Scalia Spotlights

Thomas Vartanian Speaks to the State of Money Laundering Regulations in the Current Tech Era

Professor Thomas Vartanian was quoted in “Will ‘Fincen Files’ give banks opening to push for AML reform?” by Neil Haggerty:

“If I were looking at anti-money-laundering today, knowing what I know about the instances and enforcement matters I was involved in, I would sort of rebuild it from the ground up,” said Thomas Vartanian, a former regulator and industry attorney who now directs the Program on Financial Regulation & Technology at George Mason University's Antonin Scalia Law School.

He went on to say that the government needs a reporting system that “really gets at the real money laundering rather than creating a universe of record keeping that probably isn‘t focused as clearly as it could be on what the actual money laundering is that‘s going on.”

“Banks are encouraged to file SARs whenever they see anything remotely close to money laundering or remotely close to a crime at the institution," said Vartanian.”

“When I was in the government … the regulators, Fincen, Treasury people, were just overwhelmed by the number of SARs being filed, because between regulators filing criminal referrals and institutions filing SARs, it’s just an enormously overwhelming amount of information.”

“All of the policies and procedures and all of the rules and the regulations and all of the examinations that’s going on, are they as targeted and efficient as they could possibly be? And my sense is the answer to that question is no,” Vartanian said. “And they could be a lot more enhanced by technology and a lot more enhanced by focusing more on actual money laundering and less on policy and procedures.”

Vartanian said that while money laundering continues to occur, Fincen would be better served in combating crime by improving its technology infrastructure.

“If the government doesn't start using technology properly and catch up with how technology is being used by the outside world, we have no chance of regulating anything in any reasonable way that makes sense,” Vartanian said.