Anti-Money Laundering Audits: Why Are They Vital and What Should They Involve?

Businessman checking documents at table

Whist the coronavirus pandemic has continued to impact on both the personal and professional aspects of our lives, there have been many businesses and industry sectors which have been able to continue their service provision to clients. Therefore, regulatory requirements must continue to be upheld, and the COVID-19 crisis cannot be deemed an excuse not to meet obligations as it will not be seen so by regulatory bodies.

For example, law firms were warned early on at the start of lockdown, to be diligent with regards to how they manage their Anti Money laundering Strategy and how they control the risk of Money Laundering. The SRA made it clear that whilst they will take a proportionate approach taking in to account any mitigating circumstances, that they will still apply the rules and follow the principles with regards to their continued AML spot checks on firms throughout 2020 and beyond.

And whilst the UK government announced that it is delaying the deadline for galleries, auction houses, and other art market participants to register their businesses under its new anti-money laundering regulations, it will be sensible for those who fall within the new rules to ensure they do not leave this till the last minute.

What are the AML Regulatory Requirements?

The Money Laundering Regulations 2017 (amended 2019) stipulates the need for regulated businesses to have adequate policies, procedures, and processes in place to prevent money laundering and terrorist financing.

The five main areas include:

  • Adequate policies and procedures
  • Customer Due Diligence
  • Monitoring and Controls
  • Disclosure of Suspicious Activities
  • Record Keeping
  • Training

The regulations also legislate the need for effective internal controls. This includes the requirement to assess the effectiveness of your business’ AML program via an independent audit function.

In practice, this means regulated businesses are required to perform a money laundering compliance review regularly to ensure that their AML controls and operations are efficient and in fact an annual independent AML audit should be one of the cornerstones of any AML program.

Who can conduct an AML audit?

The AML regulations require businesses to independently assess the effectiveness of their approach to anti money laundering, which includes staff who are independent of any areas that are exposed to potential money laundering risks, or by an outside party. This means the designated AML compliance officer (or members of their team) will not be allowed to conduct the independent audit. Whilst larger firms may have the time or resource necessary to accomplish this internally, smaller firms will likely not have employees who are independent of these areas, and regardless of the size of a firm, it can be too time consuming and costly to devote the resources necessary to accomplish this themselves.

What are some of the key aspects an audit should assess? 

One of the main goals of an AML audit is to identify any potential weaknesses within your current Anti Money Laundering controls to enable your business to strengthen and improve its AML programme. But what should you look out for? Below are just some of the key areas that should be assessed and questioned: 

  • Do your staff receive regular AML training?
  • Is the AML training program you employ up to date with the evolving AML legislation?
  • How are concerns dealt with and are they done so in a timely and efficient manner?
  • Is your company’s risk assessment thorough and is it tailored to your unique risk exposure?
  • How effective and robust are your AML systems and processes?
  • Do they comply with the latest AML legislation requirements for your sector and risk exposure?
  • How effective is your ongoing monitoring and reporting?


Should you outsource your AML audit?

As mentioned above, finding the time and resource to run an efficient and compliant audit can be extremely challenging, especially for smaller businesses. Engaging an external AML company to undertake such audits will not only ensure they are completed efficiently and in line with regulatory requirements, but also bring impartiality to the review enabling a business to benefit from the findings of an audit, providing comfort to the compliance officers, or to identify potential weaknesses and improve the processes they have adopted. They can also prove extremely cost effective when matched against the time it would take an internal resource to complete, especially if this takes them away from any fee earning activity, they would normally be performing

AML Compliance Audit Services

Auditing does not need to be intrusive and time consuming. At AML & Compliance, we will work with businesses as an outsource partner to all auditing or provide an independent addition to their existing auditing functions.

At AML & Compliance, we will work with your business to enhance or take over your auditing profile providing you with the essential input to ensure your anti money laundering strategy protects your business.

What will the AML Compliance Audit Service Cover?

  • Application of the AML regulations including effective Client Due Diligence (CDD)
  • Assessment of Enhanced Due Diligence Processes
  • Auditing of Compliance and Risk Registers
  • Compliance and regulation application audits
  • Risk assessment and Risk Audits
  • Operational Process audits
  • File Audits
  • Staff audits re policy and procedures application
  • Data Protection Audits


Our AML experts provide guidance and auditing services across a range of sectors and businesses, undertaking effective auditing processes and reporting to support the firms AML and Compliance strategies. For more information on the sectors we cover, click on the links below:

To enquire about our AML audit and compliance audit services and how AML & Compliance can work with your business you can call us on 0203 985 8553, email us or complete an enquiry form.