The purpose of AML/CTF compliance

The purpose of AML/CTF compliance

30 June 2021

30 June 2021

In this blog, part two of our series with Jeremy Moller, leading financial crime compliance lawyer in Norton Rose Fulbright’s Risk Advisory team, we discuss how reducing the human impact of financial crime “is why we do what we do”.

“AML has become such a hot topic as people have become more aware of the impact money laundering has on society. Reporting entities, regulators and law enforcement agencies have also become more proactive in its prevention” , says Jeremy.

This is part two of our interview with Jeremy on the impact of Financial Crime and why compliance is so important.  In this part we ask him…

  • Why anti-money laundering compliance is more relevant today than ever;

  • How Covid has impacted financial crime compliance teams; and

  • We discuss key highlights from the recent ACAMS conference. 

Why has AML compliance become of greater relevance?

The human impact is increasingly evident – money laundering is both a legal and regulatory risk, but it also has significant human cost. In the last few years, there has been a growing public awareness of how it impacts society.

Previously, there seemed to be a lot more emphasis globally regarding anti-bribery, but, more and more people have come to understand the extent of the underground banking system and the criminal networks that support it. According to The United Nations it is estimated that the amount of money laundered globally in one year is 2 – 5% of global GDP, or $800 billion to $2 trillion in current US dollars.

Regulators, law enforcement agencies and reporting entities are becoming more proactive – there is a greater focus in the industry about why we prioritise financial crime compliance.  The attitude has shifted from focusing merely on compliance and meeting legal obligations to ensuring that all the necessary steps to mitigate the risk of money laundering are taken. This obviously includes AUSTRAC, who is providing greater assistance to reporting entities, as is evident even from their recent 22-page guidance on submitting suspicious matter reports.

Do you think Covid-19 is having an impact on financial crime compliance?

Yes, firstly almost overnight risk and compliance teams had to work remotely and correspondingly there was a greater reliance on systems and technology.

Secondly, there have been increasing compliance risks that have arisen out of Covid-19. We’ve seen:

  • a rise in the reliance on electronic payment systems as visiting a bank branch was restricted. As a consequence more transactions have been moved online, which has put strain on financial institution’s legacy technology systems.

  •  the growth in cryptocurrency and virtual assets.

  • greater use of encrypted communication platforms.

The above have all created opportunities for criminals to exploit the virtual environment that we are now operating in. These have posed immediate challenges, which has subsequently driven greater investment and process changes that otherwise could have taken several years to achieve.

You attended the ACAMS Conference in Sydney last month, what was your highlight?

It was interesting to hear about the emerging anti-money laundering trends, particularly in relation to cyber-crime and cryptocurrencies , which has subsequently increased reporting to AUSTRAC. I also found hearing about the global case studies over the last 12 months enlightening, as in many ways both COVID-19 and the expansion of technology has created a more globalised and interdependent world. Jurisdictions such as the US and UK as well as those in the EU and Asia are facing many of these same challenges.

If you would like to discuss your financial crime compliance further or discuss the ACAMS conference, please…