AML Effectiveness Review

Are front-line staff (1LOD) applying the desired level of scrutiny and skepticism? Does your CRA methodology adequately identify and assess material red-flags? Ultimately, is your entity adequately protected against regulatory and reputational risk?

Subject persons continually face increased pressure to comply with Anti Money Laundering (AML) regulations to avoid hefty fines, reputational risk and disruptions to their operations.

Subject persons are mandated to have strong tools to detect, prevent and manage the risks of its services being used as conduits to conceal beneficial ownership or to set up structures for tax evasion purposes. In addition, the FIAU recurringly highlights that issues persist, particularly in the effectiveness and timing of the CRA, the tools and measures used for transaction monitoring, and the need of a robust control framework that identifies the presence of red flags.

Our AML Effectiveness Review will give you the additional assurance that your AML control framework is effective in mitigating the risks. Our review not only assesses the design of the controls but importantly assesses the effectiveness of their implementation in day-to-day activity. In view of this, the review is split as follows:

Our findings and recommendations will assist the MLRO to be pro-active in strengthening the effectiveness and resilience of the AML control framework.

Targeted and bespoke reviews may also be conducted before a subject person places reliance on another subject person as well as before take-overs and mergers.

 Effectiveness Review - Key benefits

• Risk-based approach focusing on high-risk areas
• Independent review of processes and key controls
• Effectiveness of Customer Risk Assessment
• Effectiveness of ongoing monitoring measures
• Assessment of control effectiveness and real residual risk exposure
• Meaningful recommendations to improve processes, controls and tools implemented by 1LOD and 2LOD
• Identification of skills gaps and training needs

Transaction monitoring reviews

The effectiveness review may be targeted to address specific high high-risk areas. Transaction monitoring is an area which involves scrutinising unusual and suspicious transactions detected through the systemic and regular review of customers’ transactions. While all SPs have an obligation to conduct ongoing monitoring, transaction monitoring is a key control for financial institutions to combat financial crimes.

Our team of experts have substantial knowledge and experience of reviewing and assessing control frameworks of institutions which process payments and similar transactions for and behalf of customers. While technological innovations have enhanced such controls, the FIAU recurringly highlights that issues persist, particularly in the criteria used to screen and evaluate transactions and the ability to gauge risks attributed to complex structures and transactions. As a result, we will tailor the review to target transaction monitoring including:

• Assessing whether the transaction monitoring tools effectively identifying and assessing the risks posed by customers’ transactions;
• Assessing whether 1LOD are applying the desired level of scrutiny and scepticism;
• Assessing the resilience of the pre-transaction and post-transaction tools to scrutinize customer transactions;
• The application and testing of Detection Rules;
• Alerts Management.

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