Beyond being a financial crime, money laundering undermines economic systems, enabling corruption, loss of tax revenues and empowering criminal organisations. Such illicit financial activities can be addressed through effective AML regulations, curbing these crimes by upholding the integrity and stability of financial markets and the global financial system.  

This is where AML officers come into play, as they serve a crucial role in preventing financial crimes, like money laundering and terrorist financing.  

What does an AML Officer do?

An AML officer is responsible for ensuring that an organisation meets its regulatory requirements. They monitor financial transactions, assessing potential risks and investigating suspicious activities that may indicate money laundering or financial crimes. This applies to financial institutions such as banks and other sectors, including real estate, casinos and legal and accounting firms.   

They also identify non-compliance risks, use software for transaction monitoring and provide staff training. They update compliance policies, address regulatory violations and track high-risk clients. 

What are the core responsibilities of AML Officers?

AML Officers are responsible for more than just the implementation and oversight of anti-money laundering programmes. Their duties encompass various areas, including risk assessment, training and reporting. 

• Compliance management: AML professionals ensure compliance with anti-money laundering regulations, developing and updating policies and procedures to prevent financial crime and meet legal requirements. 

• Risk assessment: Assessing risks associated with customers, products and services to prioritise resource allocation effectively, ensuring that high-risk areas are properly managed and adequately protected from potential financial crimes. 

• Transaction monitoring: Using systems to analyse financial transactions to identify potential indicators of money laundering, aiding in the detection of suspicious activities and reducing financial crime risks. 

• Reporting suspicious activities: AML officers must file the necessary Suspicious Activity Reports (SARs) to the relevant authorities if money laundering or terrorist financing is suspected. This ensures that any potential criminal activity is flagged and investigated. 

Challenges faced by AML Officers

AML Officers face significant challenges in maintaining AML compliance as criminals continue to find new strategies to launder money. The following are examples of real-world financial crimes – and how they happened because of AML deficiencies:  

Real Estate Transactions 

Uncommon real estate purchases can involve buyers making anonymous large cash payments. These high-value property transactions may occur where the deals do not align with the customer’s reported income or business profile. 

Example: A government-commissioned report in Canada, known as the “Cullen Commission,” revealed that billions of dollars were laundered through Vancouver’s luxury real estate market. Criminals employed all-cash transactions from undisclosed sources, to conceal true ownership and to inflate prices. The failure of real estate agents to verify buyers’ identities or their wealth sources allowed criminals to operate undetected. 

Shell Companies 

Shell companies are companies which have no clear business activity or presence and are used to move money. Complex offshore structures, where multiple layers of ownership within a company are created to hide the true owner of the funds. 

Example: The Panama Papers exposed how shell companies were set up in tax havens to conceal wealth and move illicit funds. Tax authorities recovered about $500 million and initiated legal actions against involved parties. This revealed how shell companies exploited the anonymity and secrecy of these accounts to evade detection. 

Insufficient Documentation 

Non-compliant clients who resist providing important documentation about their source of wealth raise questions about legitimacy. Similarly, payments to beneficiaries with no clear connection to the client can indicate potential issues with the transaction’s legality. 

Example: Danske Bank’s Estonian branch processed over €200 billion in suspicious transactions from 2007 to 2015, primarily from high-risk areas such as Russia. Internal audits and external investigations revealed widespread failures to verify transactions and assess clients’ risks. The repercussions included regulatory fines exceeding €2 billion, criminal inquiries and resignations among leadership.   

Unusual Transfer of Funds 

Unusual transfer of funds, particularly when numerous transactions occur in a short timeframe without a clear business rationale, can raise suspicions. Irregular transaction amounts can raise suspicions when they diverge from a customer’s usual patterns or do not correspond with their business operations. 

Example: In 2012, US federal regulators imposed a fine of $1.9 billion on HSBC Holdings, accompanied by $665 million in civil penalties, due to significant lapses in its compliance and AML systems. The bank’s insufficient AML controls permitted illegal fund transfers and currency exchanges through their banking services. This enabled drug cartels to launder an estimated $881 million through the bank’s branches in the US and Mexico, facilitated by bulk cash deposits at bank branches.  

Bolder AML services

In an increasingly complex financial landscape, AML officers play an essential role in safeguarding the integrity of the global economy. As financial crimes evolve, their vigilance and strong regulatory frameworks remain essential in safeguarding global markets.  

At Bolder Group, we provide governance and compliance services tailored to meet your unique requirements. Our dedicated team of professionals is well-equipped to assist you with a range of AML-related services, including the provision of AML Compliance Officers, ensuring that your organisation remains compliant and navigates the complexities of regulatory requirements effectively.  

Partner with Bolder to strengthen your AML compliance. Contact us today for expert support in navigating regulatory complexities.  

Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

Bolder Group refers to the global network of independent subsidiaries of Bolder Group Holding BV. Bolder Group Holding BV provides no client services. Such services are provided solely by the independent companies within the Bolder Group which are each legally distinct and separate entities and have no authority (actual, apparent, implied or otherwise) to obligate or bind Bolder Group Holding BV in any manner whatsoever. The operations of the Bolder Group are conducted independently and have no affiliation with third party financial, tax or legal advisory firms or corporations.