Understanding How to Implement Anti-Money Laundering Procedures
The anti-money laundering (AML) procedures is a program of that is required as part of the US Patriot Act. It requires that all financial institutions establish and implement anti-money laundering procedures ensuring they are in compliance with the new regulations and requirements. Although a great portion of the anti-money laundering procedures are to detect any criminal activity, it's also designed to provide your financial institute or firm of a secure method of reporting suspicious behavior as well as providing the documentation required for investigation.
What are the regulations in the Anti-Money Laundering Procedures?
According to what the Patriot Act dictates, every financial institution's anti-money laundering procedures must include:
- A designated compliance officer whose responsibility it is to develop, enforce and update all anti-money laundering procedures and policies as well as ensure that all members are educated on the anti-money laundering procedures.
- An established, in writing, internal procedures, policies and controls
- A continuous employee training program so employees are always aware of any changes in the anti-money laundering procedures and policies.
- Ongoing AML audits annually by an independent person to ensure proper compliance
Why It's Important to Have an Outsider Perform your Annual Compliance Audit?
Most financial institutions have very strict requirements regarding privacy and security. This is one reason why they seldom like to hire outside firms to do work involving their customer accounts and activities that go on inside the firm. However, when it's time to have the annual compliance audit on the anti-money laundering procedures, most banks are beginning to realize the importance of hiring an outsider party to perform the audit for anti-money laundering procedures compliance.
The regulations do state that any member of the firm that handles customer accounts, makes account transactions, or acts as a broker in opening accounts cannot perform the compliance audit on the anti-money laundering procedures. Members of the firm that have nothing to do with the accounts or handling of the accounts are allowed to do the audit, but are recommended against doing this within the company.
As honest as an employee may be, there may be discrepancies when an employee is doing the anti-money laundering procedures audit. If they realize that a fellow employee "meant to" do something but hasn't gotten around to it, they may let it slide, making mental note to remind the employee. This is why firms are urged to hire an outsider third party person or firm to do the audit.
By hiring an outside person to do the anti-money laundering procedures audit, there is less chance for mistakes or discrepancies. Hiring an outside firm to do the audit will also save time and ultimately money. While the bank does have to pay an outsider person to do the job, it's still a cost-effective investment for the bank because of the time it saves and the efficiency it provides for the firm. To find out more information about this, fill out the form at the top of this page and you shall be contacted by a professional for your complimentary consultation.
