Since the enactment of the USA PATRIOT Act, financial institutions have struggled to respond to heightened regulatory expectations regarding their anti-money laundering (AML) compliance programs.
Even today, amid unprecedented turmoil in the financial services industry, maintaining compliance with AML laws and regulations remains as important as ever, and the focus of regulators on compliance shows no signs of waning.
Consider, for example, some of the issues currently being experienced by the financial services industry:
- Regulatory agencies continue to issue enforcement actions addressing AML compliance.
- Regulatory agencies continue to emphasize AML compliance as a “hot topic” during their reviews.
- Compliance departments are expected to continue effective AML programs despite fewer resources due to recent staff reductions and overall industry cost-control initiatives.
- Money launderers continue to exploit access to the financial services industry with increasingly sophisticated and complex methods.
Challenges and Opportunities
As criminals continue to develop and fine-tune ways to launder money, financial institutions face the ongoing challenge of effectively and efficiently managing the risks that arise from having dirty money flow through their organizations. These risks include the expense of responding to and addressing enforcement actions, the possibility of having high-profile customers who are accused of illicit activity, and the reputational fallout of negative publicity stemming from the discovery of criminal activity that previously went undetected.
Many institutions do not realize they have a problem with their AML program until it is too late. As compliance departments face pressures to downsize and control costs, many institutions struggle to find a way to maintain an effective approach when it comes to AML compliance.
Regulatory and law enforcement emphasis on AML is here to stay. Financial institutions must develop AML programs that meet their needs as well as the expectations of any third parties that rely on the institution’s reports, data and vigilance.
Our Point of View
We believe the keys to maintaining an effective and efficient AML program include the following actions:
- Develop a rigorous risk assessment process to identify the AML risks to the institution and provide the basis for designing the risk management program.
- Appoint a qualified AML officer with the authority and resources to oversee the management of the AML program.
- Develop comprehensive AML policies and procedures that are customized to the size, complexity and risks of the institution.
- Develop a comprehensive sanctions program to identify potential activity with prohibited jurisdictions.
- Involve senior management and the respective business units to manage the inevitable conflicts between compliance and profit centers.
- Continually validate the effectiveness of technologies used to support the AML effort.
- Conduct regular AML training for employees, including senior management of the institution – everyone has a role to play.
- Perform annual comprehensive independent audits to ensure the program is working as intended.
How We Help Companies Succeed
Our AML Consulting practice helps financial institutions of all kinds solve these challenges using proven, creative and costeffective solutions. Our professionals are former regulators and industry executives with practical, firsthand experience in designing, managing and evaluating the effectiveness of world-class AML compliance and sanctions programs.
Whether your institution needs help developing a comprehensive entity-wide AML program; performing an AML and/or sanctions risk assessment; conducting a gap analysis; comparing your AML program against various AML regulatory requirements; implementing AML remediation programs; conducting annual independent reviews of the AML and sanctions programs; selecting the appropriate technology tools to support AML functions; investigating and reporting potential suspicious activity; or developing, implementing, and/or delivering AML training, Protiviti has the expertise and proven experience to help meet all of your institution’s AML needs.
A diversified financial institution selected Protiviti to project manage an effort to upgrade the AML compliance program at an institution it acquired. The Protiviti team helped redesign the company’s risk assessment methodology, customer due diligence standards, and monitoring and investigation protocols. At its next regulatory examination, the acquired institution’s regulators, who previously had been critical of the institution’s compliance efforts, commended the institution for the improvement it had made.