Article
Journal of White Collar
and Corporate Crime
Cops, Firefighters, and Scapegoats: Anti-Money 2021, Vol. 2(1) 47-58
ª The Author(s) 2020
Article reuse guidelines:
Laundering (AML) Professionals in an Era sagepub.com/journals-permissions
DOI: 10.1177/2631309X20922153
of Regulatory Bulimia journals.sagepub.com/home/wcc
Colleen P. Eren1
Abstract
U.S. criminologists have overlooked the phenomenon of the expansion of the AML (anti-money laundering) industry. This article
contributes to the literature on AML professionals in major US banks and their occupational culture through semi-structured
interviews with 22 senior AML specialists. It investigates their understanding of their ambiguous role at the intersection of
regulation, law enforcement and profit-making, and their perception of what effectiveness and success within their role means
given competing objectives. Also probed are the interviewees’ value-orientations and location amid political, economic and
regulatory/legal changes and employment pressures.
Keywords
money laundering, regulating corporate crime, anti-money laundering, occupational culture
In May 2019, the work of U.S. anti-money laundering (AML) AML, even as high-profile instances of failures of compli-
professionals made front-page news. The New York Times ran ance, from Bernie Madoff to Jeffrey Epstein, have captured
the story of Tammy McFadden, a former Deutsche Bank AML national attention. Yet, AML professionals have occupied
specialist, who had drafted a suspicious activity report (SAR) central roles over the past 30 years in investigating, identi-
on Kushner Companies after unusual transactions were fying, and “policing” ML, terrorist financing, and other
flagged. The government had ordered Deutsche to tighten its financial crime. Indeed, as we shall see, they are the ones
compliance procedures after they had laundered billions for now entrusted to be the “eyes and ears” of the Federal
Russians, so it was imperative that such transactions be prop- Bureau of Investigation, (FBI) when looking for threats to
erly assessed. The SAR, however, was blocked from submis- national security. “The compliance officer is at the heart of
sion to the Financial Crimes Enforcement Network (FinCEN) the anti-money laundering legislation and regulation,”
by private banking managers at Deutsche (Enrich, 2019). Verhage argues (2009, p13). It is therefore crucial to better
McFadden was later terminated, she alleged, for raising con- understand these individuals, their work, motives, and occu-
cerns about the bank’s AML practices. pational cultures in which they operate, in the same way
The article was a rare example of media attention to AML criminologists have sought to understand other actors in the
officers, whose backstage operations in banking are generally criminal justice system. This research sought to answer the
unknown to the public. While the precise number of AML spe- following research questions:
cialists in the United States is unavailable, their presence is
substantial. After the financial crisis of 2008, and after large 1. Broadly, who are these AML professionals? What moti-
fines were levied on large banks between 2012 and 2015 for vates them and their decision-making?
their lax monitoring of money laundering (ML) and sanctions, 2. How do they understand and negotiate their roles at the
banks increased their AML staff. The 14 largest U.S. banks intersection of competing demands among regulators, law
subsequently spent $2.6 billion in one year on their AML pro- enforcement (LE), and business?
grams. 2.7 million SARs were filed in 2018, up from 58,000 in
2012 (Onaran, April 2019). Seventeen U.S. financial institutions
employed 14,000 individuals full time in AML (BPI, 2018), and 1
Department of Sociology and Criminal Justice, William Paterson University of
in 2018, the largest professional organization of AML specialists New Jersey, Wayne, NJ, USA
reached a record 60,000 members (Association of Certified
Corresponding Author:
Anti-Money Laundering Specialists [ACAMS] 2018). Colleen P. Eren, Department of Sociology and Criminal Justice, William
Criminologists have, with notable exceptions mostly Paterson University of New Jersey, Wayne, NJ 11743, USA.
from the European continent, overlooked this expansion of Email: erenc@wpunj.edu
,48 Journal of White Collar and Corporate Crime 2(1)
3. How do they perceive the influences of politics and eco- Measurement and effectiveness of AML
nomic cycles on their duties to prevent ML?
Studies of legal and institutional developments are comple-
4. What does success look like to them, given the difficulty in
mented by the work of U.K. scholars on the costs and effec-
measuring flow of dirty money?
tiveness of AML. Harvey (2004) relied on interviews with U.K.
