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Corporates brace for AML shortage

Corporates brace for AML shortage

AS THE CORPORATE sector continues to wait for the Federal Government to show its hand on anti-money laundering, fears are growing that firms may have trouble attracting staff to work on…

AS THE CORPORATE sector continues to wait for the Federal Government to show its hand on anti-money laundering, fears are growing that firms may have trouble attracting staff to work on anti-money laundering (AML) projects.

Speculation is mounting that the Government will complete its exposure draft on AML reform in June, but the government may not make the document public at that stage, leaving the corporate sector in the dark on potential obligations. The majority of the major banks and financial services firms have completed risk assessments on AML and developed risk matrix projects, but the bulk of the work cannot begin until the Government ceases stalling and reveals the legislation.

But even the publishing of the exposure draft will not ease the upcoming AML-related pain. The most likely source of AML resources is the UK, which is several years ahead of Australia in its AML reforms. One source said his firm had recently completed a year-long AML engagement at a large investment bank in Sydney and was required to use 14 UK-based contractors for the work.

Australia’s current AML regime — the Financial Transactions Reporting Act — is not helping matters. “In Australia there is a very strong culture around the narrow FTRA regime,” said Chris Cass, a partner specializing in AML matters at Deloitte Forensic.

“It has created a dominant culture around what AML is and what you are required to do. But the new law will take Australia away from that interpretation to a broader base.”

This means that staff currently with AML responsibilities — typically operational risk and compliance professionals — may not be able to easily make the switch to the new regime. “The new law will take Australia away from that interpretation to a broader base.,” Cass said. “Those people are good in terms of the current law, but for a major organization trying to get a full risk-based approach, this resources issue is significant.”

Moreover, professionals with experience of AML regulation are also few and far between. “We are already globally in a tight compliance and risk management market,” said Cass. “The problem is that the production factory of AML personnel is a combination of regulators who have AML responsibilities and there’s only a few of them — FSA in the UK, US — and you have police forces who do the investigation of money laundering that brings an aspect to AML governance but maybe not everything around policy development.

So the factory is producing people, but if you get a legislative requirement that requires a statutory AML reporting officer, then you really want the best you can get so they are in demand. The banks, financial institutions and consulting firms snap these people up and as a result you have a macro dilemma about the production factory not producing enough people for the market.”

However, Australian corporates may have some luck snaring Australian and New Zealand AML professionals engaged on AML projects in the UK. “I‘ve had a number of candidates from the UK interested in relocating,” said Yma Rizzolo, consultant at compliance specialist Taylor Root.

“I think there are quite a few antipodeans based in the UK doing that kind of work who are keen to jump on the bandwagon once it hits the shores, but they have great experience.”

While the private sector is gearing up to snare the best resources, regulators face an even bigger problem. Unable to competitively match private sector salaries, regulators can find themselves stuck between a rock and a hard place.

“I sat on the HIH Royal Commission, and one of the significant issues there was that the recruitment and retention of experienced and expert personnel is very difficult,” said Cass. “The private sector looks to the regulator to feed the dragon and regulators will also be looking to recruit personnel with commercial experience and AML knowledge.”

Stuart Fagg is the Editor of Risk Management magazine, Lawyers Weeklys sister publication

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