The modern anti-money laundering movement - requiring millions of firms to collect customer data, monitor their financial transactions, and report millions of transactions to authorities daily - has created a global mass financial regime. Increasingly polarized, much of the debate asserts anti-crime purpose or decries the erosion of privacy.
However, systemically overlooked by the former, and frequently unaware by the latter, is whether the anti-money laundering system works.
For decades, scientists (and even the United Nations and Europol) have warned that the design and implementation of the AML regime is deeply flawed, and profoundly ineffective. The impact on criminal finances is a fraction of a percentage point from zero, yet the costs and harms inflicted on citizens, communities, businesses, and even countries, are immense.
If we want a system that works, and which doesn't unnecessarily affect legitimate businesses and ordinary citizens, we need to discuss effectiveness; for decades the the proverbial elephant in the AML lounge room studiously ignored.
This is the only site about AML/CFT effectiveness curated by someone with a PhD in policy effectiveness, outcomes, and AML (a surprisingly rare combination), quoted in The Economist, Forbes, Politico, Reuters, The Conversation, and elsewhere – including academic research papers and US Senate testimony describing the modern anti-money laundering experiment arguably the least effective anti-crime measure, anywhere, ever.
However, profound failure signals opportunity for profound value: an order of magnitude reduction in the immense social and economic harms from serious profit-motivated crime and other financially indicated crime, including terrorism, and a massive reduction in regulatory risk and compliance costs.
Flipping from almost zero impact on criminal finances into the 99 percent zone invisible to current hide-bound systems signals a paradigm shift benefiting billions of people, millions of businesses, and all countries.
Unfortunately, the global standard-setter, the Paris-based Financial Action Task Force (FATF), continues to shun fundamental issues, and recently declared the policy prescription is “more of the same”, locking in a fourth decade of failure. As outlined in The biggest problem with AML, this means that current systems and software will continue not to find most crime, and that compliance costs and regulatory risk (bizarrely, based on breaking rules with no proven material impact on crime, functionally impossible to comply with, and irrespective any evidence of money laundering or crime) will keep escalating. And AML will continue spreading its profoundly ineffective model and exponential costs to new industries, with cryptocurrencies next in line.
Despite the absence of any discernible global or regional leadership for outcomes (beyond well-meaning rhetoric and apparent belief that doing much the same thing will produce different results), the latest applied research joining effectiveness and outcomes science to anti-money laundering (a surprisingly rare combination) is beginning to reveal new ways for visionary leaders in individual countries, national law enforcement agencies, or banks or other financial institutions, to dramatically improve their own outcomes – and potentially act as catalysts enabling a paradigm shift for markedly, demonstrably better outcomes.
Join a conversation to bring effectiveness and outcomes science to the siloed strictures of anti-money laundering thinking, and unlock practical, risk-free adjustments for any bank, law enforcement agency, or country to achieve demonstrably better results, risk-free (ie without affecting “the FATF tick” or regulatory relations) with substantially, demonstrably, sustainably less harm, less regulatory risk, and less compliance cost, not more.
It no longer needs to be a negative sum game.