We begin with a review of the extant literature on AML and compliance staff and regulatory agencies to examine the costs
AML personnel before proceeding to our methods and analysis. of AML. Like Gill and Taylor (2004), she found that there was
widespread sentiment that ML regulation is valuable, but that
Literature Review overly focusing on KYC procedures could paradoxically result
There is no shortage of scholarship on AML from eco- in overlooking ML. Respondents described how LE and reg-
nomic, legal, and technical perspectives. The limited social ulators were not shouldering an appropriate share of the cost of
science research can be divided into the three themes preventing ML. Consequently, the institutions perceived them-
below. selves to be policemen. Important to note from Harvey’s inter-
views is that compliance officers expressed a need for strong
guidelines given the risk of personal liability and also that they
are frustrated by the lack of prosecutions based on their
International Legal and Institutional Developments reporting.
in AML An analysis of FATF Mutual Evaluation Reports by Levi
et al. (2018) highlights that the growth of AML has proceeded
Most AML research provides some historical and legal con-
without the ability to evaluate its effectiveness. The authors
text for its expansion since the 1980s and the speed with
emphasize the point made by Harvey (2004), that there are no
which it transformed banking, and cites milestones over those
valid estimates of the amount of money laundered, (though
decades. Many have focused specifically on these changes. In
the United Nations Office on Drugs and Crime [UNDOC]
general, these overviews have implied the buildup of a
puts the figure at 5% of global Gross Domestic Product
bureaucratic governmental intrusion into private enterprise
[GDP], or up to $2 trillion) (2020). Furthermore, they ques-
and a broadening of the duty to report suspected crimes, and
tion whether AML regulations reduce ML and associated ills,
are important in understanding the creation of the AML spe-
or if they have unintended consequences—say of increasing
cialist role.
bribery of bankers to facilitate ML. They suggest that there is
Turner and Bainbridge (2018) review regulatory measures
hesitancy to critique AML because it is seen as a noble fight
enacted in the UK since 1980, displaying AML “creep.”
against universally acknowledged evils and imply that belief
Regulated sectors bear a growing burden to fund the policing
in AML success is likely insincere. Yet, Gadinis and Mangels
of criminal behavior, as Jordanoska (2018) describes in her
(2016) offer some positive assessment of the large spending
analysis of anti-bribery and corruption laws, characterizing
on AML, which topped 11 billion in 2011. They report reg-
this shift to one of “meta-regulation” (e.g., a significant
ulators’ eagerness to access SARS is a sign that “ML legis-
amount of responsibility is placed on the regulated for inter-
lation . . . might significantly dent criminal activity” (p. 893).
preting the rules, devising compliance systems, and achieving
outcomes, p. 171). Gadinis and Mangels (2016) focus on the
U.S. Bank Secrecy Act (BSA) of 1970, a cornerstone of AML
to this day. Another development emphasized in the literature
The Role of AML Specialists
is the establishment of the Financial Action Task Force The language used by social science researchers to describe
(FATF) in 1990 to study and prevent ML (Turner & Bain- AML specialists is exemplary of the complicated dynamic
bridge 2018). The FATF produced 40 AML recommenda- probed in this research. AML specialists are “Sentinels in the
tions, which resulted in the creation of FinCEN, and Banking Industry” (Favarel-Garrigues et al., 2008), the “New
introduced SARs. Gardinis and Mangels (2016) claim the Governors on the Block” (Tsingou, 2018), “Collaborative
Annuncio-Wylie Anti-Money Laundering Act (1992) was Gatekeepers” (Gadinis & Mangels, 2016), “Reluctant Partners”
furthermore seminal in the shift toward “collaborative gate- (Favarel-Garrigues et al., 2011), and “Between the Hammer
keeping” between business and government. and the Anvil” (Verhage, 2009).
The changes ushered in by the USA PATRIOT Act (2001) “It is time to make an inventory of the visions of compliance
after 9–11 have been the subject of a significant subset of the officers regarding legislation and the impact of their battle
scholarly attention to the AML time line. Zagaris (2004) points against ML in general,” Verhage (2009, p. 23) declares. Her
out its impact on counterterrorism financial enforcement and study is of Belgian compliance officers: their backgrounds,
AML. The PATRIOT Act required enhanced “know your perception of work, and the compliance departments’ organi-
customer” (KYC) rules, encouraging cooperation and informa- zation. Some participants indicated they felt like the “bank’s
tion sharing among regulatory, LE, and financial institutions police officer,” and that there appears to be a “stressful rela-
(p. 134). This is indeed the “gatekeeper” model (Gadinis & tionship between commercial goals and compliance with reg-
Mangels, 2016) describes, where firms are made into guardians ulation” (p. 21). She reiterates that compliance officers serve an
against misconduct. “ambiguous function,” in the bank: “a noncommercial function
,Eren 49
within a commercial context” (p. 27). In line with Harvey role is understood to be (e.g., is it actually stopping ML), their
(2004), Verhage reported that compliance officers did not see motivations, and how outside forces in politics and economic
the prevention of crime as the main purpose of AML, but rather cycles affect their work. In doing so, it exposes the tensions and
as preventing reputational/legal damage. They also reported contradictions AML staff must daily negotiate in a neoliberal
that the information they provide is not used frequently by the capitalist economy that prioritizes profit seeking, and yet
government. simultaneously touts the goal of the “social good” of stopping
The work of Favarel-Garrigues et al. (2008; 2011) looked dirty money.
