Money laundering has been a fixture of Hollywood writers for years. Its covert and slippery nature makes for a thrilling ride, and any theatrical glimpses into the high-stakes underworld of financial crime are catnip to the average rubbernecking viewer.
When A-list actors like Meryl Streep take roles in films like “The Laundromat,” people sit up and watch. Entertainment media has helped familiarize the mainstream with the concept of money laundering, however glamorized.
Yet, while television shows like “Ozark” and “Breaking Bad” might have launched a thousand armchair experts on the topic, the fact is “most would be hard-pressed to accurately define money laundering, much less explain how or even why it’s done,” argues Ola Tucker, a compliance professional and author. This state of affairs is perhaps, in part, why she wrote a book that does exactly that.
“The Flow of Illicit Funds: A Case Study Approach to Anti-Money Laundering Compliance” demythologizes money laundering, decrying commonly held misconceptions—like that it must involve money—while also breaking down the basics of what it is and how it works. Each chapter is dedicated to enumerating and explaining, in informed yet digestible prose, specific typologies and trends in money laundering, complimented by case studies that exemplify the methods discussed.
Tucker tackles everything, from the exploitative use of shell companies to cryptocurrencies; the complex enterprises of laundromats to terrorist financing.
As the title promises, the book is a worthy reference for compliance audiences, as Tucker delves into the associated risks and consequences of money laundering, the development and effectiveness of anti-money laundering legislation and enforcement, and the requirements and standards of AML compliance programs.
“Although criminal proceeds can be laundered without involving the financial sector, the reality is that hundreds of billions of dollars in illicit funds are laundered through financial institutions each year,” writes Tucker.
She flags and defines the more notable areas of money laundering concern for banks and other depository financial institutions, expounds upon the supervisory role of government agencies in AML efforts, and details the range of consequences of noncompliance. This content might be well-trodden ground for an AML compliance officer at a financial institution, but for any novice, it is eye-opening information.
Even for more seasoned compliance officers, Tucker’s inclusion of a thorough list of standard-setting organizations and AML guidelines, directives, and recommendations is a valuable evergreen resource.
Perhaps the most reference-worthy section of “The Flow of Illicit Funds” for compliance audiences is Tucker’s overview of the five pillars of an AML compliance program. Though she cautions every financial institution will and should have a unique AML compliance program tailored to its specific risk profile, she also demystifies the current minimum standards for all AML programs.
Those minimum standards, or pillars, set by the U.S. Treasury Department and in part by the Financial Crimes Enforcement Network, are as follows:
- AML internal controls
- Designated AML compliance officer
- Ongoing employee AML training
- Independent AML testing
- Ongoing customer due diligence
Tucker explains each pillar instructively at length.
After educating the reader with a storied history of money laundering since ancient times and a thorough overview of AML legislation and compliance programs, Tucker shares an astounding statistic: Despite AML efforts ramping up globally over the past few decades, the current success rate of money laundering controls is at only about 0.1 percent—underscoring how much of a global threat it is today.
“If money launderers always seem to be a step ahead of law enforcement, that’s because they are,” she writes. “Not only is the success rate of asset seizure less than a paltry 1 percent but also the number of money laundering cases filed worldwide is almost as miniscule. Most money launderers never get caught.”
Tucker shares her recommendations for AML reform in the final pages of her book, underscoring the need for a coordinated global effort. She does so not merely in terms of uniform standards, though that is needed, but also in terms of critical partnerships between the private and public sectors.
“If money launderers always seem to be a step ahead of law enforcement, that’s because they are.”
Ola Tucker, author of “The Flow of Illicit Funds”
She proposes regulatory reform to the suspicious activity report (SAR) process, writing with candor and specificity about its current limitations. One area for improvement she highlights is the need for a feedback loop from government agencies.
“Institutions do not currently receive any feedback, so they simply don’t ever know what happens to the SARs they file … and, more importantly, whether those SARs are of any value,” Tucker points out.
These finer points of Tucker’s recommendations hold potential for exponentially positive results on the efficiency and efficacy of AML compliance programs. Instituting something as pragmatic as a feedback loop, however time-intensive and impractical it might seem from a logistical viewpoint, could help to improve corporate transparency and strengthen reciprocal trust between financial institutions and policymakers, thereby engendering a stronger unified front to combat money laundering.
“The only way to combat this serious problem is through a united global effort toward greater financial transparency,” Tucker pens.
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