Anti-Money Laundering Report Reveals a Very Real Fear of Noncompliance

Cyber-enabled crime, shifting economic sanctions’ targets and new data-reporting demands have created radical upheaval in the U.S. anti-money laundering (AML) regime. Thomson Reuters recently surveyed 438 AML compliance leaders connected with the Association of Certified Anti-Money Laundering Specialists (ACAMS) to gain an understanding of how U.S. financial institutions are addressing the regulatory disruption.

The 2017 Thomson Reuters U.S. Anti-Money Laundering Insights Report reveals that only 62 percent of AML professionals are confident their organization can comply with new Financial Crimes Enforcement Network (FinCEN) rules that go into effect in May 2018.

While it is well understood that money launderers often try to hide their identity when engaging the legitimate financial market by using accounts opened by associates, still 89 percent of organizations verify ultimate beneficial ownership (UBO) information directly from the customer, and 58 percent cite the inability to verify UBO data as their greatest operating challenge.

Top priorities

The top priorities for AML and customer due diligence professionals over the next 12 months are to improve data management and quality (62%), invest in new technology solutions and automation (48%) and train existing staff (44%).

“As new regulations continue to be implemented, two-thirds of the survey respondents noted they anticipate an increase in their workload in the coming year related to anti-money laundering and customer due diligence,” said Mark Haddad, vice president of the Corporate segment for Thomson Reuters. “The industry changes have impacted how these professionals work day to day and put them in a key position to make sure their organization is in compliance and operating with as little risk as possible.”

Financial institutions have been forced to overhaul their customer screening, monitoring and reporting processes due to requirements from the U.S. Treasury’s Office of Foreign Asset Control.

These changes have impacted more than half (53%) of the survey respondents who regularly engage in sanctions screening. In addition, shifting Foreign Corrupt Practices Act requirements and rules enacted by FinCEN have added even more challenges.

For example, filing timely and accurate suspicious-activity reports is important for an effective AML program, but 71 percent and 78 percent of survey participants stated they did not know how many of their reports were false positives and false negatives, respectively.

“The big takeaway from the report is that anti-money laundering professionals have a critical mission to properly identify suspicious activity, but they must do so in a way that also allows the kind of customer experience that the vast majority of law-abiding account holders deserve,” said Haddad.

“Prioritizing improved data management, data quality and automation will be important to accomplishing both of these goals and will also allow this group of professionals to be armed with technology as formidable as the criminals they are trying to stop.”



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