Failure to Have Proper Anti-Money Laundering and Screening Systems in Place Will Mean MLROs Are Held Personally Liable By FSA
2009 will see a sharp increase in fines against individual Money Laundering Reporting Officers (MLROs), not just financial institutions, as the Financial Services Authority begins to clamp down on enforcement of anti-money laundering legislation, according to compliance screening specialists, Datanomic Ltd. MLROs in particular will be under the spotlight and held personally liable if they fail to put proper money laundering controls in place. Firms have now had almost a year to update their internal screening systems since the Money Laundering Regulations 2007 came into force on 15 December 2007.
In a landmark case earlier this month, the FSA fined Sindicatum Holdings Limited, a corporate advisory firm, £49,000 for failing to implement effective systems and controls for verifying client identities. It also fined the company's MLRO, Mr Michael Wheelhouse, £17,500. The fines imposed would have been 30% higher if Sindicatum had not agreed to an early settlement with the FSA. This is the first time the FSA has fined a MLRO. The deficiencies included failure to implement adequate verification procedures for clients; failure to adequately verify client identities; failure to keep adequate records regarding identity verification of clients; and failure of the MLRO to take reasonable steps to implement adequate AML risk procedures.
“The FSA is starting to show its teeth to ensure UK financial institutions take anti-money laundering regulations seriously,” said Dr Jonathan Pell, CEO of Datanomic Ltd. “Individuals who hold the MLRO function have responsibilities and can be personally liable for their firm's failings. This should be seen as a warning shot on the importance of complying with the Money Laundering regulations, and we believe there will be more fines against more individuals to come. Mitigating risk against money laundering is vital to the integrity of the UK’s financial markets. The message for MLROs is loud and clear – get your house in order or be held personally liable.”
The legal requirement to continually and accurately screen clients presents companies with new operational challenges. Inadequate information exposes organisations to both financial and reputational risk.
Datanomic’s dn:Director Sanctions & PEP Screening software enables organisations to rigorously and systematically identify heightened-risk entities within their customer bases. It relieves the burden of manual or semi-automated client screening by enabling automated screening in an easy-to-use/easy-to-implement solution purpose-built for Compliance. Datanomic includes powerful screening rules to match against both commercial and regulatory body/Government watch lists, and has worked with leading financial institutions to deliver a highly intelligent data matching solution that is designed for ease of use by non-technical users.
In addition to significantly reducing complexity and administrative overhead, Datanomic’s dn:Director Sanctions & PEP Screening software delivers industry best practice, providing a base from which management can develop tailored policies and procedures appropriate to their business. By reducing the amount of manual matching required, Datanomic’s solution frees up resources to focus manual effort on more complex tasks. Moreover, improving the effectiveness of enterprise data applications further enhances corporate performance and competitive advantage.
Datanomic’s dn:Director Sanctions & PEP Screening software is now the platform of choice for fifty percent of the UK’s top 10 Asset Management firms, the UK’s largest VC/Private Equity firm, major credit card issuers, as well as the largest Financial Third Party Administrator in the UK. Datanomic’s anti-money laundering solution is now installed across the four continents of Europe, Africa, Asia and the Americas. Furthermore, market penetration has now expanded outside of the traditional financial services sector and now includes large customer implementations in the mobile money sector with Vodafone - the largest mobile money brand – and is also rapidly gaining market share in other industry sectors.
Datanomic’s holistic approach to data quality and screening enables its growing list of European and North American blue chip clients to rapidly achieve a Return on Investment by exposing and correcting deficiencies in information the business relies upon, and also discovering potential regulatory and legislative compliance data issues, in line with proactive risk management. Our clients come from a wide spectrum of industries including financial services, telecommunications, government, healthcare, utilities, professional services and engineering.
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