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Anti-Money Laundering: What You Need to Know

From the Blog
Anti-Money Laundering: What You Need to Know
Since the financial crisis of 2008, and with the additional installments of the Bank Secrecy Act (BSA), anti-money laundering (AML) laws have added significant reporting and compliance requirements to the running list of regulations that all financial ins

Since the financial crisis of 2008, and with the additional installments of the Bank Secrecy Act (BSA), anti-money laundering (AML) laws have added significant reporting and compliance requirements to the running list of regulations that all financial institutions must follow.

Established to prevent those financial crimes spanning securities fraud, market manipulation and the financing of terrorism, the BSA and subsequent AML laws have changed the face of financing – and the cost of not doing business in compliance with these rules and regulations can add up quickly. Take for instance the recent $75 million fine assessed earlier this month to the Tinian Dynasty Hotel & Casino, or the multi-million dollar fines facing numerous international banking institutions by the Hong Kong Monetary Authority.

In recent years, anti-money laundering efforts have become more sophisticated – and monitored more closely – as authorities try to prevent the evolving nature of today’s cyber threats. Now, not only are financial institutions required to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities (The Currency and Foreign Transactions Reporting Act of 1970), but they must also meet the minimum AML compliance standards as established by the Financial Industry Regulatory Authority (FINRA).

Does Your Business’s Anti-Money Laundering Program Meet Compliance Standards?

  • The program has to be approved in writing by a senior manager.
  • It must be reasonably designed to ensure the firm detects and reports suspicious activity.
  • It must be reasonably designed to achieve compliance with the AML rules, including, among others, having a risk-based customer identification program (CIP) that enables the firm to form a reasonable belief that it knows the true identify of its customers.
  • It must be independently tested to ensure proper implementation of the program.
  • An individual responsible for AML must be designated to FINRA and ongoing training must be provided to appropriate personnel.

Investing in Talent and Systems to be Compliant
AML directors, compliance and risk officers, all the way to fraud analysts and audit assistants are and will continue to be top hires for financial institutions – and really any organization where AML rules apply (for instance, the Tinian Dynasty Hotel & Casino facing charges in the Northern Mariana Islands).

Exposing weaknesses in a regulated firm’s infrastructure – i.e. data, documentation, systems and controls and resources – will be a paramount responsibility to those directors and officers put in place. Record-keeping systems monitoring suspicious behavior, as well as the required “know your client” system organizations must have in place to capture background checks and other key screening details will need to be continuously monitored, upgraded and assessed.

It’s important to realize that the increasing responsibilities of these professionals in recent years have also led to subsequent salary increases:

Title or Function | 2013 | 2014 | Increase
Internal Auditor – Manager | $83,500 – $117,250 | $87,500 – $121,000 | 3.9%
Regulatory Reporting – Manager | $86,750 – $110,750 | $89,250 – $114,500 | 3.2%
Chief Risk Officer | $142,500 – $218,000 | $148,000 – $225,000 | 3.5%
Market Risk Analyst – Manager | $90,250 – $126,750 | $92,000 – $132,750 | 3.6%
Credit Risk Analyst – Manager | $86,500 – $112,750 | $90,000 – $116,250 | 3.5%
Operational Risk Analyst – Manager | $85,000 – $109,000 | $88,500 – $112,250 | 3.5%
Chief compliance officer (CCO) Large Firms | $149,250 – $220,500 | $154,500 – $229,500 | 3.9%
CCO, Midsize Firms | $121,750 – $168,750 | $126,000 – $176,000 | 4.0%
CCO, Small Firms | $102,500 – $132,750 | $106,500 – $138,000 | 3.9%
Compliance Officer, Large Firms | $94,500 – $126,750 | $98,500 – $131,500 | 4.0%
Compliance Officer, Midsize Firms | $83,750 – $113,000 | $86,000 – $118,500 | 3.9%
Compliance Officer, Small Firms | $69,750 – $92,750 | $72,000 – $97,000 | 4.0%
Compliance Manager, Large Firms | $80,750 – $104,000 | $83,250 – $108,500 | 3.8%
Compliance Manager, Midsize Firms | $71,500 – $93,750 | $73,750 – $98,000 | 3.9%
Compliance Manager, Small Firms | $63,500 – $82,500 | $65,750 – $86,000 | 3.9%
Compliance Analyst | $50,250 – $77,250 | $52,750 – $79,750 | 3.9%
Anti-money laundering (AML) Specialist | $65,500 – $88,500 | $68,500 – $92,000 | 4.2%
Fraud Investigator | $64,000 – $85,500 | $66,250 – $88,000 | 3.2%
Regulatory Affairs Specialist | $63,250 – $88,500 | $64,250 – $91,000 | 2.3%
Source: Robert Half 2014 Salary Guide

Additional salary information on AML positions can be found on the International Compliance Association website.

LABUR Anti-Money Laundering Consultants
Not only are independent tests a FINRA requirement, but having an outside firm like LABUR with industry expertise – as both advisers and consultants – providing investigation, remediation and look-back exercises, ensures compliance and protection.

Read our case study on an anti-money laundering director recently deployed to an international financial services holding client in Boston, or call our offices to schedule an audit of your company’s AML program – (617) 850-9029.