AML Governance and Controls for Effective Risk Management

In AML (Anti-Money Laundering) compliance, governance  means having a clear system of rules, policies, and controls within an organization to manage and prevent money laundering and other financial crimes. It includes defining who is responsible for AML efforts from the board of directors to employees, and making sure everyone follows the rules.

Good governance ensures that the organization:

• Follows AML laws and regulations
• Identifies and manages risks properly
• Has strong internal controls and checks
• Provides training to staff on AML
• Reports suspicious activities to the authorities on time

Real-Life Example: Danske Bank Money Laundering Case

Between 2007 and 2015, Danske Bank’s Estonian branch processed about €200 billion in suspicious transactions, mainly from Russia and other former Soviet countries. This happened because the bank’s governance on AML was weak.

Here’s what went wrong:

• The bank’s leadership did not properly oversee AML controls.
• The Estonian branch failed to assess risks and ignored warning signs.
• Internal controls were weak, and compliance staff had little power to stop suspicious activities.
• Suspicious transactions were reported late or not at all.
• Senior managers did not take action even when problems were raised.

As a result, Danske Bank faced investigations, fines, and damage to its reputation. Many top executives resigned. This case shows how poor governance can allow serious money laundering to happen.