One of the most common forms of unethical conduct is money laundering, and multinational companies with offices in various countries can be especially susceptible to getting their reputation stained by enabling or associating with such illicit transactions. Management accountants can work to ensure an ethical culture by checking that their organization has implemented and is maintaining best practices for compliance with anti-money laundering (AML) regulations in particular and fraud prevention in general. These include regular due diligence checks, from know your customer or client (KYC) and AML policies to identity verification (IDV); secure internal control and information systems that raise alarms at suspicious transactions; and background screenings to ensure that the organization isn’t hiring individuals or working with customers involved with money-laundering schemes or facilitating high-risk entities that are in financial crime databases or on fraud watch lists.


Financial regulators worldwide are developing new regulations to identify and fill in loopholes in financial systems that enable money launderers. Another regulatory priority is combating the financing of terrorism (CFT), financial measures used to disrupt the flow of money and other resources to terrorist groups through a set of laws, regulations, and government agency practices. This increased legal and regulatory scrutiny puts companies at risk of civil, criminal, or reputational damage if their internal control systems fail to detect and deter criminal activity. For example, in 2022, Deutsche Bank settled an AML lawsuit for 7.1 million ($7.6 million), and Credit Suisse was fined 2 million Swiss francs ($2.2 million) for failing to prevent money laundering.


Recently we have seen prosecutors across the globe successfully bring cases against and fine financial institutions for their noncompliance with AML regulations,” says Patrick Kelly, head of sales, the Americas, at ShuftiPro, a digital IDV service provider. “It doesn’t seem like prosecutors will stop here; they’ve made their position clear—banks [must] comply with AML regulations or face the ramifications.”




The implications of this type of lawsuit for finance professionals vary depending on where they work. If you work at a regulated financial institution that must remain compliant with the U.S. Bank Security Act (BSA), then your organization must remain compliant or risk legal action, Kelly notes. Compliance with BSA includes filing suspicious activity reports (SAR) within 30 days for cash purchases of negotiable instruments, cash transactions totaling $10,000 per day, and suspicious transactions that may be linked to criminal activity. Further, banks must perform IDV to remain compliant.


Notably, accountants working in-house at nonfinancial institutions and accounting firms aren’t regulated under BSA. But this doesn’t mean they should disregard AML best practices since they’re an important element that contributes to an ethical organizational culture. While regulated financial institutions are required to file SARs, accounting professionals can file them as well. Virtually any person can file a SAR regardless of occupation or job function. Transaction monitoring into accounts can help your company detect suspicious activity and take steps to file a SAR for transactions it feels may be linked to money laundering or terrorist financing. 


“Interactions that once happened in person now frequently occur wholly over the phone or by email,” Kelly says. “Implementing robust IDV measures and subsequent AML checks during the client onboarding process can ensure you’re working with reputable clients.”


Engaging in business with unethical individuals or companies can lead to widespread ramifications—all negative—for an organization, Kelly stresses. Depending on whether you work in-house at a financial services organization or a company in another industry vertical, the required response and potential repercussions will be different. Finance professionals working at a bank must report suspicious financial activity per federal law. Most large, regulated institutions have established best practices to ensure compliance with domestic and international laws and regulations, while small to medium enterprises likely won’t have the same robust compliance efforts. Software is a viable option for finance professionals at organizations of all sizes to deter criminal activity.


“Working with known criminals or engaging in suspicious activity or business deals can harm your firm and be detrimental to its reputation,” Kelly says. “As a trusted business partner, reputation is everything—firms can use automated KYC and AML [software] to mitigate the risk associated with known criminals.”


In addition, transaction monitoring is critical, whether that’s the responsibility of the information technology team or accountants, Kelly says. Finance professionals have complete visibility into corporate transactions to facilitate transaction monitoring, which allows finance professionals to flag suspicious transactions such as unusually large deposits into an account or irregular funding activities.




Finance professionals, even those without a direct role in compliance, risk management, or internal controls, need to take AML and CFT procedures such as KYC and IDV seriously, Kelly says. This can be one aspect of multifaceted efforts to instill an ethical organizational culture.


“With the rise of hybrid working, this need has never been greater,” he says. “Implementing KYC and IDV and then performing screenings against known criminal and sanction lists can ensure that customers aren’t linked to known illegal activity.”


AML technologies powered by AI and machine learning have improved the ability of businesses to prevent money laundering, Kelly says. AML systems can intelligently extract risk-related facts from large volumes of data, resulting in a quick and secure process. AI AML algorithms have the ability to screen customers against adverse media checks, 1,700-plus watch lists, and politically exposed person lists in less than a second, according to Kelly.


“With adequate preventative measures, you can avoid working with known criminals,” he says.


While compliance with regulations is important, it doesn’t ensure an ethical culture. Cultivating ethics across the organization starts from the top down, and leaders should educate their teams on AML and CFT risks and fraud prevention best practices as an element of employee training initiatives.


“This shouldn’t be a one-hour webinar once a year,” Kelly says. “Instead, an ongoing and engaging discussion among team members on AML and CFT can ensure the team knows what to look out for and how to act when they detect suspicious activity.”

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