I recently discussed whether there is value in compliance? Do you really need to present a business benefits case to implement a compliance program required by law?

It’s been commonly accepted that AML is one compliance program where implementation is an obligation (ie satisfying regulatory requirements) and cost with little business opportunity.

But in recent presentations, AUSTRAC has argued that regulated entities can create value by managing ML/TF risk:

• Investing in ML/TF risk management creates value by addressing the following risks of damage or destabilisation to vital Australian financial assets:

1. Sovereign risk – compromising Australia’s international standing as a safe financial centre with a sound institutional infrastructure.
2. Horizon risk – favouring potentially transient short-term gains over the entity’s long-term best interests.
3. Reputational risk – damaging the commercial value of the brand name.

• Substantially upgraded ‘Know Your Customer’ and increased record retention obligations are costs –but are also more than just burdens. In organisations which do not yet have tools to present a single customer view (eg are account based rather than customer based) the cost of the new KYC programs will have spin off marketing and cross-selling benefits.

What other benefits are there in an AML program that might represent cost savings?

• Although AML and fraud detection use different techniques, there may be fraud detection benefits especially in connection with "politically exposed persons".
• The program may be the basis for a consistent approach to a range of problems group-wide.

In any case, AML, like any other compliance obligation, requires careful implementation project plannning. If other benefits can be identified, all the better.