In the aftermath of the “FinCEN Files” leak of more than 2,100 suspicious activity reports (SARs), many compliance professionals in the financial industry believe it had an overall positive impact on global efforts to fight financial crime.
According to the “ACAMS Compliance Effectiveness and Risks Survey,” commissioned by the Association of Certified Anti-Money Laundering Specialists and launched in partnership with YouGov, 43 percent of more than 340 financial crime experts polled said they viewed the release of the FinCEN Files as having a net-positive impact on global efforts to fight financial crime, while 27 percent said the media leaks had negatively affected the compliance industry.
When asked about what specific outcome the leaks would have in the financial industry, 31 percent said it will lead to increased regulatory scrutiny; 25 percent expected the leaks would result in an increase in defensive SARs filings; and 15 percent said it would lead to more financial institutions voluntarily enhancing their anti-money laundering (AML) compliance program.
On an individual financial institution level, the majority of respondents listed several concerns that potentially could result from a SARs leak, including reputational harm caused by adverse media reports; loss of client trust; compliance involvement; additional law enforcement and regulatory scrutiny or its impact on ongoing regulations; and litigation resulting from the leaks.
AML compliance efficacy
Most respondents further expressed at least some degree of confidence in the reports they provided regarding their AML compliance programs, with 50 percent stating they’re “very confident” and another 42 percent answering “somewhat confident” that they provide “a high degree of usefulness.”
When asked about the most important issues regarding AML compliance programs, 80 percent or more of respondents cited third-party money launderers, drug trafficking, terrorist financing, sanctions evasions, cyber-crime, fraud, corruption, and human trafficking. Wildlife trafficking was listed as the least important consideration but still cited by 52 percent.
Enforcement and regulatory effectiveness
Respondents were also asked, based on the content of the FinCEN leaks, how they would describe the effectiveness of monetary penalties as a deterrent to repeated compliance violations. In response, 51 percent said monetary penalties were “effective as a deterrent to compliance violations only in limited instances,” while another 23 percent said they were “effective as a standalone deterrent.” Another 17 percent responded they are generally “ineffective as a standalone deterrent.”
Additionally, 79 percent said the periodic issuance of national AML priorities by a national body would be helpful in shaping an institution’s AML compliance program. Eighty-seven percent said feedback and more guidance from FinCEN (the Financial Crimes Enforcement Network) would help to shape the reports they file.
“The findings of the ACAMS Compliance Effectiveness and Risks Survey are clear: Compliance professionals see a need for supervisors and law enforcement officials to do more to help them fight financial crime,” said Scott Liles, ACAMS president and managing director, in a press release. “While existing regulations are viewed, by and large, as being sufficient for the traditional banking sector, further guidance and greater feedback are much in demand.”