27 Sep 2017
Susan has been making her living from crime for over twenty years. She provides anti-money laundering training and advice to the regulated community in the UK, Guernsey, Jersey, the Isle of Man and Gibraltar, and writes and talks on the subject at every opportunity. As her hobby she writes historical novels—about financial crime.
I’ve been in two minds whether or not to do this blog post, as I don’t want to upset anyone, and I can’t think of a particularly clever way to disguise who I am talking about. Let’s just say that recently I have visited a jurisdiction where changes are being contemplated to their domestic AML legislation. This jurisdiction is not in the EU, so there’s no obligation for them to implement MLD4, but they do take AML very seriously and have always striven to meet the highest international standards in this arena. In preparation for the update, the local regulator and legislators – as in all reputable places – put together a draft of the proposed new legislation, and its accompanying guidance in the form of a draft new handbook, and issued them for consultation. I replied – but then that won’t surprise you. And I was rather uneasy about doing so, as I really didn’t like many of the changes they were proposing. It’s not that I expect everyone to agree with me: it’s more that I go to this jurisdiction regularly, and I had rather prided myself on having my finger on the regulatory pulse of the place and some of their proposals seemed to me to be out of step with local risk. But – as with the Brexit vote – I had to consider that perhaps I had misjudged the mood.
I was therefore relieved (but perturbed for different reasons) to find, on my recent visit to this jurisdiction, that I had not got it wrong. In fact, every single MLRO I met said how disappointed they were with the draft legislation and handbook, and how concerned they felt that the regulator had really not listened to MLROs’ views on how best to beef up local AML efforts. Most of the changes the regulator has proposed will involve MLROs and their staff in huge amounts of work with – and this is the bit that irritates those involved – very little discernible benefit. Their proposals seem to be addressing areas that have not been highlighted as weak, while ignoring those that everyone agrees could do with improvement
MLROs are, for the most part, dedicated and determined people. You do not go into compliance without a broad streak of idealism in your character, tempered with a recognition that doing the right thing does not always make you very popular. If hard work needs to be done to make things better, then your MLRO is the chap to do it. But change for its own sake? Change that does not improve? Change that is hard to justify in terms of reducing proven risk? Change that make compliance look like it doesn’t really know what it’s doing, when AML is a hard enough sell anyway? No thank you.
For the first time ever, I was present at a meeting where – after I had spoken – someone stood up and made an AML call to arms. The MLROs are massing to make their representations to the regulator, and it was a stirring sight (albeit very polite, and with no songs). I hope fervently that they will be heard, as this jurisdiction’s history of co-operation between the regulator and the regulated has always been enviable. If they lose that, and along with it the goodwill of their defensive ranks of MLROs, their very reputation will be on the line.
This piece first appeared on Susan’s blog, I hate money laundering.
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