Anti-Money Laundering Has Come A Long Way

It isn't just filing CTRs anymore. Bank Secrecy used to be primarily about paperwork - paper that got stored somewhere in a warehouse rumored to be in Detroit. Those were the days when going after money launderers was simple - we thought. Follow the money in the form of large cash transactions and, voila!

The world has changed and BSA compliance has changed along with it. Nowhere was this more clear than at the ABA/ABA 2003 Anti-Money Laundering Conference held in Washington, D.C. Issues such as how to fill out CTRs and how often to train tellers were left in the dust as AML emerged as a significant management process. There are now many themes to the AML conference that echo familiar themes from the National Regulatory Compliance Conference. These include how to design and manage an effective program, how to communicate and manage the flow of information within the organization, how to work with state and federal agencies, and how to cope when nothing is clear. Compliance always must be built; it doesn't simply happen. And every new law generates a new chunk of work - often a big chunk. Those of us in the compliance profession have often joked that the latest new law or regulation is the compliance manager's permanent employment act. The trouble is, we now have too many of them for one person to manage.

Somehow, each new consumer protection or compliance issue first appears in its most basic form and it seems fairly simple. We tackle it with the expectation that it will be easy to manage and implement. Time and effort proves that it is much more complicated and that our jokes about permanent employment were accurate. Over time, as we work with issues and find new hurdles, the assumption that we are tackling a simple job are dispelled. The assumption that the project is manageable fades until, as with Truth in Lending and now anti-money laundering, the issue emerges as a full-fledged compliance management concern.

On the humorous side, this does produce job security for folks who were assigned to the early project. But on the serious side, it stands for something quite different. It causes permanent change in our industry. And compliance management is all about causing and managing change - hopefully for the better.

The common denominator to all of these compliance issues is the way in which a program is developed and managed. Compliance doesn't simply "happen." It must be caused. And causing takes effort - and resources.

A common frustration among compliance managers is the difficulty they face when asking management for resources. Generally, management does not react with enthusiasm to requests for resources from cost centers. They see it as making the cost center more costly. This is not something the CEO wants to report to the board.

To this point, another theme emerged at the conference - loud and clear. It came from the regulators. Institutions simply must commit the resources necessary to get the job done.

As one person put it, we should do business every day as though it is September 12, 2001. While none of us wants to relive those days in September 2001, we must not lose sight of the fact that what we do today and tomorrow, in a period of apparent calm, is what will or will not prevent another September 11.

The law enforcement people agreed: financial institutions are their invaluable front line in fighting the war on terrorism - and other crimes. Their gratitude to the industry was expressed repeatedly. You should feel good about that. But don't slow down.

What is necessary now in financial institutions is a well-organized, well-managed program to provide the support that is so critical to putting a stop to the international terrorism that targets nations and individuals and to the terrorism of drug dealers on our streets that targets our vulnerable youth. When the resources question comes up, remember what we need them for.

Copyright © 2003 Compliance Action. Originally appeared in Compliance Action, Vol. 8, No. 11, 11/03