When will the entire AML community officially recognize proactive institutions?
I have been extremely fortunate to have been part of this community for over 30 years. From the beginning I have always stressed the importance of banks—now the broader financial community—being an essential part of the battle against financial crime.
Industry wants to help
Earlier on, I joined the then-head of IRS-CI on the “Today Show” and pointed out the importance (not the burden) of laws designed to attack money laundering.
The show’s host was dumbfounded. She had expected—and wanted—conflict.
As we walked off the set, the IRS official thanked me.
I simply responded, “The bankers want to help.”
Similar stories have been told post 9/11 when heroic government figures such as Dennis Lormel, then of the FBI, immediately reached out to many bankers and associations and the partnership reached even a higher level. Law enforcement has always been appreciative of financial sector support.
I have personally witnessed many local and regional events where our law enforcement partners have recognized and awarded private sector successes. These acknowledgements are very useful when the remaining recalcitrant bankers complain about AML/BSA/Sanctions requirements.
Regulators don’t always get it
But what about our regulatory peers? While an incomplete and, in my view, a tad misguided report from the Clearinghouse attempted to tackle needed AML reform, there was at least one theme I completely support:
“There are disincentives for financial institutions to develop innovative methods for identifying criminal behavior. Firms receive little or no credit for proactive, aggressive cooperation with law enforcement—focusing on real risk—because examiners generally are unaware of such actions and in any event have no method for weighing such behavior against any policy or operational shortcomings within the confines of the examination framework.”
This comes from A New Paradigm: Redesigning The U.S. AML/CFT Framework To Protect National Security And Aid Law Enforcement (2017).
Now, the immediate reaction from our friends in the agencies is twofold. First, they believe they can’t acknowledge success from SAR filings because SARs are confidential, and, second, they appear to feel that giving credit for some part of an AML program may jeopardize their ability to formally criticize other, less-strong areas.
To this I say, “Is that it?”
To be fair, many regulators that have joined me on panels at our conferences; have publicly pointed out robust AML programs; solid training; and a little bit on successful proactive work such as in human trafficking.
We need much more.
Keep confidentiality, but recognize effort
When FinCEN makes a big deal (as it should) about law enforcement, rewarding them for utilizing BSA data, where do they think that data comes from? A parallel acknowledgement of the senders of SAR data would not hurt or jeopardize confidentiality, if done carefully.
As for the regulators, perhaps seeking public comment on how you could give credit to strong programs outside of the Administrative Procedures Act process on rulemaking would be a good first start.
As I mentioned here and in many places, ACAMS was proud to have awarded both the financial sector (JP Morgan) and the Department of Homeland Security (DHS) for their cutting-edge work on human trafficking detection.
(Note: Just to prove no good deed goes unpunished, there is a Senate bill requiring compliance programs to do this and we have been told of several situations where examiners have criticized source materials used by banks to detect human trafficking!)
What about some official mention by supervisors?
These programs were innovative and developed by bankers who clearly care about their communities. Let’s expand ways to further encourage so that society can benefit.
(Note: There was also a comprehensive response to the issue in Canada called “Project Protect,” but correctly lauded by law enforcement and agencies)
Look, confidentiality is a real issue. But we are a smart community, so let’s figure something out. (Note: I received a nice note about a major successful case in the Mid-Atlantic region, thanking the bankers who assisted but needed to be publicly protected.)
Can’t you hear us knocking?
*Released by the Rolling Stones in 1971 on the Sticky Fingers album. In 2004, Rolling Stone magazine listed it at number 25 on its list of "The 100 Greatest Guitar Songs of All Time.”