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New governors on the block: the rise of anti-money laundering professionals

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Abstract

Anti-money laundering (AML) activities are part of an institutionalized, global, and increasingly prescriptive regime, covering a growing set of predicate offences. Yet with much of the responsibility for implementation and monitoring at the hands of private actors, compliance professionals within financial institutions have become foot soldiers in the fight against money laundering. This paper argues that AML professionals do not only implement and monitor, however, but, to protect their interests, also shape the content of governance. The process is two-fold. First, a professionalization process is underway inside banks and other financial institutions. Professionalization has strengthened the relative standing of compliance departments against a background of lower tolerance for illegal and irregular transactions and a growing reputational and financial cost for banks knowingly or accidentally enabling such activities. From that position, the compliance industry has consolidated its role through the development of systematic professional standards and through identifiable skills and expertise as defined by professional associations. Second, anti-money laundering professionals interpret rules and engage in regulatory creep. They meticulously implement different requirements by developing private compliance standards and risk assessments that are technically sophisticated and designed to earn regulatory kudos; they do not simply follow what is required. Further, they extend their mandate by including other compliance facets. Acting out of concern for professional security and advancement, AML compliance officers become governors on the output, but also on the input side.

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Notes

  1. Interviews with AML practitioners in the United States over time show an important development on this front. In 2008, interviewees in both the public and private sectors referred to the importance of a legal or law enforcement background and qualifications. Financial institutions focused senior recruitment efforts in those areas as well. In 2013, the stress was on practitioners who understood financial products. For more on the use of interviews in this paper, please see the subsequent section.

  2. Interviews with private sector practitioners in all three interview regions suggest that AML professionals are keen on this line of reasoning, but acknowledge that the internal organization of financial institutions prevents serious benefits from materializing.

  3. Interviews with AML compliance practitioners in the private sector in all three regions confirmed continuing investment through the financial crisis.

  4. Thirteen out of the eighteen private sector professionals interviewed held a certification or had undertaken some training. All interviewees in the United States and Hong Kong were certified.

  5. Interview with ACAMS Executive Vice-President, February 2014.

  6. A point reiterated by all interviewees; certification is important both for in-house promotions and for being ‘poached’.

  7. More information on certification, developments in training, and fees can be found at http://www.acams.org/.

  8. Interview with ACAMS staff member, April 2017.

  9. Participant observation suggests that the mantra is seldom omitted from presentations on best practice.

  10. Interviews with bank AML compliance practitioners in the 2012-2013 fieldwork period.

  11. Interviews with bank and financial services firms AML compliance practitioners in the 2012-2013 fieldwork period.

  12. This spiral was identified as an instance of regulatory creep in interviews with US officials in both the public and private sectors.

  13. A point stressed by practitioners in the public and private sectors in Europe and the US. Private sector AML compliance officers in Hong Kong remained concerned about reputational issues.

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Acknowledgements

Research funding for this paper was provided by the ‘STEAL – Systems of Tax Evasion and Laundering’ (#212210/H30-STEAL) project funded by the Norwegian Research Council, NORGLOBAL Taxation, Capital and Development Programme.

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  1. Department of Business and Politics, Copenhagen Business School, Porcelænshaven 24.1, 2000, Frederiksberg, Denmark

    Eleni Tsingou

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  1. Eleni Tsingou
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Correspondence to Eleni Tsingou.

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Tsingou, E. New governors on the block: the rise of anti-money laundering professionals. Crime Law Soc Change 69, 191–205 (2018). https://doi.org/10.1007/s10611-017-9751-x

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