5 AML Process Tips, Tricks & Must Haves

Anti-money laundering compliance regulations are now a fact of life for accountancy practices and will only get more stringent and vigorously enforced. Yet, despite the importance the government places on compliance to these regulations they, along with regulatory bodies, have been poor in communicating exactly what firms need to do to be so. With non-compliant companies facing fines and reputational damage.

Accountancy practices are among the companies most frequently fined for a lack of compliance; and, as the government has ordered industry bodies to increase the frequency of their inspections of the sector, we will see many more in the years to come.

To help make sure your practice isn’t amongst them we have compiled a list of 5 tips, tricks, and must haves for your AML processes.

1 – Your companywide risk assessment is extremely important

One of the most common mistakes seen in AML processes is a lack of understanding of just how important the companywide risk assessment is and how thorough it needs to be. This is not a box ticking exercise but rather forms the foundation of your AML defences and, maybe more importantly, will be the first thing any assessors of your processes will ask to see.

Without an adequate companywide risk assessment, you will fail your practice assurance assessments and face a fine.

You need to ensure that your assessment is complete and considers all money laundering risks that your sector, local market, customers, staff, and services present you with. You then need to explain your processes, how they negate these risks, why you decided on them, and how you will ensure they will be maintained; as well as anything else relevant to your business.

Your assessment and processes will be unique to your company and need to be easy to understand for any investigating assessor or staff member. When conducting and recording your assessment remember there is no such thing as too much detail!

2 -  You need a Money Laundering Reporting Officer (MLRO)

Every company affected by the UK AML regulations is required to have an MLRO and this is a position that needs to be taken seriously. Your MLRO is in charge of enforcing, monitoring, and assessing your AML processes and needs to regularly report their findings and concerns to the board.

Best practice is for a quarterly update with a major review at least once a year. However, if the MLRO detects any weaknesses with your processes or new risks they should report this immediately.

Due to the access needed for this position it is usually help by a director, other member of senior management, or Head of Risk (if the practice has one).

3 – It is an ongoing process

Assessing your risk and designing your processes is an ongoing process and does not stop once you have your companywide risk assessment completed and processes in place. You need to regularly review your risks and the efficacy of your defences. This is because financial crime is a constantly evolving threat and also to allow you to refine and improve your processes.

As well as your MLRO’s regular updates to the board you need to review your companywide risk assessment once every 12 months or if there has been any changes to your business that might expose your to more risk. Good examples of these are if you open a new office, take on a new major client, introduce new products/services, or have taken on a significant number of new staff.

You also need to regularly run your existing clients through your processes, again best practice is once every 12 months. This is an extremely common stumbling block for accountancy practices in practice assurance assessments as they often have long term clients they feel they know extremely well and do not need to risk check. Regardless of this, it is a requirement and one you must not neglect.

4 -  Record, record, record!

The importance of keeping detailed and accurate records of all your AML assessments, processes and efforts cannot be understated.

It can be helpful to consider the UK’s AML regulations as having two parts: Firstly, the process themselves which serve to protect the economy and your business from financial criminals, secondly to keep diligent and accurate records of said processes to prove to regulators that you have been compliant.

As such, your recordkeeping primarily serves to protect you and your practice from being fined for being unable to prove you have been following the law during an assessment. It is also important that you keep these records in a well organized and easy to access manner that allows you to quickly produce them to any investigator.

5 – Don’t let manual processes bog you down

Establishing, designing, and reviewing your AML defences is a time consuming affair, there is no way of getting around that fact, but the actual processes themselves do not need to slow down your day-to-day business.

The issue many accountancy practices face is that they are still using time consuming manual processes to run AML checks on their customers. These also have the unwanted side effect of inconveniencing your customers by requiring them to attend you offices or send over sensitive documents. Added to this is the fact that manual processes are extremely inaccurate and inherently place you at risk.

By using digital checks you not only speed up your processes and provide your customers with an easy and convenient experience but you also are able to achieve a level of accuracy in your checks that is impossible for a human being to provide.

Red Flag Alert’s digital checks are completed directly from your customer’s device, use AI powered biometric technology, and utilise a multi-bureau analysis system. All in an end to end process that can be completed in as little as two minutes (only 30 seconds of which is spent by your staff).

 Red Flag Alert is a proud partner of Practice Portfolio and supplies accountancy practices with a fully digital AML compliance platform, market leading KYB reports, a customisable, monitoring tool, and much more. Read more.