Money-laundering has been a huge issue for quite a while now. There is nothing new about the fact that banks and other financial institutions around the world take various measures and precautions to combat money laundering. Norms, regulations, and laws have been and are being issued, prescribing certain rules that the related entities should follow to mitigate instances and consequences of money-laundering and other types of financial crimes. Recently, more and more FI’s have been fined for their failure to comply with these rules and laws. Just to name a few:
In 2004, Standard Chartered Bank had “some problems” due to the absence of anti-money laundering systems. In 2012, the Bank paid a fine of $670 million for violating sanctions against Iran (2005-2006). As well, the Bank has been accused of violating sanctions against Burma, Libya, and Sudan. Standard Chartered Bank was fined $1.1 billion for failing to implement AML practices.
Other examples are: Danske Bank, Nauru, BCCI… and more.
However, Financial Institutions are not the only entities that need to observe AML regulations. In the recent past, one of the UK’s most prestigious law firms was fined a record sum for failing to comply with AML regulations. Mishcon de Reya has agreed to pay a fine of £232,500 and to pay an additional amount of £50,000 in investigation costs. Following the SRA investigation, Mishcon de Reya was found to operate in a way that facilitated transactions that were potentially associated with money laundering. The law firm failed to follow due diligence procedures and monitor clients adequately, according to the SRA.
It is no longer a question of whether financial institutions, law firms, auditing firms, large e-commerce firms, and other entities with large amounts of money that operate directly or on behalf of/for their clients, must adhere to AML regulations. The question is how they do it in the most efficient, cost-effective manner.