In order to oversee internal anti money laundering policies and remain compliant with important regulations, banks, credit unions and similar financial institutions are required to appoint an Anti Money Laundering (AML) Compliance Officer.
As part of the fight against financial crime, governments across the world require their financial institutions to put in place anti money laundering compliance programs. Implementing AML legislation can be challenging: in the United States, for example, the Bank Secrecy Act (BSA), introduced in 1970, has been amended by numerous subsequent laws, including the Patriot Act. Practically, this means US financial institutions must navigate an increasingly complicated BSA compliance landscape, often involving a significant administrative burden and serious legal consequences. To achieve compliance, it is often necessary to appoint an AML Compliance Officer: a principal figure responsible for overseeing the effective development and implementation of their institution’s AML program.
A vitally important role within a financial institution, senior management should consider the following factors when selecting an AML Compliance Officer.
What Does an AML Compliance Officer Do?
While all employees should be aware of their company’s AML policy, the AML Compliance Officer is responsible for its implementation at an institutional level. An AML Compliance Officer’s primary professional focus falls on the internal systems and controls that their institution puts in place to help detect, monitor and report money laundering activities to the authorities. Their job is to ensure that their institution is not exposed to criminal risk, and does not inadvertently facilitate financial crime.
The finer details of an AML officer responsibilities vary by country, of course. In the US, for example, a BSA-AML Compliance Officer would liaise with the Financial Crimes Enforcement Network (FinCen), while a UK anti money laundering officer would report to the National Crime Agency (NCA). Broadly speaking, however, AML policies and strategies are often mirrored across jurisdictions, and the practical duties of an AML Compliance Officer will include:
- Assisting with the development, implementation, and maintenance of an anti money laundering program within their institution.
- Ensuring compliance with current AML regulations, and other relevant legislation (e.g the USA Patriot Act).
- Developing and maintaining a risk assessment framework for products and services, clients and customers, and other issues relating to money laundering.
- Keeping and maintaining records of high risk customers, and reporting suspicious activities to the authorities.
- Arranging and implementing inspections and audits from third-party organizations, and making compliance recommendations based on their findings.
- Briefing and reporting to senior management on matters relating to internal AML compliance policies and procedures.
- Overseeing and implementing an ongoing AML training program for other employees.
Appointing an AML Compliance Officer
Given the importance of an institution’s AML compliance program, an AML Compliance Officer is required to be fully knowledgeable and skilled in all areas of financial policy and procedure, and in the methodologies of financial crime. When making the appointment, it is vital that senior management choose a candidate who not only has the ability and expertise to perform their duties effectively but who suits their institution’s unique professional needs.
The ability and dedication of an AML Compliance Officer will shape your AML program, and reflect your institution’s commitment to combating financial crime. With that in mind, when appointing an AML officer, the following factors should inform your decision:
Time & Focus
Consider the administrative burden your AML Compliance Officer will face within the institution – and ensure they are afforded the time and resources to carry out their duties. Larger organizations, with a much greater administrative load, will likely need to appoint a full-time employee with a singular focus on AML compliance, but smaller institutions may be able to designate those duties in a part-time capacity.
Expertise & Training
An AML Officer must have considerable experience and understanding of the financial and regulatory landscape, and of relevant risk management strategies. This knowledge and expertise should go beyond internal AML systems and controls, and extend to methodologies of money laundering (and its associated criminal activities), and to the potential risk posed by certain customers and clients.
AML compliance is a constantly evolving field, so your Compliance Officer’s expertise should reflect the current regulatory climate. With that in mind, a variety of industry bodies exist which offer AML certification and training.
Authority & Confidence
Given the frequent legal implications of AML compliance, it’s vital that your Compliance Officer holds sufficient authority to ensure they can perform their role and its responsibilities effectively. AML Officers not only monitor and handle a variety of sensitive financial data, but must interact with senior management and the board of directors, and with the financial authorities, on a regular basis. Ideally, an AML Officer should be a director-level employee with the industry experience and confidence to engage with every aspect of their professional environment.
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