AML Controls: What Does ‘Good’ Look Like?

Robust financial crime controls are essential for protecting your organisation from financial crime losses, reputational damage and regulatory penalties. 

The fifth instalment of our financial crime series sees us unravel the essence of effective financial crime controls and explore what 'good' really looks like for your organisation. 

What’s ‘good’?

In short, good financial crime controls should be:

• Comprehensive. Covering all aspects of your organisation's operations, from customer onboarding to transaction monitoring and regulatory reporting.
• Risk-based. Tailored to the specific risks faced by your organisation.
• Efficient. Streamlined and efficient to avoid added complexity or unnecessary costs for your team.
• Sustainable. Covering you long-term, even as your organisation grows and evolves.
• Current. Regularly reviewed and kept up to date.
• Proportionate.  This is allowed and is important

What does good look like? 

Effective financial crime controls go beyond mere compliance; they safeguard your organisation from financial crime risks. Let's explore some key components…

• Risk Assessment. It keeps cropping up in this series, and for good reason. Robust financial crime controls start with a comprehensive risk assessment. Understanding the specific financial crime risks your organisation faces is fundamental so you can tailor your controls to ensure they're targeted and effective.
• Clear policies and procedures. Establishing comprehensive financial crime policies and procedures is non-negotiable. These documents should provide clear guidance on identifying, assessing and managing financial crime risks, leaving zero room for interpretation or ambiguity. They should also link to what is happening on the ground, and provide evidence. 
• Training and awareness. Equip your team with the knowledge and skills necessary to recognise and address potential financial crime activities. Regular training sessions and awareness programmes ensure people remain vigilant and proactive in combating financial crime.
• Transaction monitoring. Robust transaction monitoring systems are a cornerstone of effective financial crime controls. Implement systems that can identify and investigate unusual or suspicious activities – this may involve you leveraging technology and data analytics, and will certainly involve rule creation aligned to the risk assessments proportionate to your business risks. 
• Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD). Thorough Know Your Customer (KYC) checks during onboarding and regular customer reviews are imperative. Understanding your customers is foundational for detecting any irregularities in their financial activities and the risks they pose to your organisation.
• Customer Screening. A robust Screening system that ensures any newly onboarded Customer, Supplier or Employee is not listed on economic Sanctions lists, PEP lists or are subject to adverse media attention. Additionally it provides ongoing coverage as new ‘bad guys’ or PEPs are detected by providing ongoing screening of your Customer base as and when lists are updated.
• Reporting mechanisms. Establish efficient channels for reporting suspicious activities. Encourage a culture of reporting within your organisation and ensure employees understand the importance of reporting any unusual transactions promptly.

Keep striving for excellence

Take a proactive approach to identify and address any weaknesses or gaps in your controls. Such a stance demonstrates diligence and a commitment to avoiding potential risks. After implementing changes or improvements to your financial crime controls, conduct regular and thorough assessments to determine their effectiveness and identify areas for further enhancement.

What sets apart good financial crime controls from the rest is a commitment to continuous improvement and execution in practice. Financial crime compliance is not a one-and-done task; it's an ongoing process that requires dedication and adaptability.

Looking for support? 

If you're unsure whether your financial crime controls align with best practices, Brighter is here to help. With years of experience guiding clients through effective financial crime management, we can assist you in understanding, designing, deploying, tuning, remediating and embedding best practices. For a confidential discussion on anything related to your financial crime systems and controls, please contact Simon Davis today.