AML - Practical Procedures for Your Firm

Reading time: 5 min

Category: Law and Regulation

Author: Courtney Price

Published: Nov 28, 2023

Last Updated: Nov 28, 2023

In today's regulatory environment, Anti-Money Laundering (AML) compliance is not just a legal requirement but a critical component of a firm's integrity and reputation. As we approach a new year, it's the perfect opportunity for firms to review and strengthen their AML frameworks.

In AML - Practical Procedures for your Firm, Elaine Jackson outlines practical procedures that firms should implement to ensure robust AML compliance and prepare for the year ahead. Below is just a few topics Elaine covered, the full list can be found in her session.

1. Develop an Annual AML Action Plan

Kick off the year by crafting a comprehensive AML action plan. This strategic document should outline the steps your firm will take to enhance its AML processes over the coming months. Whether you aim to complete this in January or spread it across the first quarter, the sense of achievement upon completion will be significant.

2. Appoint an MLRO and Deputy

A Money Laundering Reporting Officer (MLRO) plays a pivotal role in overseeing AML activities. Ensure you appoint a competent MLRO and a deputy to cover periods of absence due to leave or illness. The deputy should be well-versed in AML protocols and ready to step in when needed.

3. Conduct Regular Staff Training

AML training is not a one-off event but an ongoing process. All staff, including admin personnel, should receive initial comprehensive AML training followed by annual refreshers. These sessions should cover key topics such as legislation updates, red flag indicators, customer due diligence, and internal reporting procedures.

4. Maintain an Accurate Client List

An up-to-date client list is essential for assessing the risk profile of your clientele. This information helps determine if your firm's policies need strengthening or if specific staff training is required, especially for new clients involved in higher-risk areas like cryptocurrencies.

5. Implement Bi-monthly AML Awareness Campaigns

To keep AML at the forefront of your team's mind, consider bi-monthly awareness campaigns. Simple emails from the MLRO highlighting topics like the Proceeds of Crime Act or red flag indicators can maintain vigilance without overwhelming staff with frequent formal training sessions.

6. Review and Update AML Policies and Procedures

Your AML policies and procedures manual should be a living document, regularly updated to reflect the latest regulations. It should detail your firm's approach to customer due diligence, suspicious activity reports (SARs), and other AML-related processes.

7. Perform Annual Compliance Reviews

Conducting annual compliance reviews, internally or externally, ensures that your AML practices are current and effective. An external review every three years can provide fresh insights and help identify areas for improvement.

8. Educate Clients on AML Obligations

Clients should be informed about both your firm's and their own AML obligations. Educating them on what changes in their circumstances they need to report can aid in your risk assessment and compliance efforts.

9. Assess and Enhance Due Diligence Practices

Regularly review the customer due diligence documentation for each client to ensure it remains current and accurate. Reassess the risk levels assigned to clients as more information becomes available over time.

10. Identify and Implement Procedural Improvements

Always be open to constructive criticism and willing to act on recommendations from compliance reviews. Engaging the whole team in discussions about where improvements are needed fosters a culture of compliance and collective responsibility.

Implementing these AML procedures will not only help your firm comply with legal requirements but also protect it from the reputational damage associated with money laundering activities. By taking proactive steps now, you can set the stage for a compliant and successful 2024. Remember, AML is not just a regulatory checkbox; it's a commitment to ethical business practices and a safeguard for the financial system.

For the full session, please click here. In this course, Elaine Jackson covers the following topics;