Non-Compliance is a Loser’s Game: Takeaways from ACAMS Vegas 2019

The Future is Now, the theme of ACAMS’ 18th Annual AML & Financial Crime Conference, drove discussions across sessions from anti-money laundering (AML) and transaction monitoring to compliance, gaming, sanctions, fraud and cryptocurrencies.

As was evident throughout the three-day conference in Las Vegas, compliance is a significant issue, with many factors complicating organisations’ ability to establish an effective compliance programme.

One such factor is balancing risks and operational challenges amid significant resource constraints. Organisations must also vet the numerous technology providers to find the best match for their needs, Finally, they have to navigate changing regulations that are often perceived as excessively burdensome or too theoretical.

Clarifying regulatory expectations remains the greatest concern, according to a poll conducted during Regulatory Roundtable on Compliance Trends and Issues, a joint presentation from the main U.S. regulators.

Regulators responded by emphasising the need for a risk-based approach, since there is no one-size-fits-all regulatory requirement that can be set. As a result, each institution must implement requirements according to its specific risk exposure.

Regulators also stressed the importance of human expertise to understand:

  • the ‘spirit’ of regulatory materials and guidance
  • the precise nature of risk faced by the institution
  • the technology that an institution deploys and the effectiveness of the measures implemented.

Hot Topics in AML

In Burning Issues: Hot Topics in AML, Financial Crime and Compliance, panelists provided insight on a range of key issues that were submitted in advance by conference attendees.

Reporting requirements was one issue that came up for discussion. There was consensus that a vast number of reports (including currency transaction reports (CTRs) – transactions above $10,000) are not that useful. Going forward, it is hoped that the proposed AML reform will ease the reporting burden and offer more precise guidelines on how to report only the truly suspicious activity.

In a discussion of the link between fraud and AML, attendees recognised the value of merging anti-fraud and AML resources. Yet, 30% of attendees polled indicated they have a siloed approach to handling these functions, although 40% said the two groups “talk to each other.”

Balancing AML requirements with data protection obligations such as GDPR, identifying beneficial ownership, complying with sanctions, and the challenges of cryptocurrencies and marijuana related businesses rounded out the hot-topics discussion.

New Sanctions Guidance

Sanctions screening is clearly a major focus in the industry, as evidenced by the recent launch of ACAMS’ Certified Global Sanctions Specialist (CGSS) Certification. Two conference sessions on sanctions looked at how to strengthen sanctions filtering and how to keep pace with recent changes, both critical components for sanctions compliance programmes.

According to an audience poll in one of the sessions, 75% of the attendees had sanctions embedded in their AML programme; only 25% had it as a separate, independent function.

Establishing a sanctions management infrastructure based on a combination of technology and people was presented as the foundation needed to strengthen sanctions filtering. The optimal balance of technology and people sets the stage for efficient investigations, proactive compliance and accurate risk assessment, which is the “guiding light” to enhance the overall programme.

To keep pace with recent sanctions changes, presenters suggested banks focus on the May 2019 guidance from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). The guidance framework includes new obligations around risk assessment of the supply chain, technology selection and testing, ownership due diligence and annual training.

Don’t Gamble on Compliance

The knowledge breakfast, How to Stay on Top of the Gaming Industry Challenges, took a deep dive into the financial crime issues specific to the gaming sector. Accuity experts David Loeser and Vincent Gaudel joined Kevin deBruyckere, Director, AML & Investigations Legal, Compliance, Security, British Columbia Lottery Corporation, to share their insights.

The gaming industry is intrinsically attractive to financial criminals because of its high volumes and focus on cash. While these risks have not appeared overnight, the recent legalisation of sports betting in the U.S. has presented an opportunity to set clear regulations for compliance, with AML guidelines comparable to what exists in the banking sector.

One of the greatest challenges for casinos and gaming operators is that embracing compliance requires a shift in culture. Casinos are entertainment businesses and the priority is on satisfying players, therefore AML measures can be perceived as burdensome for the player and, as such, a threat to operator revenue. However, the industry has reached an inflection point at which it is no longer about arbitraging AML compliance and growing revenue, but first ensuring AML compliance before starting to generate revenue.

Compliance as a Business Enabler

Compliance does not have to be an inhibitor to business. On the contrary, implementing effective and efficient controls can help build trust and reputation, whilst saving time and resources.

Those who embed the right principles into their company culture and embrace technology to optimise their approach, will gain the competitive advantage needed to stay ahead of the game.