community.

One which fundamentally questions what we really want from global firms and where the true focus should lie.


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