Disruption versus conviction

Is the current anti-money laundering regime working? This is the question financial institution executives, and others, are beginning to ask. While there is no doubt that national regulators are successful at increasing compliance at financial services firms – the substantial fines are powerfully convincing – some questions are beginning to arise about the strategy overall.

In the UK, for example, most financial crime experts acknowledge a lack of resources for fighting financial crime at the coal face – within local policing organisations. A number of large national bodies have been set up over the past three years, but critics say these are targeting the ‘disruption’ of crime, not convictions.

And in the US and the UK, firms are frustrated that their suspicious activity reports don’t seem to be used for catching criminals. They fear they are filed away in computerised archives, never to be heard from again.

But there are other problems. Early academic studies show that the AML regime’s strictness is exacerbating financial exclusion. Some fear these excluded individuals will turn to either informal or black market service providers, and become victims of crime themselves.

It is still early days in the global fight against money laundering and financial crime. But regulators and firms have a duty to make sure – not just to themselves but also to society – their efforts bear fruit.