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Part 2 of getting to know Anti-Money Laundering (AML) policies and how they effectively protect your organisation. In this article, we talk about the challenges faced by AML Compliance Officers


Why do banks persist as the best money laundering machines around? That has been the case for years. The banking organisations of the past have struggled with the same issues and risks faced by Anti-Money Laundering (AML) Compliance Officers in today’s environment:

  1. Lack of resources/staffing pressures;
  2. Know Your Customer (KYC) struggles;
  3. Technology support issues; and
  4. Effective monitoring for suspicious activity.

Wait a minute.

Does this mean that the financial services industry hasn’t learned anything from its past mistakes?

This may be true in certain specific situations, but overall the lack of change is probably more reflective of the challenges facing banks: managing the huge risk posed by customers and third parties who are intentionally attempting to disguise the origin of funds and avoid detection by internal controls. So, in the face of such challenges, what is a vigilant Compliance Officer to do?

The basics of an AML programme

A sound AML programme maintains four integral key elements that we look at more closely below. These are not the only elements, but it is the framework that will keep any AML programme in good shape. As modern football coaches claim, every football team should have 11 attackers and 11 defenders.

1. A Strong Governance Structure

The lesson for bank executives is that even the unwitting, totally innocent use of your institutions by money launderers (e.g., drug dealers) can harm your public image. A clear corporate policy and vigilance over your employees is a must.

Regardless of the size of the banking institution, a sound AML programme must have a good governance structure and framework within which to operate. Building a good governance structure requires the support of senior management and ultimately, the board of directors, and it includes several important and interrelated components.

2. Risk Identification and Assessment

The second key to maintaining a solid AML compliance function is the accurate identification and evaluation of the risks that need to be addressed and managed. There are a few important elements that are essential to producing a risk assessment that identifies all risks and guides the AML program.

So, for example, as laundering funds through wire transfers becomes more attractive to criminals who are avoiding banks’ cash reporting requirements, many institutions are looking into programmes that detect large-sum wire transfers.



3. Due Diligence

Money launderers continue to use various types of businesses and shell corporations in jurisdictions lacking transparency of ownership.

Know Your Customer (KYC) is a key ingredient for a strong, solid AML programme for a bank. The more you know about your customers, the easier it is to identify activity that is unusual, out of character, and potentially suspicious.



4. Monitoring for Suspicious Activity

Criminal money looks exactly like all other money – as you may remember from our previous article, the money launderer is not unlike a magician. That is why it is important also to have a process for Monitoring for Suspicious Activity that is reflective of and responsive to the risks identified and builds on the due diligence information available.



Be Vigilant, Remember the Basics

Maintaining an effective AML program is difficult and requires consideration of more than just the four key elements mentioned here.

However, the combination of these basic elements, of knowing your risks, knowing your customer, and monitoring accordingly for suspicious activity, all under the framework of a good compliance governance system, is a time-tested formula for managing the ever-changing, but ever-present, money laundering risks.

The message is simple and straightforward: as always, remember the basics!

Share your thoughts and experiences on what makes a successful AML Strategy – we will be happy to hear from you! You can reach us on Linkedin, Twitter and Facebook.



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