Why Can’t We All Just Get Along? A call for the convergence of AML and ABC compliance functions at financial institutions

Author: Katya Hirose, CAMS-Audit

The United States Department of Justice (DOJ) has been known to target corruption inquiries by industry. As a result, companies in the extractives industries, medical devices and pharmaceutical industries over recent years have developed fairly robust and sophisticated anti-bribery and corruption (ABC) compliance programs. According to various experts, including lawyers at Morrison Foerster, it appears that the DOJ has its sights set on the financial services industry.1 Why now, and why an industry typically more attune with anti-money laundering compliance? Financial institutions, hedge funds and private equity firms can have exposure to the Foreign Corrupt Practices Act (FCPA) risk in a number of ways. Those include dealing with Politically Exposed Persons (PEPs), high level employees of state-owned enterprises who are considered to be foreign officials under the FCPA, sovereign wealth funds, employees of publicly traded companies (issuers) acting abroad, foreign companies in which they invest by acquiring risk, as well as laundering suspicious proceeds through their accounts. Quite simply, the United States has an interest in assuring that its financial institutions are not abused to launder the proceeds of corruption. Integrating ABC compliance into existing AML compliance programs makes sense not only financially, but also practically, because where there is corruption, there are proceeds to be laundered.

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