at French compliance officers. They note the lack of crim-
inological interest in AML: “the development of the fight
against ‘dirty money’ at the international level since 1989
gave rise to little research over the course of the 1990s”
Method
(2011, p. 179). Among their findings was the increasing Semistructured interviews were conducted with 22 AML/
professionalization of AML, and frustration at the lack of compliance professionals operating out of the New York City
government action with submitted reports. Interviewees pre- (NYC) region. Prior to this work, the largest analogous study
fer the term “sentinels,” to describe their role, responsible in the United States utilizing interviews among AML special-
for warning management and personnel of legal risks. Their ists was Tsingou (2010), who included 14 U.S. interviewees,
subsequent publication (2011) theorized the relationship but did not indicate their level of seniority. NYC is an espe-
between the private and public sector in combatting AML cially important site for such interviews because not only is it
using Foucault’s concept of governmentality: “banks have a center for global finance, but most large U.S. and interna-
now been integrated into intelligence-led policing mis- tional banks are headquartered there (such as JP Morgan,
sions,” with compliance officers viewing themselves as Citibank, and HSBC). The post-2008 push for regulation,
police officers (191–192). As a result, AML professionals coupled with large fines related to compliance failures, led
have been forming informal exchanges with the police. to these banks hire heavily in AML in the NYC with its deep
Gottschalk (2017) forcefully questions the legitimacy of the talent pool and bank headquarters, thus leading NYC to be a
private policing function of fraud examiners. Levi (1991) site of AML creation/innovation. Interviewees for this project
also provided an early discussion of the public–private were sought on the basis of their employment at major banks
intersection in the “policing” of ML in the UK. Several of representing a large proportion of the banking sector, as well
his interviewees were “critical of the notion that private as their seniority and thus their insight into decision-making
sector institutions such as banks should become an arm of about the structure and function of exemplary AML programs.
the State” (p. 296). Interviews were conducted until a saturation point was
Tsingou (2010) describes the processes of professionaliza- reached (information provided to questions became redun-
tion of AML personnel through interviews with specialists dant). Subjects were obtained in two ways: through snowball
in the European Union (EU), United States, and Hong sampling from a few key informants, and through cold contact
Kong/China. She argues that the process of professional via LinkedIn, which provides the CVs and locations of its
consolidation has led to compliance officers carving out members.
“a more pro-active governance role” and securing the Twenty of 22 interviewees were working or worked in AML
boundaries of their work (p. 195). She implies much of in major foreign and domestic large and midsized global banks,
AML is about ticking boxes, about having the right proce- some had additional experience at regional banks, hedge funds,
dures, people, and training systems in place as institutional and insurance companies. Of the two remaining interviewees,
risk protection. one was an AML/regulatory intelligence expert with a major
This review of the non-practitioner-oriented literature on provider of business information services, and the other, a
AML shows scholarly concern with how, why, and with what senior compliance risk management professional in banking
legislation, AML has come to occupy a significant space in with AML expertise. Their job titles (see Appendix A) ranged
business; with some questioning of the effectiveness of AML, from senior-level AML compliance officers who conduct com-
and a subset of literature on the roles of compliance staff par- plex investigations to executive directors overseeing programs.
ticularly in Europe. Given that, as Morgan describes (1997), The minimum years of experience in AML was 6 years, with a
U.S. AML law has had a global reach; that the United States is maximum of 20 years. Their ages ranged from 29 to 74, with an
the world’s largest economy with matching political promi- average age of 43 years. Twelve were men, 10 were women.
nence; that the U.S. dollar is the preferred currency for ML; Eleven were White, four were Black, five were Latino/a, and
that the U.S-based ACAMS is the largest AML-certifying orga- two were Asian.
