It has been a while since my last post and much has occurred, mostly very sad events. Terrible weather issues, domestic and international terrorism, and the shootings just last week in Las Vegas. Coupled with what can best be described as a chaotic Administration, focusing solely on AML is a challenge.
Focus, though, we must, as there are many issues that remain unresolved.
On a personal note…
I would add that another major event to me was my leaving ACAMS right after the Vegas conference. While I will still participate in their programming and on the Advisory Board, my goals are to return to advocacy to both improve the AML infrastructure and encourage the next generation to join this great community.
Recapping annual conference
At the ACAMS Vegas Conference last week, we spent time on a vast array of issues that demand our attention, including cyber security, the impending customer due diligence (CDD) rule, sanctions that constantly seem to change, terrorist financing, and … sales practices.
Yes, an AML conference covered sales practices as an area that deserves our attention.
Presenters discussed the obvious gaps in corporate culture that lead to abusive sales practices—plus the age-old position by many that organizations should reward business lines and not compliance because they are revenue producers.
Note also that those who enable and facilitate fraud should be held personally liable. Until they are, these acts will continue.
Time to dig into reputation risk
Related to the above consumer abuse, what I would be very interested in now is to encourage research into reputation risk.
Those of us in BSA/AML compliance have for many years warned financial institutions that consent orders and civil penalties impact the bottom line—but do they?
I can think of several major enforcement actions in the past decade or beyond. But other than the long-gone Riggs Bank, does it stick?
The sales practice fiasco seems to have resulted in loss of accounts. But in the other cases, more research would be welcome.
We need to measure impact because that will assist in corporate culture improvement and increased emphasis on board of director oversight. With some of the college and university work I will be doing, I will try to gain clarity on reputation.
Assessing federal BSA/AML involvement
The other themes from the conference and AML in general concern regulatory oversight. With the May 2018 CDD rule approaching, compliance professionals are fearful of violating the now “5th pillar” of AML.
I was in Missouri prior to the Vegas conference and federal regulatory officials there told a group of community bank BSA officers not to worry about pillar violations anytime soon as there will be a slow move toward testing CDD programs in 2018.
But can you count on that?
During the conference’s several sessions covering CDD, there was much confusion regarding the rule’s requirement to document beneficial ownership with individuals who, directly or indirectly, own 25% or more equity in a legal entity customer.
Many compliance officials have told us that examiners are already reneging on that requirement, by telling them to require documentation to ownership interests of as little as 10%, because of risk.
We heard the same point in Vegas so staying engaged in this issue as we approach next May is critical and I will ensure we shine a light on any and all inconsistencies.
Eye on the prize of financial inclusion
Finally—just for this post but there is so much more we need to focus on—my commitment to financial inclusion will continue apace.
ACAMS has already offered strong support for assisting the non-profit-organization community in gaining improved access to financial services. In fact, we have just submitted proposed changes to the FFIEC AML Examination Manual that among other things say:
“The charitable sector provides essential services, complementing government initiatives to assist those in need, often in high risk areas, conflict zones, and inaccessible regions. NPOs’ charitable activities help to meet vital humanitarian and development needs, and to carry out their missions, NPOs need access to financial services.”
I’ll have more to say on this any many other issues but for now:
“I won’t back down.”
*The late Tom Petty from 1989’s “Full Moon Fever” with the second verse…
No, I'll stand my ground
Won't be turned around
And I'll keep this world from draggin' me down
Gonna stand my ground
Seeing Petty perform was on my bucket list. But sadly he passed away last week so won’t make it. Tom Petty was a tremendous musician who will leave a great legacy.