Thought Leadership

KYC and DD - How to prevent massive fines, prosecution and Jail Part 2

In my last article in the December issue I said 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 to financial and other regulated institutions. 


explained how the 6th Anti-Money Laundering Directive (6ALMD) coming into effect; giving a minimum Jail term of 4 (to 14) years for failings in money laundering prevention and terrorist financing (TF) creates a real headache for corporate executives, compliance heads and MLRO’s.

If you’re reading this, you already know that regulators have become far 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 are guilty and must prove your innocence. You must prove that you did everything in your power to prevent the law being broken. This 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 specialising in KYC & DD for on-boarding and has been awarded a place on the prestigious Regtech100. 100 of the most innovative firms in the regulated and compliance market globally and are also in the top 45 global Regtech buyers guide. Our universe of Regtech data and solutions consist of 380 million companies and 5 billion individuals. So we know our stuff!

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. With hand on heart, I can say, I understand your pain and your fears.

Manny Cohen is Founder & CEO of Armadillo

The prime requirement

The purpose is to prevent money laundering terrorist financing and crime.

The concept is handing the onus of the prevention of crime away from the authorities to the (growing) regulated industry. It is far easier to police you than the criminals. Remember, most people are honest. Far easier to check your company and you.

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

The future of aviation is strictly tied to several factors

Be prepared for the inspections.

I believe it’s really important to understand; inspectors usually give notice of inspections, but they have powers for spot inspections. You need to ask yourself, are you ready for it? Is your business ready for it? Is your department ready for it? Those nice inspectors can go back seven years on an instant walk in and you want to be able to deal with them and send them away happy. You don’t want them to come back and stay for a week or more with a team.

So be prepared for the inspections. If you do not 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, so to continue..

Don’t trust, Check

Put in good checking procedures and make sure that all of them are audited internally. In our company we went down the ISO 9001 route to make sure that DD for on-boarding was completely in our processes. It’s checked internally quarterly with an annual external audit. That helps because somebody else comes in and questions us. Again, we at Armadillo can check that you've got everything running smoothly within your own system.

Sort your Data and Tech

I’ve personally been into many companies and find that every company has six, eight databases, that all work slightly differently. Each division might have its own little database on clients such that you might have the same client in each of the databases with slightly different information. Each area may be doing different things with different divisions and different people. You need to rationalise, and you need to put them together. Try and get to one system for everyone. It makes it easier to spot problems.

We know of one business that had 47 databases and spent £25m a year making sure they were all accessible and working. Our tech team can work with you and assist in this database rationalisation. It’s vital and will save you money in the long run.

Train, Train, Train

Train your staff. That just doesn't mean just sending out a memo. This means TRAIN your staff. There is a survey out saying that 15% of staff in the regulated sector deal with compliance. Make sure they're properly trained and they know what they're doing, but also make sure that the salesperson at the a front end and those in-between also know what they are doing. 

In my next article, I’ll be talking about the board, upsetting people and spending money! 
Stay safe and get prepared.

Manny Cohen is Founder & CEO of Armadillo, a Regtech & Compliance business based in the UK

Contact details

Head Office

Invision House

Wilbury Way




United Kingdom