The roles and responsibilities of anti-financial crime functions is to ensure regulatory compliance and prevent financial crime risks and incidents. Under the supervision of the anti-financial crime committee, the functions perform its compliance roles and responsibilities.
Roles and Responsibilities of the Anti-Financial Crime Function
An entity organizes its anti-financial crime function that allows financial crime compliance risk to be managed effectively on an entity-wide basis. It considers the geographic diversity, target market, nature of operations, and complexity of business and operations. The larger the entity with a complex structure, the larger the financial crime risk.
The diversified number and different types of customers naturally expose the entity to financial crime risks and non-compliance with applicable regulatory requirements. However, managing financial crime risks is equally important to large and small organizations, and they must be consistent with the entity’s overall strategy, risk profile, and structure. Where the entity has international operations, the financial crime compliance officers are deputed at international locations, which maintains a financial crime risk matrix.
To increase efficiency, the anti-financial crime compliance function may collect information from other departments, such as internal audits regarding financial crime incidences observed in a specific branch or department.
The anti-financial crime compliance function independently or closely coordinates with the financial crime risk management unit. They may conduct independent financial crime risk assessments of the critical area where the likelihood of non-compliance is high or impacts the entity’s compliance risk profile.
Apart from having a centralized anti-financial crime compliance department, the compliance team may also have subject matter experts having expertise in different areas of the entity. The subject matter experts may advise departments on financial crime-related issues relevant to their area and may be instrumental in identifying and managing the financial crime risks.
These areas may include audit, risk management, credit, product compliance, customer service, international trade, outsourcing, corporate governance, business continuity, technology, operations, AML & CFT, etc.
The anti-financial crime compliance team must be independent of business activities to carry out its activities effectively. An entity must ensure that the compliance team is not placed in a position where there are real conflicts in its scope of responsibilities or reporting lines.
The anti-financial crime compliance team should have a clear line of authority and mandate with unrestricted access to the information and personnel to carry out their roles and responsibilities. The entity must ensure that the performance appraisal of the compliance team is based on the achievement of their anti-financial crime responsibilities instead of linking it to the performance of any other business function.
A constructive working relationship between the compliance team and business lines should be implemented to facilitate identifying and managing financial crime compliance risk within and across different functions. In practice, this can involve the direct participation of the compliance team in providing related input to business functions on a product, service, process, or activity through representation on relevant management committees.
Officers undertaking financial crime compliance responsibilities should have the qualifications, experience, and skill set. They should be sound in understanding relevant legal and regulatory requirements and the implications of such requirements on an entity’s operations and functions. In a group with overseas operations, the anti-financial crime compliance team should devise a mechanism to understand legal and regulatory requirements in different jurisdictions.
The team must have the required physical and financial resources to properly carry out assigned anti-financial crime activities. An entity must ensure that the compliance team is aware of developments in legal and regulatory frameworks related to financial crime management. An entity may encourage compliance officers to possess accredited qualifications in financial crime risk management.
We live in a crisis-prone era, and ensuring business continuity is no longer a ‘nice to have’ for any company. It is critical. Financial institutions, in particular, are always acutely aware of the economic disruptions caused by a crisis. This includes addressing changes in criminal behaviors that frequently occur as a result, as well as maintaining policies, procedures, and controls that continue to meet the standards demanded by regulators.
As a result, compliance teams must ensure that their anti-money laundering (AML) tools are robust and adaptable enough to deal with the unexpected. The first step in developing a solution is to consider the long-term and realistic impact of future crises on their business.