The evolution of AML supervision to achieve greater effectiveness is an important element in the improvement in effectiveness of the AML regime overall.
Whilst effectiveness overall should be concerned with reducing levels and harms from financial crimes, to supervisors it has been more about the integrity of the financial system by promoting and monitoring compliance with anti financial crime regulations.
To bring these two elements together is increasingly important if more progress is to be made which requires the evolution of risk based specialist AML supervision in particular.
Progress has been made but more is needed.
The chart below is a very generalised attempt to summarise at a high level the evolution of AML supervision over the last 3 decades in some key areas and by doing so allow country supervisors to benchmark where they have come from, where they are and where they still need to go. For sure this will involve increasing the level of AML expertise and understanding what data and how new technology can help and augment supervisory priorities using all the supervisory powers tools and techniques that can elevate effectiveness.
For the PDF see AML Supervision – Evolution toward Effectiveness.
For more on improving the effectiveness of Supervision, see the GCFFC 10 Key enablers and 40 Key Takeaways see here.
GCFFC Experts Conclusions:
- Effective supervision is not easy.
- True effectiveness can only be achieved, over time by adopting and improving a country’s risk-based supervisory processes and achieving gains and avoiding or overcoming setbacks along the way.
- Requires knowledgeable, skilled, experienced, cooperative, collaborative and committed supervisors
- “Culture eats strategy for breakfast.” Where cultural change is involved in any endeavour, careful thought and consideration is needed to chart the course to future success.
- The interconnected nature of all involved stakeholders means that improvements in effectiveness by one individual stakeholder will lead to improved effectiveness in others, and by so doing raise overall levels of effectiveness.
- Supervisors, like other stakeholder groups, need to reflect on their strengths and weaknesses and the actions that are needed to close gaps and improve effectiveness.
- Although bank and FI supervisors have more advanced techniques and DNFBP supervisors need to catch up, the challenge of all supervisors is to move from rule-based to risk based supervisory approaches and to encourage effective ML/TF risk based preventative measures in the regulated sector.
