Why AML Failure is a Choice

two paths to AML failure or AML compliance

KYC Global Technologies’ CEO, Stephen Platt, Explains Why AML Failure is Now a Choice


There is a misguided assumption in the finance industry that the more money you throw at AML risk the more effective you’ll manage it. That is nonsense. You have to spend money, but you have to spend it smartly. The mistake that the industry continues to make is to spend money on headcount. It throws more and more and more people at the problem. Some of the world’s largest banks have compliance and risk functions which number tens of thousands of people most of whom are just trying to make sense of the archaic way in which they store customer data across disjointed datasets. Despite the massive increase in headcount the same failures occur. Why? Because it’s the way businesses manage customers that’s absolutely critical. If you can’t get a single comprehensive view on each customer relationship and use the data to drive dynamic risk profiles and alerts then it doesn’t matter how many people you have, you’re going to be in a continuing state of non-compliance and you’re going to face enormous difficulties sooner rather than later.


“It’s the way businesses manage customers that’s absolutely critical”


I wrote a book a couple of years ago called ‘Criminal Capital’ in which I attempted to analyse the anatomy of the constantly reoccurring AML failures within in the financial services industry ranging from excessive risk-taking through to mis-selling, rigging the markets, sanctions evasion, money-laundering, and the facilitation of crime. When you analyse those behaviours, and the disasters that have resulted from them, you see that the anatomy of behaviour within financial institutions is in each case remarkably similar; despite the fact that the financial industry, as a whole, has invested billions of pounds in trying to prevent this behaviour from happening. There has to be a different way because we can’t continue to see this grievous behaviour continuing at the expense of the tax payer.


“Part of the answer lies in investing in smart technology”


Many institutions, are still managing customer data and making risk decisions based on Excel spreadsheets. Excel was released in 1987. The Berlin Wall came down in  1989 and the world has moved on quite a lot since then! A large part of the answer lies in investing in smart technology which allows businesses to really utilise the data that they have in the most effective way to be able to manage the risks that are inherent in every single one of their customer relationships. That’s the first response. And the second response is that they need to place much, much more emphasis on investing in altering and evolving culture because it’s the human factor that is absolutely critical. Everybody within an organisation needs to buy in and be on-board with the criticality of preventing financial crime, and preventing the facilitation of crimes that generate criminal money. A big part of that lies in empowering your first line of defence by giving them access to on-boarding screening tools like RiskScreen Core.


“A big part of that lies in empowering your first line of defence by giving them access to on-boarding screening tools like RiskScreen Core”


The first thing is to ensure that everybody within your organisation really does appreciate the connection, often quite close connection, that exists between the way in which they do their job, the way in which they deliver financial services and the potential facilitation of crime. And when I say criminal conduct, I’m talking about some really egregious conduct committed by people for whom human life is almost completely valueless in the pursuit of their ill-gotten gains. I do a lot of work with people at financial institutions and I can see when I look them in the eye that they don’t really ‘buy’ that the way in which they do their jobs can have a direct effect on how easy it is for South American drug cartels to benefit from their trade, but it’s absolutely true. There is a clear causal nexus.


“Now we have the technology, it means that AML failure is a choice”


Making people understand that the way in which they do their jobs, the diligence with which they discharge their responsibilities does make a difference. And, if you can persuade people of that, you can get their buy-in. If you can then create an environment in which, when they do raise concerns there are activities or actions within a relationship that cause people to be concerned, they are supported and encouraged in that respect, that makes all the difference.

The human factor is key and if you can combine that with the right technologies, then AML risk management becomes must more effective. Until recently the technology that allows you to identify issues in customer relationships in real time did not exist. It does now. We do now have that technology and that means that AML failure is a choice. That’s never been the case in the past.



About the author

Stephen Platt is Chairman and Chief Executive of KYC Global Technologies a RegTech business that delivers solutions which optimise financial crime risk governance. KYC Global Technologies’ RiskScreen solutions and the world’s most popular AML portal KYC360 are used by thousands of financial institutions, regulators and law enforcement agencies, globally.

Stephen is a barrister and an Adjunct Professor of Law at Georgetown University in Washington D.C. He founded the International Compliance Association in partnership with Wilmington PLC and wrote the International Diploma in Compliance and the International Diploma in Money Laundering Prevention – qualifications that have been awarded to tens of thousands of professionals globally. He is the author of the #1 bestselling book ‘Criminal Capital’ published by Palgrave Macmillan. He has assisted the World Bank on both the StAR initiative and the groundbreaking study tracking illicit financial flows from Somalian piracy. Additionally he has worked on some of the most notorious kleptocracy asset recovery actions of the past 30 years. He has trained numerous supranational bodies, regulators, law enforcement and military intelligence agencies. He consults to Stephen Platt & Associates LLP on large-scale regulatory investigations. Stephen Platt is widely regarded as one of the world’s leading authorities on the criminal abuse of financial services through on and offshore jurisdictions.


Mastering The Data Universe


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