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7 tips for your next Independent Review of the AML/CTF Program

An independent review of the anti-money laundering (AML) and counter-terrorism financing (CTF) program helps assess an organisation’s compliance process to ensure whether it is meeting its legal and regulatory requirements. An independent review can also be a great way of identifying any potential weaknesses to help organisations update their compliance protocols and reduce risks, before becoming embroiled in a money laundering scandal. 

If you’re looking to undertake an independent review, preparation is key and can help you proactively address any potential challenges. Here are some helpful tips on the key activities you must get right to avoid your Board reading a horror novel, when they receive the Independent Review report!

1. Establish a robust AML/CTF Compliance Program

Developing a solid AML/CTF compliance program can help ensure a more successful outcome for independent reviews. Review existing program and check for the following:

  • Clearly written (and importantly embedded) policies and procedures
  • risk assessments are logical, explainable, documented and defendable
  • employee training is being conducted with competency testing controls
  • transaction monitoring systems are well established and managed
  • governance and oversight arrangements are in place with Board level support
  • ongoing internal reviews are conducted to test control design and effectiveness.

A well-structured AML/CTF compliance program helps demonstrate to external auditors or reviewers that you’re committed to preventing money laundering and terrorist financing activities and actually have the pre-requisite capabilities to deliver on this commitment – many organisations have been found wanting simply “paying lip-service” to AML/CTF.

2. Engage an experienced and Independent Reviewer

Choosing the right independent reviewer is critical to the success of your AML/CTF review. To add value, independent reviewers should bring a combination of skills, qualifications and practical experience, and utilise technology for efficiency.

When searching, look for an independent reviewer with experience and expertise in AML/CTF regulations (in all the countries your business operates in), risk management and compliance frameworks and a good understanding of industry best practices. Make sure they can provide an independent, unbiased and objective assessment. It’s important to undertake due diligence to check their credentials, reputation and track record.  

It is also important that the Independent Reviewer can provide candid feedback, without fear or favour and that the independent review report is not “influenced” by toning down the directness of recommendations – which surprisingly does still happen!

3. Undertake Pre-Independent Review Preparation Activities

As with anything, being prepared is essential before you get started with an AML/CTF Independent review. First, gather any relevant documents and collect evidence of your AML/CTF program’s coverage, such as

  • group and business unit policies and procedures
  • ML/TF risk assessments – methodologies, inherent risk assessment, controls effectiveness assessment, residual risk assessment and actions taken
  • training attendance and competency records
  • internal audit reports related to the AML/CTF Program
  • Board and executive management meetings discussing AML/CTF matters
  • correspondence with any regulators

Also, review and update your AML/CTF program with the introduction of any regulatory changes. Organise an internal pre-audit before your external independent review begins to identify and address any potential issues early and have a remediation plan already in place.

4. Establish Clear Communication 

As outlined by Forbes, the new challenge for compliance teams is managing and facilitating compliance across dispersed, interconnected businesses effectively, which comes down to effective communication between key stakeholders.

In addition to ensuring your internal communication is effective (and not just focused on outcomes like approvals, documents and training programs; but how to achieve those outcomes), businesses need to establish clear communication with their chosen independent reviewer and ensure that they are given access to people that they need to in order to complete their review thoroughly.

Share information and access. Allow access to critical and relevant people. Be open and transparent throughout the process to make the review process more efficient for everyone. 

5. Undertake Monitoring and Testing

Regular monitoring and testing of your AML/CTF controls help identify gaps in your compliance program. Being proactive lets you address issues before the independent review, so you can resolve them and demonstrate your commitment to continuous improvement. Keep evidence, documenting the steps you took. 

6. Train Your People 

Compliance training is more important than ever in today’s rapidly evolving business landscape. Investing in high-quality training can help protect organisations from breaching regulations, reducing the risk of heavy fines or other penalties. But more importantly, training gives employees the confidence to perform their roles effectively, and prioritises customer protection.

When investing in regular and comprehensive AML/CTF training, businesses must explore how to tailor training for individual roles and responsibilities. To provide relevant information and clearly outline personal responsibilities and accountabilities.

Introducing education for any new AML/CTF regulations when trends emerge helps businesses remain proactive with their compliance program. This approach helps ensure staff are more likely to identify suspicious activities, comply with AML/CTF requirements and provide helpful, informative and accurate information as part of an independent review. 

7. Respond to Recommendations and Findings

Don’t wait until after the review to implement improvements or changes to your compliance program. During an independent review, an auditor often identifies areas for improvement or outlines recommendations throughout the review process. Address these promptly, document your actions, and outline any remediation plans. These steps can help demonstrate your commitment to compliance and meeting your regulatory obligations. 

How RegTech Can Help 

Conducting a smooth and successful AML/CTF independent review requires proactivity, preparation and establishing effective communication. But regulatory technology (RegTech) can also help to streamline your processes and automate controls. Undertaking an AML/CTF Independent Review allows businesses to assess compliance effectiveness (both with design and operational elements). It can also map policies and procedures to your compliance obligations. And undertake control testing, documenting recommendations and using analytics to deliver actionable business intelligence. 

A well-executed independent review ensures businesses meet their compliance regulatory requirements but, just as importantly, safeguards their reputation and integrity.

About Arctic Intelligence

Arctic Intelligence is widely recognised as an expert in financial crime regulatory technology (RegTech). The team has developed two multi-award-winning financial crime risk assessment platforms to help clients identify vulnerabilities, strengthen controls and adapt to emerging threats.

Arctic has helped hundreds of businesses of varying sizes across many industry sectors and countries transition from spreadsheets to digitization and automation of financial crime risk assessments.

Our team of financial crime and technology experts have developed two multi-award-winning financial crime risk assessment platforms:

AML Accelerate Platform – designed for small and medium sized companies in over 30 industry sectors, in more than 30 countries. Guides you to conduct enterprise-wide money laundering and terrorism financing risk assessments, document AML/CTF Programs and track and monitor issues, breaches and incidents real-time.

Risk Assessment Platform – designed for larger companies to conduct risk assessments for financial crime and other risk domains. The Risk Assessment Platform is a highly-configurable platform that can be tailored to your organisation’s risk assessment methodology, risk and control libraries relevant to their business and execute these across multiple countries, operating groups or business units, producing real-time aggregated dashboards and reports.

Our team has also developed a Health Check designed to be used by Independent Reviewers and Internal Audit teams to test the design and operational effectiveness of controls against AML/CTF obligations registers.
Get in touch with our team for a demo today.

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