Money launderers don’t recognize geographical boundaries and, while they often seek to launder money in those jurisdictions with the weakest regulatory environment, they are also attracted to major markets, which can accommodate large-scale movement of funds. They are masters at exploiting any weaknesses caused by differences among national anti-money laundering (AML) systems, which is why the regulation of money laundering needs to be a global effort.
Three major global financial centers – New York, London and Hong Kong – do share a high degree of commonality with the global AML principles of the Financial Action Task Force (FATF). Despite their common approach to AML, requirements are implemented or enforced differently, with a number of nuances within each jurisdiction – and potentially more in the future as the UK shapes its financial crime regime in a post-Brexit environment. This can be a minefield for global financial institutions seeking to establish and maintain an effective, global AML compliance program.
On the regulatory side, financial regulators have taken a proactive approach to close cross-regional collaboration and joint enforcement activities. This impacts financial institutions, as they may find themselves subject to the same inquiries in multiple jurisdictions at the same time. This regulatory approach highlights the need for compliance teams to be aligned and connected regionally as well as globally.
We discuss these issues, and much more, in a recently published white paper, The Challenges of Managing a Global AML Program. The paper examines the differences among the three global financial centers in four specific areas: regulatory examination and enforcement, correspondent banking, information sharing, and AML technology. It also considers the implications of these differences for financial institutions seeking to implement global AML programs and provides advice on how firms can implement efficiently a compliant AML program that is cost-effective and provides more value to the business.
The white paper offers a comprehensive discussion that’s worth your read. Financial services is, without question, a global business, and while money laundering will not go away any time soon, understanding how to align your global AML program to the nuances of key AML jurisdictions will go a long way in ensuring compliance.