As financial crimes become more complex, it’s vital to protect your business from money laundering. Your organization must develop a strong Anti-money Laundering compliance program.
It must prevent money laundering in your company. This is a legal need for businesses. Clean the business environment and establish controls to block illegal activity.
An anti-money compliance checklist will ensure all measures are taken and protect against violations.
An AML compliance checklist is vital to your company’s defense against money laundering and other financial crimes. It helps to find risks, check transactions, and ensure compliance with laws. It can help you handle threats and ensure your firm’s survival.
Contents
1. Risk Assessment
Risk Assessment is the first step in the anti-money laundering checklist. It involves assessing the likely hazards related to your business area, client types, and locations, as well as the services you offer.
Knowing what these risks are will enable the enhancement of the AML program to address certain unique risks.
A 2023 survey by ACAMS found that over 65% of global banks had improved their risk assessments due to rising threats.
2. Customer Due Diligence (CDD)
Visual identification is definitely among the most important segments of any list associated with AML solutions.
It consists of confirming the identity of your customer before engaging in any business with him/her. Some proposed best practices for the CDD process are to collect and verify customer data and check the beneficial owners of companies.
Also, the customer’s risk can be assessed based on their profile. High-risk customers, as defined by the regulation, include politically espoused persons.
Politically exposed persons require a higher level of scrutiny through enhanced due diligence. Similarly, in 2022, the financial institutions revealed that 15% of their customers needed high-risk customers’ due diligence.
Bonus: Ensure that your business complies. Use the AML compliance checklist at your disposal for today to safeguard your business against financial crimes.
3. AML Screening Check
An AML screening check plays an important role in identifying the activities. This consists of checking the customers against several lists.
These checks have to be performed when onboarding and throughout the entire course of the customer’s journey with the company.
A report by FinCEN, the U.S. Treasury’s Financial Crimes Enforcement Network, shows a 25% rise in SARs in the financial industry in 2023. This underscores a continuing trend.
4. Identity Verification
The other crucial procedure that ought to be observed in the context of preventing money laundering compliance is the measures taken to identify the customers. This step requires that you ensure that the details that your clients have provided about themselves are correct.
The government requirements concerning the use of ID verification were established by the 5th EU Anti-Money Laundering Directive that was passed in 2020.
According to a Juniper Research report on ‘Digital Identity-Products, Adoption, and Regulation,’ from August 2023, digital identity also helped in eliminating fraud by 30% when compared to manual verification. It is only possible when a complete AML checklist is used for identity checks. This, in turn, assists in protecting your firms from scams.
5. Transaction Monitoring
Another aspect that cannot be subject to compromise is transaction monitoring, which is conducted on a continuous basis. This process examines how customers run their business.
It aims to find any suspicious dealings linked to money laundering. In 2023, the use of analytics and machine learning tools grew by 40% among financial institutions, according to a Deloitte report.
It helped improve transaction monitoring. Your AML compliance checklist should include protocols for monitoring and reporting transactions to the right authorities.
6. Reporting and Record-Keeping
Another important aspect of an anti-money laundering checklist is reporting suspicious activities. When firms suspect some unlawful activities, they are under the law’s mandate to file SARs.
Also, records must be kept on a business for compliance purposes. Records of customers and their transactions should be kept for at least five years, which is required by regulations such as the U. S. Bank Secrecy Act (BSA).
The 2023 PwC survey found over 70% of financial firms had record-keeping issues. This highlights the need for a better system to handle this task.
7. Staff Training
The most crucial part that contributes to AML compliance is awareness among employees. Employee training on the institution’s AML policies, procedures, and the new changes in the law should be on your AML checklist.
According to the global figures for 2023, AML training expenditure was up by 18%, which clearly shows how training is an important facet.
Some of the recommendations for training programs are that they should be reviewed periodically in order to encompass other typologies of money laundering and other risks.
8. Anti-money Laundering policy documentation
They discovered that your AML program has to be well documented. This means that there should be a clearly set and extensive AML policy that shows your company’s stand on compliance.
It should include risk assessment, customer ID and verification, transaction monitoring, and suspicious transaction reporting.
The FATF says that companies with strong AML policies are 25% more compliant in passing regulatory inspections.
