AML Compliance Professionals: The Unsung Heroes

Having worked with compliance teams throughout my professional career, I’ve always known them to be critical roles in any organization, yet they are often underappreciated. Unfortunately, commercially focused teams often deem customer due diligence merely a box-ticking exercise, a necessary evil at the inception of each customer relationship. When you take a step back, it’s far from it.

The United Nations Office on Drugs and Crime (UNODC) estimates that the amount of money laundered globally each year is 2-5% of global GDP, or $800 billion to $2 trillion. This staggering figure underscores the scale of the challenge faced by AML compliance professionals. Money laundering can distort financial markets, undermine the integrity of financial institutions, and facilitate corruption and organized crime. It’s a pervasive issue that impacts economies worldwide, making the work of AML compliance professionals crucial for economic stability by keeping dirty money out of our financial systems. 

On that note, I thought I’d write an article on an often overlooked profession, highlighting the challenges faced, the importance of AML compliance, and the rewards of working in a compliance role. 

Critical Tasks 

AML compliance professionals perform various crucial tasks, including Identity Verification (IDV), Politically Exposed Persons (PEP) screening, sanctions screening, and adverse media screening. They ensure that individuals and entities engaging in financial transactions are who they claim to be, identify high-risk individuals with significant political influence, check customer and transaction data against international sanctions lists, and monitor news sources for negative information about existing or potential customers. These tasks are essential in preventing illicit actors from entering the financial system and in mitigating the risks associated with political corruption and financial crime. 

The Challenges 

The Administrative Burden 

The administrative burden of performing customer due diligence checks differs across organizations. 15 years ago, when digital verification methods were seldom used in financial institutions, compliance professionals had to verify manual copies of ID documents, relying on Google searches for PEP screenings and storing paper copies in offices for months before they’d be disposed of confidentially and securely. 

Thankfully, we’ve moved forward, but we haven’t fully entered an age of digital adoption just yet. The amount of manual admin work required by compliance professionals still differs from company to company, with some businesses still collecting documents via email, for example. Businesses that embrace the latest technologies when performing checks around IDV, screening clients, and KYB often have more satisfied teams. Compliance teams now can – and should – spend less time lost in the weeds of administration.

Staying Ahead of Regulatory Changes 

As financial crimes become increasingly sophisticated, regulatory bodies worldwide frequently update AML laws and guidelines to address new threats and vulnerabilities. This puts compliance professionals in a position where they must continuously stay ahead of evolving global AML regulations and threats to ensure they apply the correct and appropriate level of due diligence on their clients.  

Compliance professionals must continually monitor these changes, which involves regular training, subscribing to industry updates, and monitoring global lists such as OFAC and FATF. This constant learning process allows them to swiftly adapt their policies and procedures, ensuring that their due diligence practices are robust and current. 

Friction Between Teams 

Friction between AML compliance professionals and commercially focused professionals often arises from their differing priorities and perspectives.  

Commercially focused professionals aim to establish strong client relationships quickly, viewing compliance requirements as barriers to entry. Often, the more information that is asked of the client, the more difficult it is to get the relationship off on the right foot.  

In contrast, AML compliance professionals undertake crucial front-line duties to ensure that only legitimate clients are onboarded. Often seen as a cost center, AML professionals don’t generate revenue for the business but mitigate the risk of hefty fines and penalties. These fines and penalties are not immediately tangible, so it can be difficult to justify stringent internal processes when they can impact immediate revenue generation. 

This fundamental clash between the urgency to drive business growth and the necessity to uphold stringent regulatory standards can create persistent tension within teams. Each side strives to fulfill its vital but sometimes conflicting role. 

Leaders in the space find it difficult to strike the balance here, as neither camp is wrong in what they want to achieve. The balance between these teams is crucial, as zooming out to the overall business level, risk mitigation, and strong business development are critical to the sustained growth and survival of a business. The key is clear communication between teams, consistency in the process followed, and getting it ‘right the first time’ with the client. 

