For anyone responsible for AML compliance, enforcement action – whether it happens to your firm or someone else – is a line in the sand. It tells you what regulators expect, what they won’t tolerate, and where they think firms are falling short. If you’re paying attention, it’s a warning shot that helps you benchmark your own programme.

Let’s say another firm is hit with a fine because their customer due diligence (CDD) was poorly risk-assessed and not followed up properly over time. You should immediately be asking: are we making the same mistakes? Do our files stack up? Are our high-risk customers actually being treated like high-risk customers?

Enforcement cases often reveal the gaps between policy and practice. Plenty of firms have beautifully written AML policies that, on paper, meet regulatory expectations. But enforcement tends to shine a light on the gap between theory and day-to-day execution. That’s where your focus needs to be: do staff actually follow procedures? Are alerts being reviewed properly? Is someone checking?

There’s also a knock-on effect on your reporting lines and governance. If the board isn’t paying attention to AML risks, or if senior managers aren’t being held accountable, enforcement action shows how quickly that can turn into personal liability. The Senior Managers and Certification Regime (SM&CR) has changed the dynamic: now it’s not just the firm on the hook – it’s individuals too.

For UK-regulated businesses, enforcement also affects your reputational risk and relationships with partners and counterparties. Once a firm is publicly sanctioned, banks and financial institutions start to look twice before doing business with them. That risk can’t be ignored, especially if you operate internationally.

But enforcement isn’t just about fear. It’s an opportunity to stress test your systems. Use recent cases to run internal audits, scenario plan with your teams, and review the effectiveness of your controls. If the regulator is making noise about monitoring weaknesses, don’t wait to be told – do your own review now.

Once enforcement actions happen, remediation can take years. That means constant attention, detailed progress reporting, and often external oversight. As a compliance manager, you’ll be carrying the burden for that process, and your success will depend on how solid your foundations were to begin with.

If you want to stay off the regulator’s radar, enforcement action isn’t something you just read about – it’s something you learn from.