What? Bank directors going about ‘without financial crime training’
02 Feb 2018

The early days of 2018 brought us a rather interesting financial crime survey conducted by Alix Partners. It surveyed 364 financial institutions from 64 jurisdictions, most of whom have international operations.

The results are heavily weighted towards the 84% of respondents from banking and securities institutions.

Of interest is that 20% of the respondents did not provide training on financial crime matters to members of their Board of Directors or were unaware whether the Board were briefed on financial crime issues.

It would be interesting to ascertain how these institutions set “the tone at the top” in regard to financial crime matters.

As the report authors say: “An active, involved, and knowledgeable board of directors is essential for the successful implementation of a robust AML and sanctions compliance program. Boards that have at least a general understanding of the applicable legal and regulatory requirements will be in a better position to provide adequate oversight and allocate sufficient resources.

“Boards should be trained periodically on legal and regulatory requirements, the penalties for noncompliance, and their financial institutions’ overall AML and sanctions risks. Similarly, senior management outside of the AML and sanctions compliance function should take an active approach in managing risks.”

This worrisome finding comes at a time when more is being expected of board members and executives in terms of compliance.

“During the past few years, several regulatory enforcement actions have called for the establishment of AML and sanctions compliance committees composed of outside directors. Board members, too, are being held personally accountable for their firms’ lack of compliance, which in some cases has resulted in exposure to shareholder litigation risk,” says the study, which is entitled ‘2017 Global anti-money laundering and sanctions compliance survey.

Also of interest is that 35% of respondent institutions do not conduct independent audits of their financial crime function. Hmnnn. The Fourth EU Money Anti-Laundering Directive mandates such audits for most institutions within its scope.

In addition, 32% of respondents considered that their financial crime budgets were inadequate or were seriously inadequate.

This finding is particularly troubling as without an adequate budget it is improbable that institutions can meet their legal and regulatory obligations, which may bring regulatory sanctions and significant reputational damage as a consequence.

How would you rate your institution’s financial crime programme against the survey’s findings?

Whatever the case, it’s always wise to take appropriate corrective action as soon as possible where necessary.

Denis O’Connor is both a Fellow of the Institute of Chartered Accountants in England & Wales and the Chartered Institute of Securities and Investment. He was a member of the British Bankers’ Association Money Laundering Committee from 2003 -10; and a member of the JMLSG’s Board and Editorial Panel between 2010 and 2016. He has also been a frequent speaker at industry conferences on financial crime issues, both in the UK and abroad.


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