In this Interview, Sarah Runge, formerly of the US Treasury Department, and now with Credit Suisse talks to Financial Crime News, including on how she rates the US Presidency (of FATF), challenges faced in Europe (and elsewhere), AML Reform and her optimism for the future.
FCN – What are you doing now – The fighting financial crime community knows you best in your former roles in the US Government so now you are at Credit Suisse, what does that involve?
SR: I am in a newly created role which dually reports to the Global Head of FCC and Global Head of Regulatory Affairs. The function is responsible for developing and implementing a centralized and coordinated view of FCC regulatory engagements, developing a consistent communication approach for our interactions with regulators, building a global inventory of relevant FCC regulations, guidance, enforcement actions & industry developments, and ensuring Credit Suisse is engaged in law enforcement and intelligence innovation opportunities.
There are a lot of additional pieces I am involved in due to my background including discussions around country risk, global CDD implementation, and continued engagement with law enforcement, policy groups and Congress on AML related issues.
FCN – the US Presidency of FATF has just concluded and FATF has had its mandate extended indefinitely and celebrated its 30th Birthday – How would you assess the last 12 months from a FATF perspective and under this US Presidency and what do you think a Chinese Presidency that has taken over for the coming year will mean?
SR: The US has been incredibly effective although I didn’t expect anything less! A year is short in FATF-land with only three plenaries so a country has to be very organized and front load priorities and the agenda and be clear about what they plan to achieve by the final Plenary. In the case of the US this included intercessional meetings to push decisions in between the Plenaries.
The US was also very clear and finite in their priorities – it was a limited but challenging agenda. It is too early to tell where the Chinese will end up given their announced priorities and what they may want to accomplish. I think it is still too early to tell.
FCN – What do you think of the EU response, in particular to Russian Money Laundering via the Baltic’s and into the EU – Is enough being done by the EU and if not what do you think is needed?
SR: The recent cases have Europe focusing on the right issues – effective implementation and enforcement of laws and regulations. I don’t think it is fair to single Europe out as many jurisdictions struggle with this, but I think many continue to be surprised at the far reaching fall out and impact of not having an effective supervisory regime, for example. From a jurisdictional level, there need to be adequate resources applied to AML and assessments that a country is low risk for ML and/or TF doesn’t mean you can have extremely limited resources. As we know too well, illicit actors will always find the weakest link in the chain. The EU has a whole doesn’t have consistent controls which means there is a way in. I think these cases have made the EU keenly aware of this fact, and that is one of the issues they are trying to addres
FCN – AML Reform is on the agenda in the US Congress? What’s your prediction on what will be agreed and is it enough?
SR: The focus has to be on the collection of beneficial ownership in the company formation space, which has been on the legislative agenda in the US for well over a decade. There is more momentum than ever before, but it remains a divisive issue in the US despite years of case examples of the misuse of legal entities in the US and the requirement for financial institutions to collect and verify the identity of beneficial owners. The rest of the world has now moved past the US on this issue which historically was a global shortcoming. It is long overdue for Congress to act, and I hope this Congress is the time.
FCN – If you had 3 things to talk about to a Bank’s Board of Directors, what 3 Issues would you talk to them about in the financial crime space?
SR: – Why AML/CFT is so important – the broader context of the topic including the history and development and examples of the steps we have taken globally.
– Trends and focus in AML Enforcement – what can we learn from the current environment some of which is the same (US heavy enforcement) some of which has changed dramatically (post Danske)
– The importance and challenge of managing real ML/TF risk as well as regulatory risk.
FCN – Are you optimistic about the future, and if so or pessimistic in either case why?
SR: I am very optimistic. Discussions about changes and improvements to the AML regime and recognition by all stakeholders that we are not doing as well as we could be – are happening at a global level. I hope that the time is right in the current environment – more data, new technologies, innovation, regulatory reform, and the shared view that we can do better – will result in version 2.0 of the global AML regime.
Sarah Runge currently serves as Global Head of Financial Crimes Compliance Regulatory Strategy at Credit Suisse. In this role, Sarah Runge works across the FCC and Regulatory Affairs teams in Credit Suisse to develop a global plan to engage with and manage regulatory relationships related to FCC. Prior to joining Credit Suisse, Sarah spent over ten years in the U.S. Treasury Department’s Office of Terrorist Financing and Financial Crimes developing domestic and international initiatives to address illicit finance through her work with supervisors, law enforcement, and policy makers in the United States and globally. Her work included leading the U.S. delegation to the Financial Action Task Force and representing the U.S. Treasury Department at the G-7, G-20 and the Financial Stability Board.