Thought Leadership

KYC and DD - How to prevent massive fines, prosecution and Jail Part 3

Previously, I explained how going back to basics was the best way to make sure your firm would not add to the $48bn of fines given out to December 2020 for failures in AML and TF procedures.


nder 6AMLD, a minimum Jail term now comes into force of 4 (to14) years for failings in money laundering prevention and terrorist financing (TF). This creates a real headache for corporate executives, compliance heads and MLRO’s.

Regulators are more diligent and aware of their powers as well as almost competing in handing out fines. AML and TF laws turn the concept of innocence on its head. You personally start as guilty and must prove that you did everything in your power to prevent the law being broken. This does not just sit with compliance professionals but goes from the board down to the front-end salesperson. You cannot hide behind the veil of incorporation.

My company Armadillo is a global RegTech firm based in the UK and specialises in KYC & DD for on-boarding and has been awarded a place on the prestigious Regtech100. 100 of the most innovative firms in the global regulated and compliance market. We are also in the top 45 global Regtech buyers guide. Our universe of Regtech data and verification solutions consist of 380 million companies and 5 billion individuals.

I have also been in the regulated industry for many years and have in my group, a compliance assistance business and 3 regulated businesses including a UK law firm.

I have been through inspections (successfully!) myself, worked with regulators and advised individuals and businesses. I understand your pain and your fears.

Manny Cohen is Founder & CEO of Armadillo

The prime requirement

Crime prevention has moved from the authorities to the growing regulated industry. Remember, most people are honest. It is far easier to police you than the criminals.

In this highly regulated world we live in, how do you not get prosecuted? How does your company not get those massive fines? How do you pass inspections?

The future of aviation is strictly tied to several factors

Be prepared for the inspections.

Make sure you are prepared for spot inspections. Are you ready for it? Is your business ready for it? Is your department ready for it? Inspectors can go back seven years on an instant walk in. Be prepared to deal with them and send them away happy. You do not want them to come back and stay for a week or more with a team.

If you don’t feel ready for it, ask a firm like Armadillo, we have specialists that can assist and guide you.

Previously I went into AML Policy, product and client risk registers, checking systems, data rationalisation and training.

Know your risks

If you are the MLRO or the head of compliance, on a board or just deal with clients in a regulated business, you personally must understand your personal risks and the risks to the business that come under your job role.

Check for products that you sell that carry a higher risk, certain types of clients or countries. Build your risk matrix around it.

The Boss and the board

Your boss needs to know what's going on and has to give you 100% support otherwise you can’t save your business from a fortune in fines and also the reputational damage that follows.

Make it clear that if they don’t listen, they could go to jail. Often they may not even be involved in compliance and believe they are immune. If you or your boss report directly to the board; make sure the directors understand what's going on and the risks involved to them and the business. You need their backing. Sometimes you need to bring in a third party to re-enforce what you are saying. Companies like Armadillo can help you by giving them presentations and advice.

Be prepared to upset and annoy people

In order to prevent prosecution, be prepared to upset people, especially salespeople and others with targets; and that includes the board! You have a purpose in your organisation and you need to make sure that you do everything possible to do the right thing.

You must expect internal pressure. That's the big one. Be prepared to say NO!

Spend Money

The list of prosecuted businesses is full of companies that did not spend money on their compliance systems, staff, or Regtech.

Win your board over, explain; spend money and you will save them lots of money, their reputation and jailtime. I guarantee, if every prosecuted company had spent just 20% in what they received in fines, they would never have got the prosecution, fine or bad publicity.

Next time I will be discussing SAR’s culture and technology.

Stay Safe!!

Manny Cohen is an Industry thought leader and Founder & CEO of Armadillo, a Regtech & Compliance business based in the UK

Contact details

Head Office

Invision House

Wilbury Way




United Kingdom