Advice About AML

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I could use some guidance. I’m taking an honors international law and policy course this year, and it’s exceedingly hard. The class writes short papers every week, and a handful of students are chosen to present their findings together. I was one of three randomly selected to present this coming week, which is why we need some help.


The topic we’re supposed to discuss is money laundering in the digital age. The history isn’t too hard to figure out, but the implications for this specific time period are still a struggle. What should my group highlight?


Money laundering has quite a colorful history. Your group would certainly be remiss to gloss over it. Law-abiding citizens the world over often take the practice entirely for granted. Money laundering is defined as any transaction or activity used to obscure its true origins (i.e., effectively hiding illegal efforts). Most trace the practice back to as early as 2000 BCE, when Chinese merchants were documented as hiding their wealth to avoid confiscation and taxation. Things have really snowballed since then.


While there are countless people involved in money laundering, the most critical to detect and prevent are those associated with illicit trade (e.g., arms, drugs, and human trafficking). These shadow transactions are the driving engine for the international black market, which is estimated to exceed $500 billion. That figure is likely to be conservative. As you can imagine, international law enforcement agencies devote a tremendous amount of resources to anti money laundering solutions. Almost everyone wants to avoid becoming the next big headline, especially now that the repercussions can be so severe.


More sophisticated criminal entities have begun relying on technology to achieve their goals, in many cases making their endeavors much more successful. Some organizations have gone so far as laundering money through automotive sales so it’s more important than ever for consumers to be aware of who they choose to do business with to avoid being caught up in something entirely unexpected. Seek out a local car dealership that you can trust if you’re in Mechanicsburg, PA for instance. Numerous governments have responded in kind. The US, for instance, which generates the largest share of the international black market, is especially motivated to implement detection and prevention countermeasures. With that in mind, few can question the importance of AML at this point.


The main task now is prioritizing the right detection and prevention mechanisms. Newer policies combined with robust software are likely to make a real impact. The Financial Crimes Enforcement Network (FinCEN), which is run by the US Department of the Treasury, already published a comprehensive list of applicable AML laws and policies. You’ll notice that our government legislated seven policies since the formative Bank Secrecy Act in 1970. You should probably expect newer ones to be legislated in the near future.


The larger challenge will be educating the wider workforce and undermining money laundering at the source rather than relying on retroactive resolutions. The former approach is about finding a sustainable cure whereas the latter focuses on symptom treatment. Everybody knows that you’d rather find a cure. Some argue a cure is impossible because there will always be someone with malevolent intent. Others disagree wholeheartedly. That’s something your class should openly debate because it’s an open-ended pursuit.


“Many receive advice; only the wise profit from it.” — Harper Lee