In previous blogs we discussed how financial institutions should take a pragmatic approach in transitioning to an enterprise-wide anti-money laundering (AML) standard.  An essential first step is identifying and leveraging existing business standards that apply across multiple regions and across multiple lines of business.  These can serve as the basis of a common, enterprise-wide standard.

At present, banks, capital markets and insurance firms employ a broad range of AML standards.  At one extreme are firms with discrete regional standards, each custom-made for that region, and no common guidance on AML policy across either lines of business or regions.  Each line of business may have a different understanding of policy, with different approaches to implementation.

Most firms find themselves in a transition phase, with multi-regional standards shared across some geographies and within certain lines of business.  There is consistent guidance for geographies under similar regulators and separate guidance for those that differ significantly, with few shared standards across lines of business.

Some financial institutions have established a single global standard for each line of business.  The single standard documents the minimum requirements to be met in each geography in which the line of business operates, and any regional variations are captured as addenda to the global standard.

The optimal state, as we see it, is an enterprise-wide standard.  This is a single, firm-wide standard that captures the minimum requirements that each line of business and each region should meet.  Additional guidance for lines of business—due to customer or product-driven variations—is captured as addenda. Uniform solutions to meet requirements are implemented across all lines of business.

In my next blog, I will take closer look at the broad spectrum of AML standards available to financial institutions.

For more information, view our presentation on the need for a global consistent standard for anti-money laundering compliance.

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