Gatekeepers’ Role in Financial Crime Prevention & Compliance

In Anti-Money Laundering (AML) and financial crime prevention, gatekeepers are professionals who act as intermediaries between clients and the financial system. These include lawyers, accountants, notaries, real estate agents, and trust and company service providers.

They are called gatekeepers because they can either help prevent or unintentionally allow illegal financial activities. Their work often involves setting up companies, managing client funds, or handling large transactions, making them crucial in spotting and stopping money laundering and terrorist financing.

Why Are Gatekeepers Important?

Gatekeepers are important because:

• They provide access to the financial system by helping clients open bank accounts or establish companies.
• They are responsible for performing due diligence to verify who their clients are and the nature of their business.
• Criminals may try to exploit gatekeepers either by deceiving them or by gaining their cooperation to move illegal money.

Regulatory Responsibilities

Gatekeepers must follow AML rules that require them to:

• Verify the identity of their clients and understand their business activities.
• Report any suspicious transactions to the relevant authorities.
• Keep records of their clients and transactions for a certain period.

Real-Life Example: HSBC Money Laundering Case

In 2012, HSBC was fined $1.9 billion for failing to prevent money laundering by Mexican drug cartels. The bank’s compliance team, acting as gatekeepers, did not properly monitor hundreds of billions of dollars in transactions. They missed warning signs and continued to process transactions for high-risk clients linked to drug trafficking.

Because of these failures, the drug cartels were able to launder large amounts of money through the U.S. financial system. HSBC’s lack of adequate staff and weak controls led to serious consequences, highlighting how important gatekeepers are in preventing financial crime.