Banks Staffing Up to Boost Anti-Money Laundering Vigilance
Dirty money has become big business, a trend that is becoming increasingly expensive for banks around the world. Hefty fines have just prompted American Express to ramp up its money-laundering vigilance. Globally, however, banks have already begun staffing up to better monitor transactions and spot suspicious activity. Mitch Feldman, President of executive recruiting firm, A.E. Feldman, says the need for qualified anti-money laundering experts persists and that demand will continue to grow.
American Express was just hit with the largest anti-money laundering related fine ever assessed against a U.S. financial institution. The Financial Crimes Enforcement Network, an intra-government enforcement arm, slapped the bank with a $65 million penalty for failing to maintain an effective anti-money laundering program. American Express opted to not fight the charge, which specified that the bank failed to implement adequate internal controls, conduct adequate independent testing, and designate compliance personnel to ensure compliance with the Bank Secrecy Act. The FinCEN also said American Express operated in certain high-risk jurisdictions and business lines without commensurate systems and controls to detect and report money laundering and other suspicious activity in a timely manner. Despite the heavy fines, the government will recommend the dismissal of the charge in one year, provided the bank fully implements significant anti-money laundering measures.
“An established and respected financial institution learned a valuable lesson about its legal responsibilities, says Karen P. Tandy”, U.S. Drug Enforcement Administration administrator. Alice S. Fisher, assistant attorney general in the criminal division adds, “The Department of Justice will continue to work to stop financial institutions from knowingly disregarding their obligations to have these vital programs in place.”
In response to the action however, American Express defends their existing anti-money laundering efforts, and stipulates that their programs will continue to be augmented in the future. ”We have had an anti-money-laundering compliance program in place for many years,” Susan Aftran, vice president of communication for American Express Bank International told eWEEK. ”The program includes policies and procedures, training, and independent audit functions, as well as designated AML compliance officers. We have enhanced the program in recent months and intend to continue to enhance it in the future.”
It’s not just American Express. Banks around the world report that they have already begun to ramp up their AML efforts. Last month KPMG published a new survey, which revealed that 95% of North American banks reported an increase in the number of suspicious activity reports over the past three years. Globally, 72% of banks polled cited an increase. Meanwhile, KPMG also found that over the past three years, spending by banks to combat money-laundering activities rose by 71% in North America - well above the 58% global average. ”The KPMG survey confirms what we all know,” said Sepideh Behram, senior compliance counsel for the American Bankers Association. AML compliance is a significant and increasing burden.
With more suspicious activity reports being filed around the world, banks are facing new anti-money laundering challenges. Banks predict that costs to fight money laundering will continue to increase in the coming years. The biggest expenses: implementing computer systems and hiring experienced personnel to monitor transactions.
Although automated monitoring systems generate valuable information, anti-money laundering experts continue to be a bank’s first line of defense against potential money laundering. ”A vigilant, experienced and well-trained staff is the first line of defense in the fight against money laundering,” says Teresa A. Pesce, a forensic practice partner overseeing the AML service line for KPMG LLP.
Every single North American bank executive surveyed by KPMG stated that they rely most heavily on their employees to report suspicious transactions. And globalization has only increased banks focus on anti-money laundering efforts. Not only are more people required to manage the effort, but the costs of hiring experienced anti-money laundering experts are also on the rise.
A.E. Feldman says this trend has put AML experts in high demand. Banks are staffing up in an attempt to better monitor transactions and identify suspicious activity. Successful candidates must have demonstrated success in business and strategic planning as well as a strong background in finance or accounting. Strong leadership and communication skills along with the ability to manage client relationships are also key requirements.
