Training And Development Money Laundering sample essay


The FATF recommendation 19 requires financial institutions to develop programmes against money laundering, which should include: the establishment of internal policies, procedures and controls (including the designation of compliance officers and adequate screening procedures for personnel recruitment); an ongoing employee training programme; and an audit function to test the system. The first two of these points are also laid down in Article 11 of the European Money Laundering Directive.


1. Describe how it will benefit your department and the organisation as a whole
Dealing with the new measure will definitely benefit my department as, adequate internal control procedures and training programmes for employees are useful both for financial institutions and for law enforcement authorities. They are useful for financial institutions in that they allow them to detect more suspicious transactions and decrease the possibility of money laundering transactions passing through unnoticed.

2. Describe the implications of not having a good system
The level of internal control procedures and compliance will often be very material when a money laundering operation does take place through a financial institution and criminal charges are laid against the financial institution. Especially under a system of corporate criminal liability where a financial institution itself– not just its personnel – can be held criminally liable, adequate internal control procedures and training programmes can be used by financial institutions to demonstrate that they did all they possibly could to prevent money laundering and that the financial institutions should not therefore be held criminally liable for the money laundering operation that took place.

3. Consider the possible implications of the topic in a wider context.
Training, development and compliance programmes are particularly important to avoid liability for wilful blindness. Especially in the U.K., compliance programmes have become very important because they are seen more as a means of avoiding criminal liability than as a means of co-operating with the government in combating money laundering. Every British bank is also required to develop its own ‘know-your-customer’ programme. On the other hand, law enforcement authorities can reap the benefits of training and compliance programmes developed by financial institutions because they will receive more, and especially more relevant, information from financial institutions. Lack of appropriate training can have two kinds of negative effect on the reporting of suspicious transactions: either too few or too many reports may be made.

Primary Investigation
The Organization
A qualitative as well as quantitative approach has been taken during the course of my dissertation. The values of an organization — as reflected in its management philosophy, its culture, and the products or services it offers — echo the values of the individuals who make it up: employees, supervisors, managers, and most significantly, the chief executive officer (CEO) and top leaders.

Some commonly held organizational values are the importance of resources, return on investment, welfare and well-being of employees, service to customers and clients, and loyalty to the organization. Although the goals and values of an organization may be implicit or explicit, to a growing extent they are being placed in writing. Many companies have adopted codes of ethics or included sections in their policy statements that relate explicitly to ethics. They address such issues as leadership, integrity, equity, employee rights, employee development, participation in policy formulation, non-discrimination, and quality of work life.

1. Explain clearly how you approached the assignment topic and what information you needed.
The Department of Defence Industry Initiatives on Business Ethics and Conduct provided valuable resources and benchmarking statistics which greatly aided in the writing of this thesis. The adoption of a code of conduct is tantamount to a commitment by the corporation to engage in corporate self-regulation. In today’s business and regulatory environment the importance of meaningful codes of conduct or compliance programs cannot be underestimated.

Corporate codes of conduct are kept in line with organizations such as the Department of Defence Industry Initiatives on Business Ethics and Conduct (DII), which set forth six principles, one of which is that each company will have to adhere to a written code of business ethics and conduct. An organizational atmosphere that condones unethical behaviour is a major contributor to misconduct. According to one study even employees with high ethical standards may stray in a climate that rewards unethical behaviour. A firm’s official code of ethics may not coincide with its actual culture.

2. Describe in detail the following: what methods of investigation you considered to obtain the required information
Articles, trade journals, industry journals and various books listed in the bibliography at the end of this paper, were gleaned to write this up. Social networking and telephone conversations with key people led to a more in-depth experience. People’s own values are a reflection of their home life and rearing, education and training, and religious beliefs. They bring these values to the performance of their jobs.

Examples are competence, honesty, a sense of personal responsibility, completing a task on time, and pride in workmanship. Major contributors to misconduct are an individual’s greed and gluttony or the desire to maximize self-gain at the expense of others. One reason for the downfall and eventual imprisonment of financier Michael Milkmen, for example, was his insatiable appetite for money. Although he earned (or at least was paid) $500 million in one year, he kept searching for deals that would make him wealthier. Many of these transactions involved securities fraud.

Because the unethical activity helps the company, the company will condone it and protect the perpetrator. For example, the managers in the counterfeit apple juice incident believed that saving the company money would exempt the perpetrators from punishment. As noted by the ideas presented thus far in this section individuals, organizations, and society itself are important variables in understanding the prevalence of misconduct or unethical behaviour in the workplace. However, in our view a major contributor still remains a corporation’s top management.

3. Why you chose the methods you adopted – the reasons why you discounted other methods that you considered.

While no one doubts that public awareness of corporate misconduct has increased in recent years, it is also an accepted fact that ethical issues in general and corporate misconduct in particular are a daily component of business; they are more important today than ever. Corporate misconduct is involved in many facets of a business: decision making, arbitration, marketing and sales, and financial reporting.

