The battle to defeat money laundering has highlighted a game of ‘cat and mouse’ taking place. In doing so, two critical players are clearly defined: the supervisors, or regulatory authorities (the cats) and the opposition – the reporting entities (the mice).

In terms of costs for all this, they are significant for both players. Globally, we have witnessed an extraordinary growth in efforts to control money laundering and it seems the costs are not due to lessen anytime soon. Associated costs have largely been driven by the FATF and through a desire by countries to pass the FATFcreated, controlled, partially administered, and unevenly applied MER. Like the pull of gravity, the reality of the problem of AML/CFT lies predominantly with those at the bottom. It is here where most are left scrambling to adhere to costly regulatory obligations while following guidance on a problem, perhaps equally as old as they are. It is here too where money is thrown in the billions at problems to make them appear no longer a problem.

The fallout from this AML/CFT scenario has been the creation of a distinct ‘us and them’ position. On one side of the battlefield, as we will call it, is the supervisor or regulatory authority. On the other side, hunkering down behind makeshift defences, are the reporting entities – most too scared to raise their head above the parapet even to surrender. This situation has created a global scenario that has thrown genuine partnership working out of the window. It has created an opportunity to openly punish entities for regulatory failures. The fear of huge fines and subsequent reputational harm – not always for allowing money laundering to take place – has forced some entities into a spin while others have simply accepted punishments as a cost of doing business.

Whether called ‘supervision’ or ‘regulatory oversight’, the rules of the game have by now been carved into stone. Governed by the FATF but equally controlled by the wealthiest countries, the rules, whether perceived as good or bad, have created businesses, authorities and agencies intent on supporting AML/CFT efforts. However, it is clear from the scale of money laundering as a problem today, the intent has not delivered anything spectacular.