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LexisNexis® Risk Solutions, the global information solutions provider, today releases its latest analysis of the anti-money laundering (AML) sector in the UK. Research conducted with senior AML stakeholders, suggests that as part of the Senior Managers & Certification Regime (SM&CR), senior management – not just the Money Laundering Reporting Officer – should be held responsible for money laundering failings.
Following its implementation in 2016, senior financial crime professionals indicated the SM&CR had borne positive results. Surveyed for the LexisNexis Risk Solutions report – Future Financial Crime Risks 2017 - almost two thirds of respondents believed that the regime had increased collaboration between business and compliance units, with 70% believing that making senior executives responsible for the actions of their employees was positive for the industry.
However, interviews with senior AML stakeholders conducted for a recent LexisNexis Risk Solutions report, Money Laundering Exposed – Facing the Threat, indicated a belief that responsibility for anti-money laundering (AML) must sit within the C-suite, rather than solely sitting with Money Laundering Reporting officers (MLROs).
One senior financial crime professional highlighted that in some organisations the person responsible for AML processes is ‘fighting a losing battle’ as it is ‘beyond their control’, noting ‘compliance for AML should sit… with the managing director or head of business operations because it would incentivise them to comply with the rules’. Another expert questioned the approach of holding MLROs solely to account “I find it sad that when you look at the fines from the regulator, they are targeting the MLRO. Where is the business in this? They own the risk. Where are they?”
The SM&CR was introduced in 2016 by the Financial Conduct Authority in order to increase transparency across the financial sector and ensure senior managers take accountability for their actions. Initially rolled out to banks and asset managers, the regime has since been extended to encompass the insurance sector as of December 2018.
Some experts argue that it needs to be extended past the financial services sector altogether to be truly effective. One financial crime professional stated that implementing a similar approach in the professional services industry would “focus the minds” and increase collaboration across sectors.
Michael Harris, Director, Financial Crime Compliance and Regulatory Risk at LexisNexis® Risk Solutions comments:
“It’s vital that executive leadership be aware of the role everyone has to play in the fight against financial crime. Whilst the compliance team or MLRO might be the ones with the true expertise in these matters and are accountable for AML processes, they may not have the power to effect change within the organisation – that sits with the board.”
“As financial crime continues to grow, accountability needs to sit across the C-Suite, to ensure that anti-money laundering efforts are sharply in executive focus, appropriately resourced and inherent in company culture.”
