Practical Fraud Prevention

Chapter 19. Anti–Money Laundering and Compliance: Wider Context

As I went down in the river to pray, studying about that good ol’ way…

“Down in the River to Pray,” traditional folk song

The motivation for fighting money laundering is different from that for fighting fraud. As Nikki Baumann, a Fraud Principal at Farfetch who also has experience in both banking and cryptocurrency, pointed out, money launderers might also be fraudsters: “It’s all the same way of thinking, where the criminal works out what the bank or the merchant is doing and tries different ways to circumvent that, often using the same tactic to conceal money laundering as to conceal fraud.” Indeed, there are notable similarities between certain aspects of fraud fighting and AML, and we encourage AML professionals to read Parts I and V and Chapters 12 and 15 of this book in particular, as they are especially relevant to their work. Despite the considerable overlap, however, the purpose of the fraud prevention teams and the AML teams working against the criminals is different.

Fraud prevention is fundamentally about mitigating loss, both from successful fraud and from false positives or dissatisfied customers. Anti–money laundering (AML), on the other hand, is about being compliant, and being able to show that your business is compliant, with the relevant regulations. A close relationship with legal and compliance officers is absolutely essential, since the legal landscape is dynamic and AML efforts ...