Q&A with Anti-money Laundering Expert

  • Bion Behdin, CRO and co-founder at First AML

  • 05.04.2024 12:20 pm

According to the United Nations, 2-5% of global GDP is laundered each year, amounting to $800 billion - $2 trillion in US dollars. Of course, due to the clandestine nature of money laundering, the extent of it can be considered fairly unclear. But the problem with it is clear. 

Money laundering facilitates the flow of money from criminal activities like human trafficking and the drug trade. From an economic perspective, it depletes tax revenues, undermines public confidence, and hinders GDP growth. Everyone from regulators to businesses must pull their weight to stop this pervasive threat. 

The regulators have been scrambling to play catch up in the last few years, with overdue reforms to the Anti-Money Laundering (AML) and Counter-Terrorism Financing Supervisory Regime and Companies house, meaning change is afoot. 

We aim to shed light on the fight against money laundering, to aid businesses as they prepare to meet these new regulations. So, we sat down with Bion Behdin, Chief Revenue Officer and Co-founder of First AML, to discuss anti-money laundering measures, his experiences and how businesses can build a culture of compliance. 

1. Can you explain the importance of anti-money laundering measures in today's business environment?

Robust anti-money laundering (AML) is more important than ever. This is due to the unprecedented number of sanctions being imposed and the mounting apprehension surrounding the potential misuse of emerging technologies – such as cryptocurrencies and AI-generated deep fakes – for money laundering purposes.

The financial services industry is undergoing rapid and significant changes, both in terms of complexity and volume. With the increasing adoption of digital transactions, traditional AML frameworks no longer suffice – and firms must evolve with it.

Regulators are also becoming increasingly rigorous in ensuring that organisations within their remit are complying with money laundering regulations. Recently, the Financial Conduct Authority stated that some firms are “still not getting the basics right” in a public letter to the CEOs of firms they supervise. Firms were warned of potential regulatory and enforcement actions if they failed to rectify their financial crime controls within the next six months. A regulatory crackdown may be coming - and businesses must be ready. 

2. What are the risks of non-compliance?

The risks of non-compliance have been evolving in recent years, with regulators issuing increasingly substantial fines for breaches, such as ADM Investor Services International Limited being fined £6,470,600 for inadequate AML systems and controls

Not only this, but regulators are also focusing on more nuanced signs of non-compliance. Late last year the Financial Conduct Authority targeted hundreds of firms that they noted had churned through three or more MLROs (Money Laundering Reporting Officers) in as many years. Significant turnover in this role can ‘compromise effective oversight’, as well as be a red flag that the firm isn’t valuing the contribution or recommendations of personnel in that function. 

In addition to fines, reputational damage needs to be considered. In an era where information spreads rapidly and fines are getting handed out consistently, the reputational damage from compliance failures can be swift and devastating. It can lead to a loss of customer trust, which is incredibly challenging to rebuild (consider the impact sustained by HSBC when news came to light that it was associated with the Sinaloa cartel and El Chapo). Not only will non-compliance have a direct financial consequence, but it will also come with a longer-lasting detriment.

3. What are the emerging trends or technologies that could enhance AML efforts, and how should companies adapt to these developments?

Emerging trends include the deployment of artificial intelligence for the analysis of extensive datasets, aiming to identify potential red flags. There is also the move towards comprehensive ‘all-in-one’ anti-money laundering platforms as businesses transition away from point solutions, which tend to result in fragmented internal processes.

The shift towards all-encompassing AML platforms means companies can have a more holistic view of customer activities, enhancing the ability to track and analyse transactions across multiple jurisdictions. This not only streamlines compliance processes but also strengthens the overall effectiveness of AML controls by reducing the likelihood of oversight.

4. What specific responsibilities does the c-suite hold in ensuring effective anti-money laundering practices within the organisation?

The c-suite holds the responsibility for cultivating a culture of compliance within an organisation. Striking a balance between anti-money laundering obligations and the revenue requirements of the business presents challenges. However, allocating appropriate resources for compliance is essential. Many firms have historically either understaffed their compliance departments or provided inadequate support, resulting in prolonged processing times, inefficient procedures, and high turnover rates among compliance officers. This approach not only undermines the effectiveness of AML measures but also poses a significant risk to the reputation and operational integrity of the organisation.

5. How significant is the role of the c-suite in setting a culture of compliance?

The c-suite is responsible for setting the tone for the rest of the organisation when it comes to compliance. Investing early in people, processes, and technology is vital in ensuring that the compliance department is equipped to scale alongside the organisation's growth, as the two often go hand in hand.

That said, while using technology undoubtedly streamlines AML processes, the foundation of a successful compliance strategy lies in the culture of the organisation. This is where the C-suite executives are needed. 

When senior executives actively participate in and prioritise compliance, it sets a clear example for the entire organisation. This leadership influence helps integrate compliance into the daily operations and mindset of the company, making it a fundamental part of the organisational culture - rather than an afterthought.

This commitment to doing the right thing demonstrates to employees, regulators, and the market that the company is committed to operating responsibly and ethically - which positively impacts the company’s reputation.

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