Anti-Money Laundering – AML
AML laws have been around for over 30 years and impacts millions of companies operating in the financial services, gaming, bullion and designated non-financial businesses and professions (DNFBP) sectors in over 200 countries.
In 1989, the Financial Action Task Force (FATF) was established to set global standards for the prevention of money laundering across various member countries who have made a commitment to combat financial crime by adhering to these standards. Every 3-5 years, the FATF conduct mutual evaluation reports on the progress that each country has made to reduce money laundering vulnerabilities and publish these findings including where Governments are falling short on their commitments.
In the mid-2000’s, the guidance by the FATF and various Financial Intelligence Units (FIUs) and other AML Regulators moved away from a prescriptive one-size-fits-allapproach that treated all risks equally, to a risk-based approach (RBA), which requires regulated businesses to conduct initial and ongoing risk assessments, to identify and assess risks across a number of defined risk categories and then develop and maintain an AML Program, that outlines the controls that have been implemented to mitigate and manage the identified money laundering and terrorism financing risk exposures.
In the early 2010’s, after reporting entities had a reasonable period in which to implement and embed the AML risk management and control framework into the fabric of the organisation, AML regulators generally require AML Programs to be independently reviewed to assess the design and operational effectiveness of controls in mitigating and managing AML risks.
In the late 2010’s, the focus of many AML regulators has been to expand the AML laws to DNFBPs, like lawyers and accountants, who act as ‘gatekeepers’ to the financial sector, for example, establishing companies and trusts and arranging for financial services to be provided. In addition, other sectors like real-estate and the dealers in high-value goods, such as art, jewellery, precious metals, cars and boats, which are used by organised criminal networks to launder the proceeds of their crimes.
In the future, it is expected that governments and regulators around the world will continue to expand AML laws beyond the financial services sector to these ‘tranche 2’ industries, which is supported by investigative reports, such as the Panama and Paradise Papers, that identified wide-spread abuse of and by financial institutions and other ‘gatekeepers’.
For more information on Anti-Money Laundering visit our resource centre
ANTI-MONEY LAUNDERING SOLUTIONS
What are the key AML obligations?
Designing, implementing and operating an AML Program is a detailed and complex undertaking and presents a significant challenge to most businesses.
The diagram below sets out the major requirements that all regulated businesses must meet to be compliant with AML laws.
ANTI-MONEY LAUNDERING SOLUTIONS
What are the consequences of failing to comply with AML laws?
It has been estimated that over USD$400 billion dollars* has been paid in fines by financial institutions since 2008 for failing to comply with AML laws.
In addition to fines and penalties imposed by AML regulators, the consequences for non-compliance are far-reaching and could include:
- Civil and/or criminal penalties imposed on Boards and Senior Executives;
- Enforceable undertakings to act or cease acting in a certain way;
- Reputation damage resulting from negative media exposure;
- Revocation of operating licenses;
- Falling share prices; and
- Extensive remediation programs to address compliance deficiencies.
* Source: Thomson Reuters
ANTI-MONEY LAUNDERING SOLUTIONS
What solutions do we offer?
Arctic Intelligence is a RegTech business that enables audit, risk and compliance ‘as-a-service’ through technology allowing our solutions to guide you to compliance.
Regulated businesses must conduct an initial and ongoing risk assessment that considers the following categories of risk:
- Product and Service
The money laundering and terrorism financing risk assessment must be logical, well documented and defendable to your AML regulator.
Conducting money laundering and terrorism financing risk assessments and identifying controls that can mitigate and manage these risks continues to provide significant challenges to many regulated businesses, which led to our focus on our risk assessment platforms.
We have developed two Risk Assessment platforms – find out which is best for you
AML Accelerate is a cloud-based money laundering and terrorism financing risk assessment platform designed by experts and is tailored to over 30 financial and non-financial industry sectors.
The platform creates the ML risk assessment and AML Program Manual and has tailored content to the AML laws of different countries including Australia, New Zealand, Hong Kong, South Africa, Singapore, Canada, United Kingdom, Ireland and the United States.
The Risk Assessment Platform is designed to help you to identify, assess, mitigate and manage risks for financial crime and other risk domains.
The platform is highly configurable allowing you either purchase a content library or to create or upload your own risks and controls, as well as, change the risk methodology and risk weightings across the model and align the assessment to your risk management framework.
