Regulated entities must establish an effective AML compliance program to prevent criminals
from abusing their products and services for money laundering purposes. Failure to
maintain a solid AML program can expose an entity to significant penalties and reputational risks.
An efficient AML program includes the following elements:
This includes the development of relevant policies and procedures to mitigate the money
laundering and terrorism financing (ML/TF) risk exposure of an entity and ensure that the
risk remains within acceptable levels. All AML controls must be created in accordance with
the regulatory obligations of an entity.
Risk assessment is an essential part of an effective compliance program. Once an entity
identifies and understands its risks, it is possible to establish risk-based CDD procedures,
• Identification and verification of the client's identity
• Understanding the nature and purpose of customer relationships to develop a
customer risk profile
• Ongoing monitoring
• Identification and reporting of suspicious transactions
Every regulated entity must have its AML program tested and audited by an independent
party. The auditor must be sufficiently qualified to perform the necessary tests and identify
potential weak points in the compliance program. The audit findings are submitted along
with the auditor's recommendations to the Board of Directors, who are responsible for
taking appropriate measures to rectify potential weaknesses.
The Board of Directors must designate a compliance officer to oversee the overall AML
compliance program. Among others, the compliance officer is responsible for drafting and
updating relevant policies and procedures, performing inspections in the relevant
departments, identifying training needs, and evaluating and reporting suspicious
transactions to the Financial Intelligence Unit (FIU).
Employees are the front line of a company and can contribute to protecting it from potential
ML/TF risks. However, they need to be adequately trained to ensure that they:
• Understand their legal obligations
• Are familiar with the overall AML framework
• Know the internal policies and procedures of the entity
• Can identify suspicious transactions
• Know how to report suspicious transactions and to whom
Employees need to be trained regularly to stay up to date with regulatory developments.
Failure to train the entity's employees may result in regulatory breaches and severe fines.
In conclusion, regulated entities must establish and maintain an effective Anti-Money
Laundering (AML) compliance program to prevent their products and services from being
used for money laundering purposes. Failure to do so can result in significant penalties and
reputational risks. An efficient AML program includes internal controls, risk-based customer
due diligence procedures, independent testing of compliance, designation of an individual
responsible for day-to-day compliance, and employee training. These elements are crucial in
identifying, mitigating, and reporting potential money laundering and terrorism financing
risks. By implementing an effective AML compliance program, regulated entities can ensure
their long-term success and protect their reputation.