Corporate leaders and employees must be able to see the ethical issues in the choices they face, make decisions within an ethical framework, and build and maintain work environments that counter corporate misconduct. There are a lot of stakeholders in the game of corporate misconduct: corporate boards of control, the company itself, executives, managers, supervisors, employees, customers and clients, suppliers, competitors, the industry at large, the community, and the nation. At one time or another corporate misconduct involves all of these constituencies and has a profound impact on market share, competitive position, profitability, image, job satisfaction, and morale.

1. For each method of investigation you conducted, you need to clearly describe the information that you collected
The Bedford Committee of the American Accounting Association stated in 1986 that “Professional accounting education must not only emphasize the needed skills and knowledge, it must also instil the ethical standards and commitments of a professional.” Training programs may be an important step toward effective compliance, not only for CPAs but for companies as a whole.

The employees should be mandated to attend the training program on a periodic basis. A survey was taken of Irish accountants who indicated that there was “near unanimous agreement” that ethics courses should be offered as part of continuing professional development. 7 In other words, the demand for ethical guidance is clearly there. Education and awareness in combination, as well as communication, are in the best interests of the organization. As shown throughout this book, the code of ethics and compliance with the code can improve the bottom line over the long run.

2. You then need to analyse the information in both quantitative and qualitative terms
Training is an integral part of a good ethics program. Training in ethics has evolved from handing the new hire a policies and procedures manual and signing off on a list of “I promise not to do such and such” to having entire organizations taking the time to determine the company’s values, understanding the ethical decision-making process, and knowing the resources and who to communicate with if there is a question.

Training in ethics can result in meaningful shifts in the thinking and behaviour of employees if approaches such as these are taken. The training should have the participants attempt to use some method in order to formulate an ethical decision—the desired goal is to have an employee make an ethical decision. The process can be by a variety of means. The American Accounting Association devised a decision model, as follows:

1. Determine the facts—what, who, where, when, how. (What do we know or need to know, if possible, that will help define the problem?)
2. Define the ethical issue (make sure precisely what the ethical issue is, e.g., conflict involving rights, question over limits of an obligation, and so on). a. List the significant stakeholders.
b. Define the ethical issues.
3. Identify major principles, rules, and values (e.g., integrity, quality, respect for persons, profit).
4. Specify the alternatives (list major alternative courses of action, including those that represent some form of compromise or point between simply doing or not doing something).
5. Compare values and alternatives to determine whether a clear decision is possible. (Determine if there is one principle or value, or combination, that is so compelling that the proper alternative is clear, e.g. correcting a defect that is almost certain to cause loss of life.)
6. Assess the consequences (identify short- and long-term, positive and negative consequences for the major alternatives; the common short-run focus on gain or loss needs to be measured against long-run considerations; this step will often reveal an unanticipated result of major importance).
7. Make your decision (balance the consequences against your primary principles or values, and select the alternative that fits best).

3. You need to clearly indicate how the information you collected helps to:
a) Further identify the assignment topic
Although the preceding is an excellent process for making ethical decisions, it should be recognized that it is also a good method for making any decision. Larry Pone Môn, CMA, included some of the following as being important elements in ethics training: • Live instruction
• Small class size • Powerful senior executive message
• Given to all employees
• Significant group interaction
• At least four hours of training
• New employee programs
• Follow-up communication
b) Resolve any issues encountered.

It is important to make sure that the ethical training sessions include being proactive (meaning that they teach or fortify integrity, honesty, moral excellence, and social responsibility). By being proactive, hopefully fewer problems will occur. This approach contrasts with the typical ethical problem occurring and then reacting to it by having employees attend a training course.

How much did the employees “get out” of a training course? This is where CPA firms can provide their value-added services by performing the periodic ethics audit, ensuring that the actual practices (taught in the training courses) occur. Training is effective when it is relevant. If an organization has just faced a well-publicize ethical problem, then an ethics training program may be warranted and should be implemented on a timely basis.

Table 1 Total number of disclosures made to NCIS since 1992
Total disclosures Disclosures by
Accountants Solicitors
1992 11,289 1 4
1993 12,750 2 4
1994 15,007 6 86
1995 13,710 38 190
1996 16,125 75 300
1997 14,148 44 236
Source: Annual Reports of the National Criminal Intelligence Service (NCIS).


1. State what conclusions and/or final outcomes you have logically developed from the information you obtained and the analysis you have done

An important development is the establishment of international standards for accounting in anti-money laundering and financial crimes. The goals of accounting, as defined by the British Accounting Association, are to make decisions on the use of limited resources, including crucial decision areas, determine goals and objectives, direct and control effectively an organization’s human and material resources, maintain and report on the custodianship of resources, and facilitate social functions and controls.

