Executive Liability for Anti-Money-Laundering Controls
Columbia Law Review Sidebar, Vol. 116, January, 2016
17 Pages Posted: 6 Nov 2017
Date Written: January 4, 2016
The Essay considers the merits of a February 2015 proposal by the former superintendent of New York State’s Department of Financial Services, Benjamin Lawsky, to increase senior executives’ personal responsibility for a financial institution’s AML controls.
In a broad sense, the Essay endorses more robust individual accountability for AML compliance. The specter of personal liability would likely force executives to devote more attention to the design and maintenance of an institution’s AML program. At the same time, however, the Essay stops short of a full-hearted embrace of traditional legal tools for executive liability. A world in which executives are held liable for AML failures could also lead to socially and economically undesirable results. It could, as recent history has shown, encourage institutions to take more than an optimal level of care, reducing access to banking services in certain communities or infringing on other privacy interests in the process. For those reasons, the Essay suggests that industry-generated liability—in the form of privately set standards—could be equally if not more executive than liability imposed by regulatory fiat or enforcement, of the kind that Lawsky suggested.
Keywords: financial regulation, corporate governance
Suggested Citation: Suggested Citation