As you might imagine, every day, Accuity encounters customers and prospective customers that screen their client bases against OFAC and other regulatory and enhanced due diligence lists. But what you might find surprising is that we also encounter a large number that don't. What we see in these cases is that companies do not believe that the laws — which they are, for the most part, fully aware of — are intended for them. The legal market is a good example of this.

In this market there are some sectors that are taking an active approach. The UK, for example, has led its European counterparts in ensuring that UK law firms comply with both EU and UK regulations regarding anti-money laundering. The UK Law Society has spent a large amount of time and effort informing its membership of how important it is to perform due diligence checks when on-boarding clients and cites the 30 lawyers per month that find themselves in front of a judge faced with money laundering charges. In other regions, however, this market has been slow to adopt such due diligence processes. In other European countries and even in the U.S., there are law firms that have little or no AML policy in place when on-boarding clients.

Here's an example of why this is problematic. Mortgage and property fraud is one of the most common types of money laundering. Let's say a terrorist financier wishes to acquire a property then sell it in order to "clean up" his dirty money and, potentially, earn a profit on the transaction. The agent selling the property is not likely to perform a due diligence check on his new client (even though under EU law he is required to do so). The lawyer involved in the contractual process is also required to perform a check — and, again, may or may not do so. So, if the transaction goes through unchecked, both the agent and lawyer are now facilitators in terrorist financing. While this alone is breaking the law under the 3rd EU AML directive, surely the reputational exposure of negative news is just as big a threat to them.

But even in the face of this, there are those that try and get away with doing nothing citing budgets or lack of resources or even "oh, that could never happen to me" as excuses not to invest in solid AML solutions. This attitude is especially prevalent in smaller business and the irony is that fraudsters and money launderers know not to go through the big guys anymore — the medium and smaller firms are rich pickings for them to go about their underhanded business unnoticed.

The "wait until it's an issue then address it" attitude is the wrong way to approach risk in this day and age. It will be interesting to see how many non-banking organizations do eventually take a stance to combat money laundering in 2010.