Worst Excuses

10.5 Worst Excuses for Having an Ineffective Compliance Program

In Anti-Money Launderingby Parvesh ShamdasaniLeave a Comment

Here are the 10.5 worst excuses for having an ineffective compliance program that I have come across during my many years of working in this field:

10. “We cannot do this, this will not work for us” – Good luck in succeeding with this mindset

9. “We are not a bank” – Yes, it is obvious you may not be a bank, but AML and compliance are not only a bank’s responsibility

8. “We are a small company” – Its not like you are so small that people won’t notice you. Whether big or small, AML and compliance levels are relative to your size and operations

7. “We have done our Due Diligence” – Using the word ‘Due Diligence’ without properly understanding or incorrectly does not make you look ‘cool’ or ‘hip’. Nor does this statement solve or answer any compliance questions one might have. If this is all you have to offer in place of conducting proper due diligence, I wish you good luck

6. “I do my on-going monitoring when I look at the invoice” – Unless your brain is a supercomputer that remembers every invoice, puts it in a mental database, and runs periodic AML reports to catch unusual patterns and suspicious transactions, you might want to retract that statement

5. “We do not do business with anyone who does not have ID proof” – It is a good start, but this is not a complete compliance program. If life was that simple the government would not need to issue an AML policy manual for us to follow

4. “We need to learn soo much, a whole booklet, I cannot be bothered” – Just like how I cannot be bothered to shave, but it has to be done if you want to continue to run a high-risk business. It is actually less about learning and more about understanding and complying

3. “We will start when we need to” – Compliance is not like a switch you can turn on instantly, it takes consistent hard work over a long period of time to learn, setup, and maintain. If anyone believes they can get it all done magically come time, they should be auditioning for talent shows

2. “When FATF come they will check the banks and other institutions and not us” – Facts are not what you think or feel. If you were to read FAFT reports and notice that your industry has been singled out for inspection, you would realise that this statement is not true, and that would be a fact

1. “We cannot apply rules and regulations because Hong Kong is a free port” – Being a free port and completing your AML responsibilities are 2 completely separate topics. Being a free port denotes we are open to all traders, and we are an area where goods may be unloaded, stored, and shipped without payment of customs duties. This does not and should not interfere with our AML obligations in any way

0.5 This is not really an excuse but practicing compliance without proper understanding and thinking you know best when you actually have no idea is a rampant problem that needs to be addressed – Imagine operating on a patient without the understanding, education, and qualifications. Not a good idea? If you have no clue what you are doing, get someone to help you do a complete and decent job before it’s too late

Business and compliance enthusiast, problem solver, road warrior, police ID check magnet, and half geek whose exploits have taken him around the United States, United Kingdom, Caribbean, India, deep into Southeast Asia and West Africa. Entered the anti-money laundering and high risk field to help develop understanding, contribute research, improve standards, prevent profiteering at the expensive of SMEs, and to protect interests of the average person.
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