Executive Liability for Anti-Money-Laundering Controls

Columbia Law Review Sidebar, Vol. 116, January, 2016

17 Pages Posted: 6 Nov 2017

See all articles by Christina Parajon Skinner

Christina Parajon Skinner

University of Pennsylvania - The Wharton School

Date Written: January 4, 2016

Abstract

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

Skinner, Christina Parajon, Executive Liability for Anti-Money-Laundering Controls (January 4, 2016). Columbia Law Review Sidebar, Vol. 116, January, 2016. Available at SSRN: https://ssrn.com/abstract=3064820

Christina Parajon Skinner (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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