Costly US laundering rules must change

Author: | Published: 1 May 2005

Financial institutions operating in the US can expect no relief from an intense focus on anti-money-laundering (AML) on the part of regulators, prosecutors and lawmakers. After an extraordinarily active 2004, in which the federal banking agencies undertook 19 public enforcement actions related to AML compliance failures, 2005 has seen no respite. Institutions should bear in mind that simply responding to the heightened expectations of regulators might not be enough to protect them from AML attention.

Suspicion on the part of Congress and prosecutors about the extent to which financial regulators can truly distance themselves from the institutions they supervise has created a systemic view that more and more scrutiny - and more and more enforcement actions - by prosecutors, state and federal, is required.

Despite evidence that, in practice, additional layers of enforcement authority are self-defeating, this multiple enforcement system, analogous to the US dual banking system, is likely to continue. This means both greater...