22 Jun 4 Key Elements of a Successful Anti-money Laundering Programme

Through this short article, composed by our expert trainer Anna Stylianou, we share with you the most vital components that must be included in an anti-money laundering programme if it is to be effective in an organisation.

Every regulated entity that needs to comply with anti-money laundering (AML) laws and regulations is required to design and ensure the implementation of an anti-money laundering programme which will protect the financial institution from several legal, operational, and reputational risks. A successful anti-money laundering programme comprises of the following four elements:

Development of internal policies, controls, and procedures
Internal policies, controls and procedures need to be established to:

• Protect the financial institution against ML/TF and therefore protect the entity’s brand and reputation.
• Ensure that the financial institution is in full compliance with the anti-money laundering and countering financing of terrorism (AML/CFT) regulatory framework.

The policies and procedures are designed by the Compliance Officer, or the Compliance Department based on the principles set and approved by the Board of Directors. These policies and procedures include risk management practices, identification and verification procedures, suspicious transaction identification and reporting, record-keeping, and others, always, taking into consideration the size and nature of the business.

All AML procedures, policies and controls will then be approved by the Senior Management or the Board of Directors. It is important that these policies are regularly reviewed and updated to ensure that they take into consideration new risks that may arise.

Appointment of a compliance officer at a management level

A regulated entity must appoint a designated Compliance Officer with sufficient experience and authority to oversee the design of the business’s internal policies and monitor that they are in-line with relevant laws and regulations. This person must also ensure the compliance of employees with these policies.

The duties of the compliance officer are specified in national regulations. These include, but are not limited to:

• Design the internal policies, measures, procedures and controls with regards to the prevention of money laundering and terrorist financing, including the AML manual.
• Develop the clients’ acceptance policy.
• Monitor and assess the implementation of the internal controls, perform risk assessments, and ensures that policies and procedures are regularly reviewed and updated.
• Provides guidance to employees for corrective measures.
• Receive internal suspicious reports, evaluates them and, if necessary, reports to the Financial Intelligence Unit.
• Organize employee training.

Establishment of an independent audit function

Where appropriate and depending on the size and nature of the business, an independent audit function should be appointed to test the internal policies, controls, and procedures implemented within the organization.

The purpose of this function is to provide an independent evaluation of the effectiveness, appropriateness, and adequacy of the company’s internal controls and to make recommendations to the Board of Directors.

Those performing the audit must be sufficiently qualified to ensure that their findings and conclusions are reliable. He reports to the Board of Director through the independent audit report. The frequency of the evaluation is specified in national regulations but is usually required annually. The Board is then responsible to take action and rectify possible shortcomings.

Ongoing employee training

A regulated entity must ensure that its employees are fully aware of their legal obligations with regards to the anti-money laundering laws but also of the ML/TF risks posed to the entity by their activities through regular training.

A successful and complete employee training programme takes into consideration the employees’ needs according to their positions and level of responsibility. The training programme must have a different structure for new employees, existing employees and for different departments and be provided at regular intervals.

The training may include:

• an understanding of the AML legal framework
• the internal policies and procedures
• offences and penalties
• how to identify and report suspicious transactions
• how to respond to customers