Jun 30, 2017 Philip Burgess
Are criminal enterprises running a money laundering scheme through your coffers? Better question: Would you be able to tell if it were happening?
In a 2015 assessment, the Department of the Treasury estimated the total profitability of illegal activities in the U.S. at $300 billion annually. Ostensibly, every dollar of those ill-gotten gains must undergo laundering to cover the tracks of criminals who aim to spend it. Money laundering also extends to market manipulation, misuse of public funds and tax evasion as well.
To eliminate illicit enterprise from affecting your business, here are tips for starting an anti-money laundering (AML) policy at your firm and upholding it:
1. Read the Bank Secrecy Act
A proper AML policy must comply with the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970 (31 U.S.C. 5311 et seq.), known simply as the Bank Secrecy Act or BSA. Among other things, this rule outlines methods for reporting and filing transactions and suspicious activity in ways that create an audit trail should money laundering activity ever be discovered and require investigation.
2. Discuss internal controls with a cross-functional team
Preventing money laundering is an all-hands-on-deck endeavor, requiring the support of every department in your organization. However, without input from representation across this diverse group, AML procedures may interfere with business as usual. As vital as effective AML policies are to the economy, they should not, if possible, detract from standard operations so greatly as to affect efficiency or profitability. Equal voices at initial AML development sessions should do the trick.
3. Drill responses to different laundering scenarios
Once AML development teams formulate ideal AML protocols, test the conclusions, even if team members only perform them as a verbal exercise. This allows businesses to understand just how these new duties will shape current operations. Drills will also give employees the opportunity to identify areas that still need work.
4. Integrate policy into employee training
To ensure every employee works with the established AML policy, not against it, consider all the ways hiring managers and human resources can blend these practices into training and onboarding. HR managers should be in attendance at the cross-functional development sessions anyway.
5. Get it all in writing
It is not enough to treat an AML policy like other unwritten rules around the workplace. Senior management must sign off on the processes that carry out the requirements set forth by the BSA to ensure every aspect is accounted for. This written policy should include the contact information of a designated AML compliance officer. Every AML policy should have one.
6. Share your AML policy with the world
Ultimately, firms should publicly disclose the details of their AML policies. Doing so demonstrates that businesses have dedicated themselves to transparency and will do their part to stem the tide of criminal activity. Who knows? A comprehensive AML policy may even encourage competitors to follow suit and update their anti-money laundering processes.