Anti-Money Laundering Program Manuals
Having completed the money laundering and terrorism financing risk assessment, you are required to create and maintain an AML Program Manual documenting the systems, procedures and controls that you have in place to mitigate and manage the identified risks.
Documenting an AML Program Manual that is appropriate and proportionate to your risks, as well as containing all of the expected sections and content, to the level of detail expected by your AML regulator often presents a significant challenge for regulated businesses, which is why we developed the AML/CFT Program Manuals.
Our AML Accelerate platform contains an AML Program Manual that has been tailored to over 30 financial and industry sectors and to the AML laws of a number of countries.
This document provides a solid foundation for further modifying the content to suit your organisations specific circumstances.
AML Accelerate also provides an Action Plan and AML Operating Manual that provides guidance on how to practically implement and operationalise the content of the AML Program Manual.
AML Accelerate also monitors for regulatory changes and provides an alert notification service to ensure that your AML Program can be kept up-to-date as AML regulators make changes.
Our Anti-Money Laundering Health Check platform also contains an AML Program Manual that can be tailored to suit your organisations specific circumstances.
The AML Program Manual contained in the AML Health Check platform is not tailored to any specific industry sector or any AML laws of any specific country but has been included as an additional product feature for clients that are mostly interested in software that supports the independent review requirement.
Regulated businesses are required to conduct induction and ongoing money laundering and terrorism financing risk awareness training for employees, which may vary depending on their role within your organisation.
It is also expected that you maintain training records to demonstrate that training has occurred and where appropriate, that required competency levels have been met.
Arctic Intelligence has partnered with GRC Solutions, the recognised leader in the online compliance education market in the Asia Pacific region to offer access to first-class and affordable online financial crime, risk management and compliance training through the SALT Compliance e-Learning Library.
For the full range of Anti-Money Laundering and other compliance courses:
Regulated businesses are required to have their AML Programs independently reviewed every 1-3 years, depending on local AML supervisory requirements.
The Anti-Money Laundering Health Check solution is an online platform dedicated to controls assurance and provides a structured framework for conducting independent reviews to assess the design and operational effectiveness of anti-money laundering and counter-terrorism financing programs.
The AML Health Check is typically used to perform:
- An internal self-assessment against regulatory obligations;
- An assessment of a third-party for due diligence purposes;
- Independent reviews by internal audit functions of major reporting entities;
- Independent reviews / gap assessments performed by AML consultants; and
- Remediation programs to track improvements against regulations.
The Anti-Money Laundering Health Check platform has been designed to leverage best practices in risk management controls assurance and was built based on a logical hierarchy that links rules and obligations, with policies, risks and controls and provides a means of assessing compliance against obligations, prioritising responses, providing auditor comments and management responses, as well as, assigning actions and attaching documentary evidence to support audit findings.
After the assessment has been completed for each compliance obligation users can create executive summary reports directly from the platform, highlighting the key observations, findings and recommendations, as well as, actions, issues and risks identified during the review process.
The AML Health Check platform also contains rich data analytics that provide actionable business intelligence including; real-time operational dashboards for tracking open and outstanding actions, issues and risks; interactive reports which can slice and dice audit data in many ways including, drilling into particular areas of interest, as well as, benchmarking audit outcomes across different timeframes, divisions and countries, it can even summarise on a single page the compliance status across hundreds of compliance obligations.
Following independent reviews or onsite visits from AML Regulators some reporting entities may have deficiencies in customer due diligence programs, which requires a Know Your Customer (KYC) Remediation Program to be undertaken.
Managing KYC Remediation Programs can be costly and involve contacted tens or hundreds of thousands of customers to collect and/or verify information, which may not be available via publicly available sources and requires the regulated business having to contact customers directly.
Traditionally, KYC Remediation Programs have been very expensive, time consuming to manage and mostly involves manual processes to collect information from customers via sending physical mailouts, which mostly receive a very low response rate. The reliance on manual methods of performing KYC Remediation Programs makes it very hard to track and report progress to AML Regulators, but there is now a much more accessible and affordable alternative.
The ezyKYC Platform was designed to help major reporting entities that are required to collect high-volumes of know your customer (KYC) data during a remediation project by providing tools to issue forms to clients and track completeness online and in real-time which saves time and money over traditional methods of physical mailouts.