The Anti Money Laundering Complex and the Compliance Industry by Verhage Antoinette;

Author:Verhage, Antoinette;
Language: eng
Format: epub
Publisher: Taylor & Francis Group

Conclusion

Through the introduction of AML legislation and by making private corporations responsible for the detection and reporting of crime, governments have contributed to the ‘multilateralisation’ of policing (Bayley and Shearing, 2001). Compliance officers have been forced to take up a role in policing the enterprise and the client, which – contrary to private security – not only suits the purposes of the corporation, but focuses on meeting the wishes of the authorities. Financial and other institutions under the AML law were gradually urged into a framework on anti money laundering, by making governmental problems into corporate problems. After all, when banks do not comply with legislation or regulation, they can be sanctioned by the regulator, their colleague banks and, finally, by their customers. Today, this has resulted in a very uneasy position for compliance officers, in which uncertainty and a continuous awareness of risk prevails. Immobility or at least loss of effectiveness can be the result.

Although this was not initially the objective of the research, we cannot avoid the question of effectiveness. However, none of the respondents were clear about this point, because they have no insight into the results. There are, apart from the views of the respondents, some conclusions we can draw with regard to the functioning of the system that, by its very nature, may affect effectiveness.

Within the AML complex, relations between different parties are constructed in such a way that responsibilities and liabilities are shifted mainly towards the base of the complex. While the government states that the financial sector is the key to the problem, the financial sector points to its compliance officers, and they, on their part, refer to the desk employees. The perception of who is in control and which party is most powerful in convincing others of their ideas, shapes the complex and hence its effectiveness. This deduction can also be made from the statements of compliance officers. They say that, with very little support from the authorities with regard to not only the provision of information that ought to feed into AML tactics and money laundering identification, but also regarding their appraisal of how banks actually fulfil their obligations, looking at relations within the complex, an outsider starts to wonder whether this complex is actually striving to fight crime. A system in which the base of the chain – responsible for the input of the system – is not supplied with information, forcing them to rely on their own information sources, on informal information exchange with other banks, or on annual accounts from their own reports, functions as a self-fulfilling prophecy as institutions are obliged to continuously confirm their own analyses. This might lead to banks using either the wrong criteria for reporting (‘defensive reporting’), or those criteria that are most suitable within their commercial setting. All things considered, we cannot then be surprised that banks develop reporting strategies and policies, and base these strategies on how to most favourably protect the interests of the bank. In these contexts, ‘blaming the bank’ is rather easy.

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