Anti-money laundering (AML) has evolved beyond the Hollywood image of suitcases filled with cash or exotic tax havens. In today’s investment fund industry, financial crime is often quite sophisticated. So, what does it look like in actual practice?
“Financial crime risk rarely appears as one obvious red flag,” explains Adrianna Bednarska, associate director, AML/CTF Controls, TA & distribution oversight manager at Vontobel Asset Management. “More often, it’s a series of individual, ordinary events that only become significant when you connect them together.”
ALFI industry affairs adviser Pablo Del Arco Ortega adds that in the investment funds industry, financial crime tends to be more indirect. “Funds are generally not used to clean cash because investors subscribe through regulated financial institutions and payments are made via the banking system,” he explains, adding that ALFI works with its members to “ensure that the new regulation is proportionate, simple and effective”.
Financial crime risk rarely appears as one obvious red flag.
Not just a cost centre
Both speakers challenged the perception that AML is merely another cost centre. While compliance does require investment in technology, people and governance, Bednarska argues that it’s worth weighing this against the cost of getting it wrong—“the value lies in events that never happen,” as she puts it. Furthermore, costs aren’t just limited to regulatory fines or sanctions; reputational damage, lost investor confidence and long-term client relationships are also at stake. “Effective AML does more than protect the downside. It can also onboard legitimate clients with greater confidence, allocate resources more intelligently, and therefore respond faster when the risk environment changes. That creates a real competitive advantage.”
Strong AML standards are not a barrier to business. They are a part of the foundation that allows the industry to grow sustainably.
Del Arco Ortega agrees that AML frameworks create value not only by reducing risk, but by allowing institutions to identify potential issues sooner, avoid breaches, and maintain access to international markets. “Strong AML standards are not a barrier to business. They are a part of the foundation that allows the industry to grow sustainably,” he explains. In the podcast, he explores what this means in practice for Luxembourg.
New AML authority, rulebook taking shape
As the EU prepares to implement a single AML rulebook under the Anti-Money Laundering Authority (AMLA), both speakers emphasise the importance of balancing harmonisation with proportionality. A consistent regulatory framework across member states will undoubtedly reduce unnecessary complexities, but how flexible will it be to reflect the various risk profiles of firms, products, and distribution models?
The speakers exchanged on what they hope policymakers will get right. While Bednarska provides some comparisons between US and EU models, Del Arco Ortega explains how ALFI is uniquely positioned to address its members’ concerns and serve as a voice for Luxembourg’s financial sector: “For ALFI, it’s a key point for the industry, where we need to advocate for rules that will work in practice and that understand the specificities and reality of our sector.”
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