Creating, implementing, and maintaining and effective AML compliance program is key for organizations to prevent money laundering and to assure compliance with applicable AML regulation.
Now, there is definitely no single approach that fits all organization just alike, but there are some general elements to consider. These elements are most commonly the foundational building blocks for an effective AML compliance program.
But first things first. You might wonder what an AML compliance program actually is. Basically, an AML compliance program is everything an organisation does related to money laundering prevention. This can include things such as processing policies, accounts monitoring and detection, and reporting of money laundering incidents. The aim of an AML compliance program is to expose and correctly react to the inherent and residual money laundering risk.
Usually, an AML compliance program is based upon some important factors that determine the size and scope of the program. This is important because, before creating a compliance program to battle money laundering, an organization has to analyze and draw up its potential risks and legal obligations.
In particular, here is what an organizations needs to do:
- It needs to determine the risks it is exposed to
- It needs to consider the applicable AML laws in their jurisdiction and fines for non-compliance
- It needs to have a rough idea of how possible suspicious activities could look like that indicate potential money laundering
These are at least the very basic considerations for building an effective AML program.
3 Step Approach
If this yet sounds a little bit too overwhelming, don’t worry. In the following, we will go through something which can be called a step-by-step guide to build and implement and effective AML program. It comprises of three simple steps that will guide you towards the development of an effective AML compliance program.
The first step is to create the right organizational environment, where you should consider the corporate culture, have the senior management to support AML compliance, and make it a strategic priority.
The second step is to conduct an AML risk assessment. This is done to get a holistic overview of the money laundering risks the organization is exposed to and that it can act upon.
The third step is to implement organizational measures to encounter the risks that you have identified for your organization.