The Way To Getting Perfect AML Program – A Brief Guide

Is there any "perfect" plan for AML?

The menace of money laundering had a catastrophic effect on several economies, causing damage of immeasurable kind. The plan AML has piloted since those times and it comes with a full-throttle this time.

It’s not that governments haven’t been doing anything. Even if it’s reactionary, the level of penalizing banks for these offenses and warnings for compliance officers has gone up. People in the government are making arduous efforts to stop the miscreants from wrecking the economy.

Seems like a miniature of an AML program can test the waters. Otherwise, some AML programs had devastating effects on financial institutions, leaving them with nothing at all. Here, in the following, we highlight the ways to achieve the perfect AML program using practical methods.

1. Tying up with technology partners

It isn’t a newly discovered thing. Since ages, institutions and technology have enhanced their capabilities of detecting thuggish behavior through data and reporting. Regulators can take the help of modern AML screening software with real-time compliance monitoring for achieving outstanding results.

Regulators or financial institutions find a rigid kind of regulatory challenges, which can push anyone backward. With the help of a reliable and apt technology partner, regulators or financial institutions can put a lid on this. Moreover, it proves advantageous in streamlining data and reporting.

2. Conducting independent audits

Pulling it out perfectly, the AML policy must match with what’s on the to-do list of independent auditors. Indeed, financial institutions have their AML policy uniquely designed to stop money laundering process, the independent audits will tell the story of risk assessment, guidelines, record retention, etc. according to international standards. Based on these reports, the auditors may offer their findings and recommendations for the regulator to review on it.

3. The need and necessity of EDD

Enhanced Due Diligence (EDD) processes include identifying accurate data about customers from various verified sources, verifying sources of income, demystifying account activity of a suspect customer. For this reason, several organizations have incorporated KYC screening and topped on information collection. However, a few financial institutions have called trouble for themselves by not following KYC rules and regulations, thus, compromising and risking their assets.

4. Value of risk assessment

No namesake business, please! While preparing a solid and effective AML policy, the risk assessment procedures should involve credible steps. Some of the major factors that financial institutions can access include geographic risks, product risks, and customer risks. Unfortunately, if a financial institution doesn’t align its program of risk assessment thoroughly, it can pull itself to an unwanted situation of earning a regulatory risk. The result, so far, has caused damage to reputation and losing the faith of customers.

5. Effect of discounting false positives

People argue how there has been an increase in false positives these days. Nevertheless, very little to less is talked about how it can be reduced. Financial institutions must design programs that discount false positives through a potential customer screening process. This includes discounting of people with static agents. Similarly, there’s a list of DON’Ts to identify the ways of not discounting false positives.

Author Information:-

Linqs Inc writes about AML policies of financial institutions. He explains how KYC screening, risk management, risk assessment, terrorist financing schemes, customer screening, and AML screening are core to reduce risk factors emerging to disrupt the economies.

Linqs software helps you with an accurate KYC screening of customers or trading partners before entering a deal with them.