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Conduct risk in anti-money laundering: Implications of when financial institutions get it wrong
Journal of Financial Compliance,
3
(4),
318-324
(2020)
Abstract
The world of AML compliance is not traditionally viewed as a hotbed of potentially unmitigated customer conduct risk. The Federal Financial Institution Exam Council (FFIEC) BSA/AML Exam Manual contains a directive for examiners to review a bank’s policies, procedures and processes related to account closure. What the manual does not provide is any guidance on how this closure process should be handled. In reading this manual, it is apparent that this common AML practice affects more than the customer’s perceived AML risk exposure. In some cases, taking a conservative approach to AML risk management could unwittingly expose one to unrecognised customer conduct risk. This paper analyses the potential consequences to financial institutions when they fail to recognise and mitigate the customer conduct that is present throughout the customer lifecycle.
Keywords: customer conduct risk; AML; risk management
The full article is available to subscribers to the journal.
Author's Biography
Heather Allen is the BSA officer for Peoples Bank North Carolina and Banco de la Gente, a branch of Peoples Bank. The bank has been in business since 1912, growing from a single office to 16 banking centres and five loan production offices throughout North Carolina (Peoples Bank operates four Banco de la Gente offices and three loan production offices). Prior to joining People’s Bank in 2016 Heather was VP for Enterprise Risk Management and Compliance for Xenith Bank in Richmond Virginia where she designed an expandable BSA/AML programme to meet the needs of an institution that completed five mergers during her tenure and grew from 120 million in assets to over three billion. Heather has over 18 years of experience in AML/BSA, risk management and compliance. She is on the Virginia ACAMS Board and is a Certified Regulatory Compliance Manager (CRCM) as well as a Certified AML and Fraud Professional (CAFP).
