Why the battle against money laundering seems lost

A recent publication provides quite an interesting point about the reasons why Europe has accomplished so little in the AML/CTF area regardless the numerous efforts.

It I noted by the author, that the main issues can be divided in 3 main topics i) Governance, ii) Risk Management and iii) capability.

  • Governance: The editorial opinion refer to the lack of a supervisory body within the Union, which coordinate frameworks and defines a long term strategy for the block and which react swiftly to FATF recommendations in order to standardise approach.
  • The piece names 2 main topics as per the ineffective risk management approach: a) Lack of consistent and clear KPIs for countries and b) the need for a real time involvement of controlling functions which goes beyond the limits of the 3 lines of defence.
  • Capability: While fines keep growing in size, the founding of government agencies remains very limited therefore, knowledge and talent remains in the private sector creating a disparity between the regulator/supervisor and the professionals under its ruling.

In our opinion, the problem can be overcome by embracing transparency, personal accountability and by making enforcement independent from the local market.

Supervision should be fully independent (reason why the 3 lines of defence do not function as conceptually defined), making decision only under the consideration of compliance within a risk based approach or not.

Transparency will require that decisions and enforcements are known as well as regulatory expectations, therefore, players will act over a clear and defined set of KPIs and knowing the consequences of drifting from the framework.

Personal accountability is a key element of supervision, decision makers must understand the impact of their decisions and assume personally the risk appetite of the company;

In that sense, supervision and risk definition will convey to generate a compliance culture which will drop into the organisations themselves.



Jaime Prieto

Mr. Jaime Prieto is a lawyer experienced in Financial Crime, Anti-Money Laundering and Counter Terrorism Financing having extensive professional experience in both public and private sectors. Mr. Prieto has been a Head of Compliance in the European Union, the Americas and the Caribbean for banks, trust companies, asset managers, Big Four audit and advisory firms, RegTechs, government agencies and other types of financial professionals. In addition to his experience, he has been legal and educational chair in several compliance and sectorial organisations and performed as a teacher and speaker for a number of organisations and in several local and international forums. Furthermore, Mr. Prieto is an experienced Money Laundering Reporting Officer anda Data Protection officer with additional experience in risk management.
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