Money laundering is a top priority for Boards of Directors, as regulators have increasingly been issuing fines for failure to maintain adequate AML controls. It is therefore important for an organization’s Board of Directors to establish and actively support a culture of compliance throughout their entire company. These are our Top Tips for board members looking to effectively lead their organization into a culture of compliance.
When designing an organization’s Governance Structure, make sure you tick off the checklist below:
- Does it ensure AML Compliance?
- Are the Compliance Department and Compliance Officer independent enough to appropriately manage the organization’s AML Risk?
- Can the Compliance Department exert appropriate influence over operations to ensure the quality of execution of AML procedures?
- Do you have enough resources (sufficient personnel, technology, and expertise) to implement the program?
The 5 Pillars of a written, board-approved AML program should incorporate the below elements:
- A system of internal controls
- A designated Compliance Officer
- Training for appropriate staff
- Independent testing of the Customer Due Diligence Process.
An effective AML Program and Annual Report should contain, at minimum, the following elements:
- Which material changes were made to the AML Program in the last year and why specifically signalling which were due to regulatory updates and which were due to process failure
- Material AML Material Weaknesses, Deficiencies or findings identified by Regulators or Internal Audit or an Independence Test Monitoring Program. An Action Plan must subsequently be considered, as well as regular updates on the status of the corrective actions
- Possible Violations: whether these were Isolated or Systemic and whether they are likely to be the subject of an enforcement action or criminal prosecution
- Summary of all Suspicious Activities Reports, including details on fraud.
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