Money laundering, and the damage it can cause, was recently in the news again – this time, in reference to the financial crisis in Cyprus. The European Central Bank says that a $23 million loan will be required to stabilize the country’s financial situation since Cypriot banks failed to halt money laundering by the Russians…despite a number of anti-money laundering laws on the books.

And it’s not just Cyprus in crisis; money laundering is a global problem. As an example, HSBC was slapped with a $1.9 billion – yes, billion – fine last year for not following U.S. Anti-Money Laundering (AML) regulations. Industry experts say this trend will continue, and have noted that these scenarios clearly illustrate that compliance officers, executives and consultants are not being held accountable for airtight AML programs within financial institutions.

The bottom line is, non-compliance fines and the complexity of AML examinations have created a wealth of opportunity for private consultants to design security solutions. These experts are hired to figure out the many ways money launderers work (counterfeiting, third-party fraud, etc.), and to design ways to detect fraud and report it within a timely manner. But government documents show that private consultants are delivering a mixed bag of results.

In reality, there just isn’t a good way to facilitate independency, since consultants are paid billions of dollars annually by the same banks they are expected to police. Government oversight is not an option, given current resources, nor is it particularly desirable.

So what’s the answer? How can we launder our money-laundering experts?

The simplest answer is to conduct a thorough due diligence of AML consultancies prior to awarding a contract. Consultants offer many paths toward developing better AML practices, so look at the strengths of its designs. To deliver the type of change that produces airtight regulatory compliance, you need cross-functional team support as well as elements extracted from a proven approach for continuous improvement, such as Lean Kaizen. (Lean is a methodology that eliminates waste and boosts efficiency; Kaizen refers to continuous improvement.) In my experience, applying Lean Kaizen tools and engaging the appropriate AML/compliance/business stakeholders can dramatically improve almost any AML process.

But even if you’re not familiar with or convinced using Lean Kaizen tools is the best option, here are a few other evaluation points for choosing an AML consultant or consulting firm:

• Look for experts that are members of the Association of Certified Anti-Money Laundering Specialists (ACAMS) and who have certified CAMS team leaders.
• Ask if the consultant or the firm has taught classes in AML or authored peer-reviewed articles on the subject. Can the consultant offer staff training, particularly on new technology implementations?
• How many AML projects has the consultant or its team successfully completed? Did any of these projects involve replacing manual systems with a risk-based AML information technology infrastructure?