Breaches of AML Reporting Requirements by UK Bankers: Are Effective Enforcement Choices Being Made by Financial Regulators?

Research Handbook on Ethics in Banking and Finance, 2018 Edward Elgar Publishing Ltd., Forthcoming

23 Pages Posted: 27 Sep 2017

See all articles by Miriam A. Goldby

Miriam A. Goldby

Centre for Commercial Law Studies, Queen Mary, University of London; George Washington University - Law School

Date Written: September 23, 2017

Abstract

This chapter aims to analyse the way in which breaches of anti-money laundering (AML) reporting obligations by bankers have tended to be dealt with in the United Kingdom (UK). The need to ensure a high level of compliance with reporting requirements is key to the achievement of the objectives of AML legislation but, the sheer volume of funds that is estimated to be laundered through the UK financial system on an annual basis is worrying, and these estimates have not reduced since the large-scale reforms introduced with the Proceeds of Crime Act 2002 (PoCA). Neither is the amount of money being recovered reassuring. As enforcement is a crucial aspect of compliance, a theoretical analysis and evaluation of enforcement decisions taken with respect to breaches of bankers’ reporting obligations is essential. This chapter finds that, in spite of there being a variety of options for dealing with failure to report, prosecution of individuals appears never to have been resorted to with respect to a banker since the Financial Services Authority (FSA) was established and since the coming into force of PoCA. In view of the findings of Regulatory thematic reviews, the reason for the absence of prosecutions of individuals is likely to be that authorities prefer to use alternative enforcement measures, usually against the institution rather than the individual committing the breach. In order to evaluate these enforcement decisions, the chapter examines where the powers and duties lie for investigating and prosecuting failure to report and what might be the reasons for the rarity of prosecutions of individuals operating in the financial sector. It argues that in order to improve compliance, steps must be taken to change corporate culture within banks. In an institution where compliance is recalcitrant and where management will do as little towards compliance as they are able to get away with, law enforcers should ensure that they do not get away with reporting breaches, and that the full set of enforcement tools that the law makes available to them is put to use. It concludes by outlining the reasons why reform might be desirable as well as some possibilities for reform.

Keywords: anti-money laundering, reporting requirements, breach, enforcement, sanctions

Suggested Citation

Goldby, Miriam A., Breaches of AML Reporting Requirements by UK Bankers: Are Effective Enforcement Choices Being Made by Financial Regulators? (September 23, 2017). Research Handbook on Ethics in Banking and Finance, 2018 Edward Elgar Publishing Ltd., Forthcoming. Available at SSRN: https://ssrn.com/abstract=3041959

Miriam A. Goldby (Contact Author)

Centre for Commercial Law Studies, Queen Mary, University of London ( email )

Charterhouse Square
London, EC1M 6AX
United Kingdom

HOME PAGE: http://www.ccls.qmul.ac.uk

George Washington University - Law School ( email )

2000 H Street, N.W.
Washington, DC 20052
United States

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