AML compliance checklist best practices
Following best practices for an AML compliance checklist is a necessary requirement for financial institutions, businesses and regulatory bodies in order to prevent financial crime. Regulatory scrutiny is on the rise, which calls for companies to adopt a proactive and robust AML compliance checklist.
Here, we’ll take a comprehensive look at an AML compliance checklist, outlining best practices to follow that will ensure your organisation meets the regulatory requirements to prevent money laundering and terrorist financing activities.
Your AML compliance checklist
By following the steps below, you’ll ensure that you’re implementing a robust and effective procedure that will help you prevent as much financial crime from impacting your business as possible.
Conduct an in-depth risk assessment
The first process to add to your AML due diligence checklist is to conduct an in-depth risk assessment. Using a risk-based approach will help your business identify and prevent potential threats before they cause damage.
- Assess customer risks based on geography, transaction behaviour, and business type.
- Identify high-risk sectors, including cryptocurrency, gambling, and real estate.
- Regularly update risk assessments to reflect emerging threats and regulatory changes.
Create internal AML policies
Creating a bespoke AML policy for your company will ensure a structured approach to AML compliance. Your AML policy document should detail all procedures for transaction monitoring, reporting, and risk mitigation.
Equally, your company should implement clear guidelines for customer onboarding and ongoing monitoring, so that the process is efficient and effective.
Regular watchlist and sanction list screening
All potential customers should be screened against international sanctions lists so that your company does not engage with restricted individuals or businesses. You can do this by using automated tools that can continuously monitor and screen customers against updated PEP and sanction lists.
As well as this, your company can integrate screening tools into customer onboarding and transaction monitoring to ensure it is safeguarded against financial crime.
Reliable customer due diligence (CDD)
The next best practice to put into place is customer due diligence; this is the premise of effective AML compliance.
So, to ensure reliable customer due diligence, you should verify their identity by using official identification documents, along with proof of address. If you notice that a customer is high-risk or on the PEP list, conduct enhanced due diligence (EDD).
Timely suspicious activity reporting (SAR)
A part of your AML compliance checklist and best practices is to report any suspicious activity in a timely manner. Ensure that your employees understand how to detect any red flags with robust Suspicious Activity Reporting (SAR) procedures.
Also, be sure to submit timely reports to the relevant authorities and regulatory bodies as part of your best practices.
Proper record-keeping
Maintaining detailed records will always be in your best interest, especially when it comes to audits and regulatory compliance. So, be sure to keep customer due diligence records, transaction logs, and risk assessments for at least 5 years.
You also need to store all of your records securely in order to prevent any unauthorised access and tampering with the records. Ensure that records are easily retrievable for regulatory review.
Ongoing employee training
You have a duty to ensure that your employees are trained and up-to-date with any essential regulatory updates when it comes to your AML checklist compliance. Conduct annual training programmes, especially for employees working in risk, compliance and customer service roles.
Training should also involve the red flags of money laundering and any emerging financial crime trends. This will ensure that your employees feel confident in their role in preventing financial crime activities.
Independent audit function
Next, you should schedule in regular audits to assess the effectiveness of your AML compliance programme. These should take place at least once a year. This way, you’ll be able to identify any gaps and implement the correct measures to improve your AML compliance checklist process.
Utilise advanced technology solutions
In today’s fast-paced and technologically driven world, it makes sense to use AI-powered transaction monitoring systems to detect any suspicious activity or anomalies. You should also automate KYC and CDD processes to verify the identity of your customers faster.
Is your AML programme up to date? Ensure your compliance framework aligns with the latest industry standards to stay ahead of financial crime risks.
At Creditserve, we offer a range of credit check packages that will help you run credit checks on any company you work with. With our services, you’ll be able to assess the risk efficiently, making informed decisions that allow you to mitigate risks and move your business forward.
Get in touch with our team of experts at 01992 414222 for more information!
