anti-money laundering

An effective anti-money laundering program is essential to combatting financial crime and managing new risks arising from the dark web and cryptocurrency. Aligning AML training with monitoring systems and other controls and procedures helps ensure that employees can recognize and report signs of this global crime.

How much ‘dirty money’ is laundered every year? An estimated $800 billion to $2 trillion, according to the United Nations Office on Drugs and Crime, negatively impacting the economy, society, organizations, employees and customers.

Two recent AML enforcement actions underscore the importance of AML training and fostering a culture of compliance .

  • A cryptocurrency company agreed to pay a $30 million fine to the New York State Department of Financial Services for violating AML and cybersecurity regulations and failing to create and maintain a culture of compliance.
  • A subsidiary of a global payment card services company agreed to pay $430,500 to settle charges connected to illegal drug distribution and money laundering resulting from “a combination of human error and sanctions compliance program deficiencies,” according to the US Treasury Department’s Office of Foreign Assets Control (OFAC). Conducting employee training is among the steps the company agreed to take as part of the OFAC agreement.

While AML is a top priority for financial services companies, the consequences of money laundering and financial crime affect many other organizations and industries. And companies that deal in high volumes of cash, such as restaurants, grocery stores, vending machine operators, taxi and retail companies and casinos are at a higher risk of money laundering or terrorist financing.

AML Training Essentials

An effective AML training program should focus on relevant information, examples and actionable insights that increase employees’ understanding of:

  • What money laundering is
    Ongoing training reinforces AML basics, including what money laundering is, why it’s illegal and the three stages that criminals use to hide the origin and movement of funds — placement, layering and integration.
  • Common money laundering methods
    Besides traditional methods such as paying cash for luxury goods, employees should be aware of other types of money laundering involving Covid-related scams and other healthcare fraud, human trafficking, drug trafficking and terrorism.
  • How to spot red flags
    Frontline employees who are unable to recognize signs of money laundering or terrorist financing pose a big risk to the organization and its reputation. Among the common red flags: complicated business ownership, unusual transaction patterns, individuals who withhold or falsify passports or drivers’ licenses, clients who have offices or own property in high-risk countries or deposit a large amount of cash in numerous small amounts or at different bank branches to avoid scrutiny. 
  • AML policies and reporting procedures
    Effective AML training should clearly communicate the purpose of the organization’s AML policies, Know Your Customer (KYC), due diligence and other procedures and how they relate to employees’ everyday work. 
  • Relevant AML laws 
    While AML laws in the US (the Bank Secrecy Act and the USA Patriot Act), the UK, the European Union and other countries may differ, they share a common purpose: to prevent legitimate businesses from being used to hide the illicit proceeds of crime and require organizations to take steps to detect and report it. 

Traliant Insight

As part of an organization’s holistic approach to preventing money laundering, AML training is an important step in motivating employees to stay vigilant, to report potential misconduct and understand their role in creating and maintaining a culture of compliance.