What Is An AML Compliance Program?
In order to combat financial crime, banks, credit unions, and a variety of other financial institutions across the world, are required to develop and put in place Anti Money Laundering (AML) Compliance Programs.
A financial institution’s anti-money laundering policy should form part of its wider compliance regime, and should be designed to meet the requirements of its legislative environment. Given the complexity of AML laws, however, designing an effective AML program may be challenging. Anti-money laundering compliance is an ongoing process: the United States’ Bank Secrecy Act (BSA), has been amended by a variety of subsequently-introduced legislation (including the USA Patriot Act), while the EU introduced its Fourth Anti Money Laundering Directive in 2017.
With this in mind, all financial institutions should have a strong understanding of what an AML compliance program needs to achieve, and how to create a program which works for them.
What Should an AML Program Do?
In practice, an AML compliance program should ensure that an institution is able to detect suspicious activities associated with money laundering, including tax evasion, fraud, and terrorist financing, and report them to the appropriate authorities. An AML compliance program should focus not only on the effectiveness of internal systems and controls developed to detect money laundering, but on the risk posed by the activities of customers and clients with which an institution does business.
An AML program should be built on a strong foundation of regulatory understanding and overseen by personnel who are experienced and knowledgeable enough to create a climate of compliance at every level of their organization.