nization in the world; and that U.S. exports AML systems, Most interviews were conducted in-person and seconda-
software and processes, the lack of qualitative research among rily by phone/Skype, in 2019. Participants were asked
AML professionals in major banks in the U.S. context is glar- approximately 10 questions that probed their backgrounds,
ing. This research sought to tease out how U.S. AML profes- roles held, motivations and values, relationships with regu-
sionals manage relationships and demands among competing lators, LE, and front-office staff, their understanding of suc-
stakeholders (regulators, LE, and banks), what success in their cess meant in AML, and how they thought their role was
, 50 Journal of White Collar and Corporate Crime 2(1)
influenced by economic, political, and regulatory shifts (see law enforcement,” pointing to the fact that their role had
Appendix B). become that of quasi-LE—they were “becoming cops” and
As the interviews were semistructured, participants were such expectations were too expansive.
free to expand on my questions and introduce new avenues
of inquiry. The average interview time was 50 min. Consent
was obtained before interviews were audio-recorded and tran- LE Connections and Morale Boosts
scribed by the author. Content analysis was then performed For those who are able to directly see the impact of the inves-
with Atlas.ti utilizing an inductive coding process. Open, tigations/SAR filings—either via communication with LE or
line-by-line coding of all transcripts provided an initial set of through news about a case—this impact provided great satis-
concepts. Some of these initial codes were constructed around faction and demonstrates the blurring boundary between LE
words, sentences, and paragraphs pertaining to the research and the regulatory function within banks.
questions (e.g., “regulatory cycles” or “job hazards”), and oth-
ers were in vivo, such as “scapegoats,” or “eyes and ears.” Tom: You’re regularly liaising with [LE] and they’re
Relationships among the codes as well as frequency of codes telling you—that thing that you submitted was
across participants’ narratives were then examined. Similar what I was looking for. I’ve had law enforcement
codes were collapsed, and related codes were nested as sub- send me an article about my guy getting sen-
themes of larger code groups. This process lead to conceptual tenced and we pinned it on the wall. I had a Wall
logic, theoretical clarity, and coherence of narrative in addres- of Shame of all successful prosecutions . . . I’m
sing the research questions. very proud to be able to glean knowledge they
think is valuable in combating this risk.
Jonathan: I love it. We’re all a team, we’re all trying to fight
Findings financial crime, we’re all trying to stop human
This analysis is divided into four sections: (1) Relationships at trafficking, whether it’s children or women. You
the center of regulation, LE, and business. (2) Regulatory buli- can help them, we’re their eyes and ears
mia and cycles of enforcement actions (EAs). (3) Fall guys and
Even those interviewees who never heard from LE about a
scapegoats: the hazards of personal liability. (4) A clash of
specific SAR or investigation, cited the morale-boosting
motivations.
effect of contributing to a greater cause. Leadership at the
1. Relationships at the “center” of regulation, LE, and major banks appears to understand the performative,
business morale-boosting impact of having LE speak about outcomes
and partnerships, and invite FBI agents to give presentations
Compliance officers find themselves in at the center of com- in “Town Halls.”
peting interests and relationships. This section focuses on three
of those critical intersections; relationships with regulators, LE,
and the “front-office,” revenue-generating side of the business.
Informal Relationships With LE
Most interviewees described having or witnessing others have
Eyes and Ears: Relationships With LE informal ties to LE that could result in information sharing that
skirted the boundaries of legality, but which would otherwise
Of the relationships senior AML professionals negotiate, be caught in bureaucratic processes, as the below excerpt
those with LE provided the least antagonism and most sense demonstrates:
of purpose. All the interviewees who interacted with LE
described positive rapport and “partnerships” with them, Lynn: If there’s a terrorist attack, they will reach the head
whether formal or informal. The findings largely replicated of my department—someone that they know . . .
those of Favarel-Garrigues et al. (2011), Levi (1991), Gardi- Obviously there’s the formal way of sending out
nis & Mangels (2016), and Verhage (2009) in three ways. subpoenas, but when you have these urgent situa-
First, there was ample evidence of informal relationship tions, it’s really nice to be able to see that informal
building that would expedite information flows and make partnership.
SAR reporting more useful to intercepting crime. Some of
One interviewee, Bastian, described instances where LE
this informal relationship building was a consequence of
would engage in bargaining—information and assistance in
banks hiring LE but also through contact over time. Second,
exchange for reputational protection:
those without direct contact with LE expressed frustration that
they did not receive feedback about SARs. Last, while not Bastian: I would ask law enforcement—Is it going to be in
unanimous, there was an undercurrent of resistance to having the media? [They’d say] “Yeah we think it is.” So
private enterprise become an arm of LE. The statement “we becomes a kind of dialogue. You don’t want to be
are the eyes and ears of law enforcement” was repeated, sug- in the papers, I want to make sure that I’m helping
gesting consistent messaging from LE and internalization of the DA’s office. So [maybe] they don’t mention
this credo. Several problematized being “the eyes and ears of that [the suspect] had an account with us.