2. Ensure that all key issues are addressed and any potential barriers and/or difficulties are identified.
Auditing encompasses the following three major categories: (1) financial statement audit; (2) operational audit; and (3) compliance audit. In particular, a compliance audit has as its principal goal determining whether the entity under audit is following procedures or rules established by a higher authority. Both accounting and auditing include within themselves certain fundamental notions on conformity with, and obedience to, applicable legal authority. These basic concepts involve the intersection of accounting and money laundering.

1. Outline your recommendations, with justification, that you have made or will make to your organisation
One of the most problematic areas of training and development in accounting firms is the issue of ethics evaluation and its related benchmarking practices. Evaluation in this area can be carried out easily.

Considering the definition of benchmarking, clearly CPAs can use their analytical skills (measuring and making comparisons) to determine how their client’s ethical practices measure up compared to those of other companies. In the preliminary survey phase, it may be beneficial to determine what types of ethical programs or ethical practices other companies have in the same industry. Means by which such knowledge could be gathered could include contacting the following:
• Professional associations
• Trade associations
• Companies
• Employees
• Consultants

2. Ensure that these are both practical and are capable of being implemented
Once the preceding steps are implemented and any deficiencies noted compared to the best practices, then improvements and corrective action to the system may be made. Benchmarking is fine for ethical programs that have had a chance to develop; however, each company should at a minimum have the following: Minimum Ethical Requirements

• Code of ethics
• Hotline
• Grievance procedure (reporting mechanism)
• Ethics officer (if not feasible as a full-time position in small organizations, then someone performing those responsibilities on a part-time basis)
• A board of directors and management that is involved (performing the oversight function)
• Regular ethics training
• Performance reviews that address ethical qualities exhibited by employees


This thesis presents a comprehensive analysis of the United Kingdom attitudes and current positions on Training and Development in the context of Money Laundering. FATF and FSA regulations are discussed at length including probes into financial workings of LAUTRO monitored companies using a survey and various secondary data which is catalogued at the end of the paper. Directives from the British Accounting Association are also explored further in the paper as is globalization and its effects on the practices, role of nations as monitoring bodies, ending with Challenges to Anti-Laundering Enforcement. Six key areas are identified at the end of the thesis along with a concise recommendation plan aiming at a broader scope of implementation.


Adams, W.; ‘Effective Strategies for Banks in Avoiding Criminal, Civil, and Forfeiture Liability in Money Laundering Cases’, Ala. L Rev. (1993), 699–701.

Bingham, The Honourable Lord Justice (1992) Inquiry into the Supervision of the Bank of Credit and Commerce International, London: HMSO.

Castells, M. (1997) The Power of Identity, Oxford: Blackwell.

National Criminal Intelligence Service (1992-97) Annual Reports. London: NCIS.

Rohter, Larry; New Bank Fraud Wrinkle in Antigua: Russians on the Internet, N.Y. TIMES, Aug. 20, 2005

Smith, James F.; Town Is Unlikely Star of Money-Laundering Probe, L.A. TIMES, May 22, 2003

Wiener, J. (2003) ‘Money laundering: transnational criminals, globalisation and the forces of “redomestication”’, Journal of Money Laundering Control 1(1): 51-63.

Woolf, E. (1983) ‘Banks: the substance over the form’, Accountancy: 111-12.

Woolf, E. (1986) Auditing Today, 3rd edn, Hemel Hempstead: Prentice-Hall.

Zagaris, B.; ‘Proposed US Know Your Customer Rule Will Formalise Internal Control Procedures’, International Enforcement Law Reporter (1998), 488–91.


Table 1 Total number of disclosures made to NCIS since 1992 – TO BE FOUND ON (PAGE 14)
Total disclosures Disclosures by
Accountants Solicitors
1992 11,289 1 4
1993 12,750 2 4
1994 15,007 6 86
1995 13,710 38 190
1996 16,125 75 300
1997 14,148 44 236
Source: Annual Reports of the National Criminal Intelligence Service (NCIS).


1. What were the main learning points from the assignment?

The realization, that there is still inconsistent enforcement of anti-money laundering provisions in the United Kingdom. Countries that cooperate on money laundering investigations, including the U.K. and prosecutions need to share forfeited proceeds.

2. What barriers or challenges did you encounter when carrying out the assignment tasks?

Researching, Organizing, Collecting and referencing of FSA (Financial Services Authority) related data, either current or archived was difficult.

3. How will you overcome these in the future?

Possible direct contact with FSA research and archiving department.

4. What do you need to do to ensure that your recommendations are implemented?

Government co-operation as well as organisation-wide implementation of FSA-specified practices.

5. What difficulties do you envisage?

Co-ordination between the various agencies and the organization.

6. How will you overcome these difficulties?

Electronic and telephonic communication should be enhanced and perfected to ensure smooth implementation.

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