Pillars of AML Compliance

Money laundering is a global problem that has been plaguing the financial markets on a global scale. A staggering $2 trillion, or up to 5% of the world’s GDP, is thought to be laundered each year. Because of this, organisations must prioritise Anti-Money Laundering (AML) compliance in order to detect and prevent potential money laundering and other financial crimes. In high-risk areas, achieving compliance is even more crucial, and it should include the five AML compliance pillars that ensure efficacy.
 
AML compliance was initially restricted to banks and other financial organisations. However, it has spread to closely connected businesses as a result of growing rates of money laundering and changing criminal tactics. AML compliance is currently required for a variety of institutions, including casinos, cryptocurrency, savings and investments, and more. Five key components—which we shall discuss in this article—make up a successful AML compliance programme, even though particular standards may differ among jurisdictions.
What is Anti Money Laundering (AML) Compliance?
 
The practice of abiding by rules and regulations to stop money laundering and other financial crimes is known as anti-money laundering (AML) compliance. The Financial Action Task Force (FATF) publishes global anti-money laundering (AML) rules, which are subsequently interpreted by regulatory agencies in various international jurisdictions. But since they come from the same source, these rules typically share a great deal in common. For instance, financial organisations are required by the US’s Bank Secrecy Act (BSA) to establish efficient AML programmes in accordance with predetermined guidelines. The Financial Crimes Enforcement Network (FinCEN) then enforces this.
Who Is Required To Have An AML Program?
 
All businesses operating in regulated industries are essentially required to maintain an AML compliance programme. Some instances of these companies are:
 
Banks
Asset management companies
Real estate companies
Insurance companies
casino organisations
Money remittance companies, etc
Pillars for an AML Compliance Program
 
Appointment of a compliance officer
Develop internal AML policies
Proper employee training programs
Regular auditing and maintenance of the AML program
Implementation of AML program for customer due diligence
1. Appointment of a compliance officer
 
Designating a designated compliance officer, who will oversee the programme across the entire organisation, is the first stage in ensuring AML compliance. In addition to dealing with regulators on behalf of the business, the compliance officer will be in charge of creating, executing, and upholding compliance across the board. Their approach ought to be compliant with the rules established by the business jurisdiction’s regulators.
 
Typically, a compliance officer’s responsibilities consist of:
 
creating, carrying out, and upholding a compliance programme throughout the business
 
recommending, in light of findings, changes to current AML programmes
 
Setting up internal staff development
 
keeping abreast of and informing important stakeholders, management, and other staff members of any updates about compliance
 
A compliance officer ought to be skilled, knowledgeable, and well-versed in the pertinent industry compliance regulations. The likelihood that employees will view compliance as an operational burden and avoid it whenever feasible can be decreased with the correct combination of experience and communication abilities.
2. Development of Internal AML Policies
 
The creation and execution of internal AML policies constitutes the following pillar. This will help to preserve consumer data, make wise judgements, and efficiently monitor any questionable customer activity. In general, it is advised that these procedures use a risk-based methodology and appropriate tactics created in accordance with the degree of risk a customer poses.
 
Since every business is different, the policy should be tailored to meet those needs. These guidelines should also be routinely reviewed and updated.
 
3. Implementation of AML Program in Customer Due Diligence
 
One of the cornerstones of AML compliance is Customer Due Diligence (or CDD). Global anti-money laundering (AML) rules require businesses to perform identity checks on their customers to make sure they are who they say they are, as well as to keep a close eye on their activities in order to discover and report suspicious activity to the appropriate authorities.
 
Typical needs for customer due diligence include:
 
Identifying a customer’s identity
Running AML checks to assess the risk level posed by the customer
Identifying and verifying the ultimate beneficial owners for legal entities
Verifying customer’s source of funds
Constant monitoring of customer transactions for suspicious patterns and reporting them appropriately
 
Customers should be treated according to the degree of risk they pose while designing CDD, using a risk-based approach. For customers who pose a very high risk, appropriate increased due diligence procedures must be implemented.
4. Proper Employee Training Programs
 
A company can only be as compliant as the internal staff members that follow compliance processes. For this reason, it’s critical that staff members receive regular training on pertinent AML procedures so they can appreciate the value of compliance and stop viewing it as a barrier. They must receive training on the methods for reporting fraudulent activity, as well as the instruments and apps utilised for fraud detection. The compliance department should keep a record of these trainings, which should address pertinent AML rules in the jurisdiction.
 
5. Regular Maintenance of the AML Program
 
The last pillar of AML compliance is routine programme maintenance and auditing. This is important since regular reviews enable the organisation to fix any detected flaws and upgrade the programme to meet the most recent criteria. It would be ideal for a third party with more ability to spot potential programme problems to do this audit.
 
Other areas, such as finances, might also undergo frequent audits to identify any anomalies that might point to money laundering. All things considered, the proper audit aids in locating flaws, enhances current procedures, and demonstrates to regulators the degree of an organisation’s operational integrity.
 
How To Stay Compliant Today
 
Companies must use the appropriate technology if they want to improve their current compliance procedures and reinforce their AML compliance pillars. Businesses can achieve AML compliance all in one place with the help of GloRep products. Without compromising the user experience, businesses can easily integrate and modify their onboarding process to suit their specific needs, ranging from identity verification to biometric authentication, business verification, and AML checks.

Related Posts

Consequences of Someone Stealing your Data

In this day and age we have become numb with the speed and ease of online signups and freely hand out our information and documents to register with a platform or game as soon as possible without pausing and giving thought to the consequences of this information falling into the wrong person’s hands.

Comparing todays Bot prevention Technologies

On the internet, bots are self-governing programmes. The ability to create phoney accounts, access accounts that already exist using credentials that have been stolen, post comments on social media,in the person of a real person, and much more,all at frighteningly fast speeds and scale has made them a genuine threat in the hands of fraudsters.