Yates Memo a Year Later: AML & the Liability of the CCO


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CCOs under threat of civil litigation

Chief Compliance Officers seem to be getting it from all sides these days. Panelists at a Wall Street Journal regulatory conference this week zeroed in on the anxiety often present for CCOs tasked with overseeing AML Compliance.

Kendall Day, an AML specialist at the Justice Department, referenced the Yates Memo of September 2015 and the resulting focus over the last year on civil cases against individuals, often in Compliance roles. This was a big change from prior emphasis primarily on recovery of proceeds from deep-pocketed financial institutions accused of AML violations. Day noted in his panel comments that focusing on individuals in Compliance roles can have a powerful “punitive and deterrent effect.”

AML software solution helps share accountability

Various industry commentators and analysts have documented since the Yates Memo the climate of concern common among AML Compliance professionals. Frank Cummings, CEO of AML Partners, notes that it’s a concern made all the more valid considering that an institution’s Compliance culture is so closely wedded to the tone from the top that is set by the general manager and board of directors.

“Compliance professionals frequently getting caught up between labyrinthine regulations and their institution’s desire to move assertively on customer opportunities,” Cummings said. “If you can get the initial commitment, good fintech can help give firm procedural structure to Compliance norms that prioritize internal transparency and shared accountability.”

He cited as an example the workflow configurability and comprehensive archiving system in SURETY Eco, his company’s AML software ecosystem.

“With SURETY Eco, Compliance leaders can create workflows that operationalize the tone from the top and the stated commitments about shared accountability for adherence to an institution’s Core Compliance Program,” Cummings said. “This kind of AML software system provides institutional users with a blank digital slate onto which they transpose their unique Compliance program.”

“It’s a great way to gain confidence in the fidelity of implementation of one’s Core Compliance Program,” Cummings said. “And it’s a smart and efficient way to track and identify the participation of everyone who has a role in achieving Compliance success for an institution. This is the type of system that not only improves Compliance outcomes in terms of regulatory requirements but also in terms of the peace of mind of CCOs and concerned GMs and boards of directors.”