GM, AML and risk enthusiasts! The U.S. Treasury just dropped “2024 National Money Laundering Risk Assessment,” AKA “NMLRA.” The latest report from the Treasury has spotlighted some glaring issues across various financial sectors.

It’s 108 pages, but here’s the lowdown on where we're dropping the ball in anti-money laundering efforts and counter-financing of terrorism:

1. Banking Blues:

The number of banks in the U.S. has been on a downward trend, thanks to mergers and the digital revolution shaking up traditional banking. But here’s the kicker: some banks are still playing catch-up with AML/CFT regulations. Despite the high-tech tools at their disposal, a number of them are struggling to file Suspicious Activity Reports (SARs) timely or maintain adequate internal controls. And those venturing into new technologies? Let's just say they’re finding new risks in their tech-savvy playgrounds.

2. MSB Missteps:

Money Services Businesses (MSBs) are vital for folks sending dough over borders but keeping up with compliance? That’s another story. With over 26,472 MSBs buzzing around, the U.S. is a hotbed for remittances. Yet, the IRS has flagged a decrease in thorough examinations, and nearly half of the SARs related to unlicensed MSB activities are coming from just a few states. Talk about a compliance conundrum!

3. Broker-Dealer Dilemmas:

Over in the securities world, broker-dealers and mutual funds are under the microscope. The SEC’s got its eye on whether these entities are tailoring their AML programs to fit their business models while keeping up with SAR filings and customer identification. And with the current geopolitical tensions stirring the pot, the stakes are even higher for compliance.

4. The Complicit Professional Problem:

Last but not least, let’s talk about the inside jobs. Complicit professionals, those wolves in sheep’s clothing, are making a mess of things by helping launder money right under the noses of their employers. Whether it’s through neglect or direct involvement, their actions are a significant thorn in the side of effective AML/CFT strategies.

Navigating the Compliance Minefield:

These AML/CFT lapses are more than just regulatory hiccups—they're wide-open doors for illicit activities that can undermine the very foundations of our financial system. It’s clear that as the financial world evolves, so too must our strategies to guard it against those looking to exploit its weaknesses.

Here’s a link to the full document.

Looks like it’s going to be a busy year. They're rolling out the 2024 National Strategy for Combatting Terrorist and Other Illicit Finance soon, armed with fresh strategies to tackle these issues.

Canada: The Great White Wash: 

Canada, known for its polite citizens and pristine landscapes, is gaining a less desirable reputation as a "money laundering paradise." Why, you ask? Well, it seems the combination of lax regulations and lenient penalties makes it an attractive destination for the dirty money crowd.

Let’s break down why:

Banking on Secrecy:

TD Bank, one of the giants, is under the microscope with allegations of laundering oodles of cash linked to a massive drug smuggling operation, including the infamous fentanyl. The U.S. isn't just wagging a finger; they're probing deep, with TD facing probes from three different regulators and the Department of Justice. Ouch!

Snow Washing:

This term isn't about fresh laundry in a winter wonderland. It's the art of cleaning dirty money through Canadian enterprises. With the ability to set up anonymous companies, Canada is practically rolling out the red carpet for financial felons looking to hide their tracks.

Penalties? More Like Pennies:

Penalties for money laundering are worth the price of admission. A maximum fine of half a million dollars applies equally to tiny jewelers and massive financial institutions, making it pocket change for the big fish.

A Cultural Conundrum:

Is it just a cultural thing? Are Canadians too nice to tackle money laundering head-on? Perhaps, but the real issue is enforcement. The country has faced criticism for being soft on financial crime, and this gentle approach could tarnish Canada's global reputation, making international partnerships trickier and potentially more costly.

The Maple Money Mystery Continues:

As Canadian regulators potentially ramp up their game, the financial world watches eagerly. Will Canada shed its emerging reputation as a laundering haven, or will it continue to be seen as a place where money gets mysteriously clean?

Only time will tell, but here at The Risk Radar, we’ll keep you posted—eh! (sorry had to)

Other reads from the week:

• Interpol needs help fighting terrorist financing

• Australia is allocating to AML reforms

Meme of the Week: