The Anti-Money Laundering Checklist

By Cognito Team on June 5, 2020

It’s not news to today’s financial institutions that money laundering is a serious global problem. According to the U.N., the estimated amount of money laundered in one year is 2–5% of global GDP — in other words, the world loses a staggering $2 trillion USD to money laundering a year. Understandably, Anti-Money Laundering (AML) regulations have become significantly stricter over the past year as a result. Strengthening AML compliance is essential for businesses looking to reduce the risk of fraud and avoid the financial, legal, and reputational damage that can result from it.

AML compliance can be a complex undertaking for any company, but there are smart ways to streamline the process. We’ve assembled a handy checklist to help ensure your AML program is up to scratch.

1. Do you have a written AML compliance program?

A written AML compliance program is an essential part of any effective AML strategy. Your business may also be required to have one — FINRA Rule 3310, for example, directs financial institutions to develop and implement a written AML compliance program in order to meet minimum standards.

As a rule of thumb, your written compliance program should explain:

  • Which regulations you are complying with
  • Your identification policies
  • How you will monitor and report on your compliance program
  • Your criteria for identifying suspicious activity
  • Your record retention policy
  • How often you will conduct internal audits
  • Your communications procedures
  • The name of your compliance officer 

Having this policy available to your executive leadership, board, staff, and regulators in an important component of any good AML program.

2. Do you have a compliance officer?

A compliance officer’s role is to ensure your organization is meeting the national and international regulations specific to your industry. Compliance officers work with management and internal teams to roll out or augment company-wide compliance programs. 

If you don’t put someone in charge of compliance, your processes will not be as robust or up to date as they should be. In the long run, this will hamper your ability to manage the risk of fraud. Make sure whoever you designate as your compliance officer has the seniority and influence necessary to ensure AML compliance is fully implemented and monitored.

3. Do you efficiently screen new customers?

Onboarding is a critical component of your AML compliance program as well as your customer experience. With an effective watchlist solution in place, you can quickly and securely screen new customers — protecting you from money launderers from the get-go by identifying them and refusing them access to your systems. A smart watchlist tool can ease the burden on your compliance team and reduce false positives in the screening process, boosting your efficiency.

4. Do you regularly re-screen customers?

Although it’s tempting to think the screening process ends after you’ve onboarded a new customer, it should be an ongoing part of your customer relationship lifecycle. A customer’s status can change after they’ve signed up for your services, and when it does, you need to be able to detect this change so you can manage the potential risk to your business. 

How often do you re-screen your customers, and how much time does it take your team to accomplish this task? An efficient watchlist solution re-scans your users on a regular basis to automatically uncover any changes in their status, giving you the timely notification you need in order to respond before a threat becomes a liability. The right watchlist product should non-intrusively screen hundreds of millions of accounts each month, keeping your business compliant while maintaining a smooth and frictionless customer experience.

5. Do you train your employees on AML?

AML training can help your employees protect your company. By educating your teams on the legal requirements affecting your business and the compliance policies you have in place, you equip them to better recognize the common techniques used by money launderers to gain access. Make sure to conduct regular training so your team’s knowledge is kept current: in addition to providing introductory sessions to new hires, host refresher programs for existing employees as well.

6. How often do you review your AML compliance processes?

Your compliance requirements will evolve as your business grows and regulations change. That’s why you should review your compliance processes and procedures on a regular basis to make sure they are up to date. Consider bringing in an expert to advise you on which aspects of your compliance program need to be strengthened and how to improve them. 

The right partner can help you streamline your AML processes, improve the accuracy of your onboarding and re-screening processes, cut the costs associated with compliance, and deliver a more seamless customer experience.

In a world with increasingly strict regulations, AML compliance is no longer optional. Make sure your company is up to the challenge by taking advantage of smart solutions that streamline your compliance processes. By increasing your capacity to manage business risk, you can better protect your company as well as your customers.

With automatic rescans and frictionless, gradual verification, Cognito’s watchlist product is designed to keep your company AML compliant. Contact us to learn more.

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