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FCC SURVEY: AML penalties only work on occasion, say executives who fear reputational damage due to leaks like FinCEN

By Dan Byrne for AMLi

Over half of respondents to an international poll have said that AML compliance fines only work some of the time.  

In a survey released by the Association of Certified Anti-Money Laundering Specialists (ACAMS) this month, 51% of respondents – consisting of individuals, financial institutions and regulators, among others – said that monetary penalties are “effective as a deterrent only in limited circumstances.” 

This is in spite of the ever-escalating value of monetary penalties issued by regulators worldwide, with several standalone fines climbing into multi-billions territory in 2020.  

The survey was released in the aftermath of the FinCEN files – the massive September 2020 data dump of suspicious activity reports (SARs) showing the path of billions in potential dirty money worldwide.  

The highest concern among institutions when it came to leaks like the FinCEN files was reputation, with 69% saying the harm caused by news reports was a worry to them.  

Behind that issue was “loss of client trust” and “endangerment of compliance staff”. Litigation stemming from the leaks was the topic of least concern, although this still worried over half of respondents at 51%.  

Many of the survey’s questions were therefore connected to this leak and the fallout afterward.  

It found that:

  • less than half of respondents (43%) said that the revelations would have a net positive effect on the fight against financial crime
  • 27% said it would have a negative effect
  • 18% predicted no change.  
  • 11% said did not know

Interestingly, respondents highlighted a desire for more communication – as institutions continue trying to perfect the much-discussed public-private partnership in AML. 

Almost 80% of respondents said that they thought a periodic issuance of national AML priorities would be helpful in shaping their AML framework.  

While 60%c that feedback from FinCEN itself on the process and usefulness surrounding SARs would shape how they file those reports in the future.  

Another 63% of respondents expressed frustration about a time lag between filing a report and action being taken. These respondents said that the lag limited the effectiveness of the entire SAR regime.  

The results come as FinCEN works toward a three-pillar definition of what makes a good compliance program, but 61% of the survey’s respondents have said that they would like more guidance on this to understand what the watchdog hopes to achieve with this. 

FinCEN originally sought feedback on these proposals around the time of the data leak in September 2020.  

Meanwhile, there was much more optimism among institutions when it came to how they viewed their own reporting. A massive 92% of respondents said that they were at least “somewhat confident” that the information they provided to authorities was useful.  

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