KYC (CDD) at center of bulls-eye for Justice Dept.


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Money laundering and the KYC (CDD) and AML/CTF programs that can keep it out of the banking system are taking center stage for enforcement investigations by the U.S. Justice Department, according to a new report by Reuters.

And this new focus on AML and especially KYC (CDD) is not just for the industry’s heavy hitters but also for mid-size financial institutions, “broker-dealers, jewelry and auto dealers, casinos, insurance companies, and shipping companies,” according to reporter Aruna Viswanatha. This pressure on enforcement and self-policing is placing an entirely re-energized and high-stakes focus on AML Compliance and KYC (CDD) solutions for organizations across these various industries.

Two high-profile enforcement actions have recently been levied against major European banks, and there are several more major players facing similar investigations into AML and sanctions violations in both Europe and the U.S. And while Jeffrey Holder’s too-big-to-jail misstep has certainly played into this new focus, the Reuters story zeroes in on another big motivator: Choking off the banking services of criminal actors is often easier and more effective than going after the criminals themselves.

The driving force behind these investigations, according to Reuters, is the Money Laundering and Bank Integrity Unit of the U.S. Justice Department, which has also enlisted the investigative resources of the U.S. Federal Bureau of Investigations and the Internal Revenue Service.

Created in 2010, the MLBIU is using the powers of the Bank Secrecy Act to lessen the focus on low-level money-launders and instead zero in on the bigger players at the higher levels who are either tacitly facilitating money laundering and terrorist financing or are even instigating it because it’s so lucrative.

Frank Cummings, CEO of AML Partners, has been supporting the Compliance, AML, and KYC (CDD) efforts of financial institutions since the September 11, 2001, attacks, and he said this renewed focus on KYC (CDD) and AML internal controls has institutions focusing on more effective AML/CTF but they need the tools to match their intentions.

“Institutions are putting great programs in place, but the software is not keeping up,” Cummings said. “At AML Partners, we have placed the highest priority on tech tools that meet these new challenges. In fact, our CDD (KYC) software already has the ability to comply on the fly with any program an institution creates—no matter how intricate and well constructed. And equally importantly, we have placed a premium on powerful and customizable risk modeling. If you can map it out in your risk model, you can configure this risk analysis in our software. This is the future of KYC (CDD) and AML/CTF Compliance, and these new enforcement emphases on internal controls make that crystal clear.”