The Rewards of AML Compliance Work 

Despite the challenges, working in AML compliance is incredibly rewarding. These professionals do a lot more than just follow underlined rules—they help build a culture of ethical behavior and integrity within their organizations and their sectors. 

Promoting Ethics and Integrity 

At its heart, AML compliance fosters a culture of integrity. Compliance professionals help create an environment where ethical practices thrive by ensuring financial transactions are clear and above board. This dedication to doing the right thing can be deeply fulfilling, aligning with the broader goal of a fair and just society. Knowing that their work contributes to the ethical foundation of their organization brings a sense of purpose and accomplishment. 

Building Trust 

A strong compliance framework builds trust among employees, customers, and stakeholders, which is crucial for long-term success. When people are confident that a company follows high ethical standards and complies with all regulations, they’re likelier to consider the organization a potential business partner. AML compliance professionals play a key role in building and maintaining this critical trust, preventing the reputational damage brought on by penalties and fines. This trust is invaluable for a company’s reputation, protection, and success. 

Preventing Major Crimes 

The most critical role in a compliance professional’s mission is to stop major global criminal activity. By preventing money laundering, compliance professionals help cut off the financial lifelines of terrorism, child trafficking, drug trafficking, and other serious crimes. Their work is vital in protecting vulnerable populations and promoting global security. Knowing that their efforts help prevent such devastating activities offers a deep sense of fulfillment and highlights the importance of their role. 

The Importance of AML Compliance 

The role of AML compliance professionals extends far beyond paperwork and procedural checks. Their work is critical in preventing serious crimes and maintaining global financial stability. The Panama Papers case of 2016 highlights the importance of remaining headstrong in AML Compliance and ‘trusting your gut’ in the face of internal pressures.

Real-World Story: The Panama Papers 

In 2016, the financial world was shaken by the revelations of the Panama Papers, a massive leak of documents from the Panamanian law firm Mossack Fonseca that exposed the widespread use of offshore entities for illicit purposes. One bank stood out among the countless financial institutions implicated for its proactive compliance measures that helped prevent a major money laundering scheme. 

A compliance officer at a European bank noticed unusual activity in several accounts linked to offshore entities. The complex transactions involved multiple jurisdictions, raising red flags for potential money laundering. Despite pressure from the commercial side to maintain these lucrative relationships, the compliance officer insisted on a thorough investigation. 

The compliance team conducted enhanced due diligence, including in-depth identity verification and sanctions screening. They uncovered connections to politically exposed persons (PEPs) and entities previously flagged for suspicious activities. The compliance officer also identified discrepancies in the documentation provided by the clients, further indicating potential fraudulent activity. 

Acting on these findings, the officer reported the suspicious transactions to the relevant financial authorities and froze the accounts, preventing the flow of potentially illicit funds. The investigation ultimately revealed that the clients were attempting to launder proceeds from corrupt practices and tax evasion schemes. 

Thanks to the compliance professional's vigilance and persistence, the bank not only avoided significant regulatory penalties but also upheld its commitment to preventing financial crime. This example underscores the critical role that compliance officers play in safeguarding the financial system from the infiltration of dirty money despite the challenges posed by commercial pressures. 

Compliance Professionals Are the Unsung Heroes of Financial Integrity

Compliance professionals should be proud of their critical efforts in the fight against money laundering and other financial crimes, making a real-life impact in their day-to-day role, even though their efforts are not always recognized. 

Despite facing significant challenges, administrative burdens, constant regulatory changes, and friction with commercially focused teams, they remain steadfast in their commitment to ethical practices and global security. 

Their work prevents illicit activities, fosters trust, promotes organizational integrity, and contributes to a fairer and safer financial landscape. As highlighted by real-world examples, the vigilance and dedication of AML compliance officers are indispensable in maintaining financial stability and preventing dirty money from entering our financial systems, therefore facilitating major crimes.