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      How to Build an AML Program

      An effective AML program is essential for businesses that need to comply with regulatory requirements and prevent financial crime. Follow this guide to structure a compliant and efficient AML program.

      1. Establish an AML Compliance Framework

      Define the policies, procedures, and controls that will guide your AML efforts. Your framework should align with industry regulations such as the Bank Secrecy Act (BSA) in the United States, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) in Canada, the European Union's Anti-Money Laundering Directives (AMLD), and recommendations from the Financial Action Task Force (FATF). Additionally, ensure compliance with relevant local regulatory bodies and enforcement agencies such as FinCEN (USA), FINTRAC (Canada), and the European Banking Authority (EBA).

      Key Elements:

      • Appoint a dedicated AML Compliance Officer: Designate a qualified individual to oversee AML policies, ensure compliance, and serve as the primary point of contact for regulatory bodies.

      • Define risk assessment methodologies: Develop a risk-based approach to evaluating customers, transactions, and jurisdictions to identify and mitigate money laundering risks.

      • Develop internal controls and monitoring mechanisms: Establish robust policies, employee training, and automated detection tools to flag suspicious activities effectively.

      2. Perform Risk Assessment

      Understanding the risk exposure of your business is crucial. Conduct an enterprise-wide risk assessment to identify the types of clients, transactions, and geographies that pose higher risks.

      Steps to Conduct Risk Assessment:

      1. Identify customer and transaction risks: Analyze customer profiles, sources of funds, and transaction behaviors to detect potential risks.

      2. Assess geographic and industry-specific risks: Determine exposure to high-risk countries, industries prone to financial crime, and evolving global threats.

      3. Assign risk scores to customers and entities: Use a scoring system to categorize customers based on their level of risk and adjust due diligence measures accordingly.

      4. Update risk assessments regularly based on emerging threats: Conduct periodic reviews and adapt risk models to align with new regulations and financial crime patterns.

      3. Comprehensive Compliance Management

      Leverage iComply's holistic end-to-end compliance software to manage identity verification, name screening, risk assessment, case management, and reporting, ensuring a comprehensive compliance process.

      Best Practices:

      • Use automated identity verification to streamline onboarding: Reduce manual errors by integrating digital identity verification tools that use biometric authentication.

      • Conduct real-time screening against global sanctions, PEP, and adverse media lists: Ensure continuous compliance by checking customers against databases like OFAC, UN sanctions lists, and Interpol.

      • Apply enhanced due diligence (EDD) for high-risk customers: Conduct in-depth background checks, source of wealth analysis, and additional documentation for individuals flagged as high-risk.

      • Maintain an audit trail for all verifications and screenings: Ensure every verification and decision is logged to provide a clear compliance record for audits.

      4. Monitor Transactions & Detect Suspicious Activity

      Your AML program should include continuous transaction monitoring to identify unusual patterns.

      Key Features to Use in Your Transaction Monitoring Software:

      • Set automated alerts for high-risk transactions: Establish thresholds and rules to trigger alerts when transactions exceed predefined risk parameters.

      • Customize monitoring rules based on risk levels: Adjust monitoring strategies for different customer segments, industries, and geographies.

      • Investigate flagged transactions and document findings: Conduct thorough investigations, collect supporting evidence, and determine whether suspicious activity reports (SARs) should be filed.

      • Submit Suspicious Activity Reports (SARs) when required: Report suspicious transactions promptly to regulatory authorities to comply with legal obligations.

      5. Establish an Ongoing Monitoring & Review Process

      AML compliance is not a one-time task but an ongoing process. Regularly review and refine your AML program to adapt to evolving risks and regulatory changes.

      Best Practices:

      • Schedule periodic audits of your AML program: Conduct internal and external audits to identify compliance gaps and improve procedures.

      • Conduct training sessions for employees: Ensure all staff members are knowledgeable about AML regulations, red flags, and software tools.

      • Adjust screening parameters based on new regulatory updates: Stay informed about regulatory changes and update system settings to reflect new compliance requirements.

      • Utilize case management features to track investigations efficiently: Implement case management tools within the iComply platform to document investigations, assign tasks, and monitor resolution timelines.

      6. Ensure Regulatory Reporting & Record-Keeping

      Maintain records of customer data, transaction logs, and compliance reports to meet regulatory requirements.

      Compliance Requirements:

      • Retain customer verification records for the required period: Follow local laws on data retention, which may range from five to ten years.

      • Document all due diligence efforts and risk assessments: Maintain detailed records of customer risk profiling, enhanced due diligence efforts, and transaction monitoring decisions.

      • Submit regulatory reports promptly: Ensure timely submission of required reports such as SARs, Currency Transaction Reports (CTRs), and Large Cash Transaction Reports (LCTRs) where applicable.

      7. Train Employees & Build a Compliance Culture

      Ensure that your team is well-trained in AML policies, software usage, and regulatory obligations.

      Training Topics:

      • Recognizing red flags of money laundering: Teach employees how to identify suspicious behaviors, unusual transactions, and high-risk customer profiles.

      • Proper use of the iComply software and tools: Provide hands-on training on how to use screening, transaction monitoring, and reporting features effectively.

      • Reporting and escalation procedures: Establish clear guidelines for employees to escalate suspicious activity cases and ensure timely compliance responses.

      • Regulatory updates and compliance best practices: Keep employees informed about changes in AML laws and industry developments through ongoing training sessions.

      Conclusion

      Building a strong AML program is a continuous effort that requires a combination of technology, policies, and training. By effectively utilizing the iComply platform for identity verification and name screening, you can enhance compliance, reduce risk, and protect your business from financial crime.