A recent live chat hosted by ACAMS raised the following question: “Can a customer relationship management (CRM) system that is suitably modified be used for anti-money laundering (AML)?” It’s an interesting idea that we thought deserved some further exploration.

A good CRM system can be an invaluable tool for supporting an institution‘s Know Your Customer (KYC) initiatives — a key element to any AML program. Likewise, a KYC program can provide great insight into CRM. However, as is usual, the business goal drives the tool and CRM is not in the business of trying to meet AML regulatory compliance. So, depending on what “suitably modified” might entail, the answer is a provisional “not readily”. Not unless, that is, the institution is so small and exclusive that its entire AML program can be devolved into extensive KYC without any other tool to manage necessary data and the modifications made to the CRM system can support risk assessment of the customers involved and can be tied to the transactional review that the institution performs and sensitive KYC information pertaining to AML screening can be restricted to use only by the compliance department. As you can see, that’s a lot of “ands”...

Trade and Technology: The New AML Battleground
The escalation in trade and technology-based money laundering poses serious risks to institutions. Sophisticated, trade-based money laundering schemes are difficult to detect because the perpetrators greatly distance themselves from the money laundering process. Technology has advanced our ability to monitor and identify suspicious patterns of activity. However, in the hands of money launderers, it facilitates innovative cyber schemes making your institution vulnerable to criminal and terrorist exploitation.

This seminar will provide you with the intelligence and training you need to guard against becoming the target of money launderers or government investigators. www.moneylaundering.com/hottopic.

A lawsuit has been filed by a group of Israelis against five Lebanese banks that allegedly provided financial services to Hezbollah through its funding arm, the Islamic Resistance Support Organization or IRSO, using correspondent accounts in the United States. The plaintiffs, who are seeking at least $100 million in damages, all were either wounded or lost family members during the Second Lebanese War.

This sort of lawsuit should give all regulated firms pause. While OFAC sanctions can include civil fines starting at double the transaction amount in addition to sizable criminal fines and jail terms, that may pale in comparison to what this sort of purely civil suit might extract. When you consider the ability of civil suits to collect both actual and punitive damages, such lawsuits, which can be filed by any claimant with a reasonable nexus to harm perpetuated by terrorist or drug trafficking activity, might prove to be the biggest and most damaging potential nail in a firm’s coffin. Even the possibility of such a lawsuit should be enough to have Chief Compliance Officers everywhere double checking their AML and KYC screening practices.