How to Implement an Effective Anti-Money Laundering Programme

How to Implement an Effective Anti-Money Laundering Programme AML

The UK has strict Anti-Money Laundering (AML) regulations in place, and sanctions for non-compliance are high.

Businesses and individuals in the UK that operate in the financial sector must register with the relevant supervisory authority to ensure they follow AML regulations. There are over 100,000 businesses in the UK that the regulations apply to, including:

The onus is on a business to find out its respective AML obligations to ensure it has the correct policies and procedures in place so that it complies.

Dangers of Non-AML Compliance

Penalties for non-compliance are high. Businesses that do not comply with AML regulations face significant reputational damage and hefty fines. Regulators also have the authority to wind up or restrict the operations of firms found guilty of wrongdoing.

Therefore, an effective AML compliance programme is essential for all businesses operating in regulated sectors, helping to identify what is required and avoiding any sanctions.

In this blog, our specialist AML compliance team looks at some of the main questions you may have about an AML compliance programme and gives their top tips on how to implement a programme effectively so that it works for your business.

What is an AML Compliance Programme?

An AML compliance programme is a set of regulations and procedures regulated businesses must follow to prevent and detect money laundering or terrorist-financing activities. 

An effective AML compliance programme should ensure that a business is not only able to detect suspicious activities associated with money laundering, such as tax evasion, fraud, and terrorist financing, but is also able to report them to the appropriate authorities.

It needs to focus both on internal systems and controls, and on the risk posed from outside by the activities of customers and clients with which the company does business.

To be effective, an AML programme should be built on firm foundations. There should be comprehensive regulatory understanding, and it should be run by people who are experienced and knowledgeable enough to create a climate of compliance across their entire organisation.

What are the AML Regulatory Requirements for a Company in the UK?

Businesses covered by the Money Laundering Regulations must meet certain day-to-day responsibilities. These include risk assessing your business and carrying out customer due diligence checks.

You must also put in place internal controls and monitoring systems. The nature of these controls will depend on the size and complexity of your business, including the number of customers you have and the number and type of products and services you provide.

You can find out more about a business’s responsibilities under money-laundering supervision on Gov.UK.

What is a Risk-Based Approach to AML Compliance?

For a business to implement an effective AML compliance programme, it must first understand what money-laundering risks it faces. The UK Government adopts a risk-based approach to money laundering, and regulated businesses must undertake a risk assessment before introducing the appropriate AML response.

A risk assessment involves a regulated business considering:

  • Who its clients are.
  • The types of products and services it offers.
  • The jurisdictions in which it operates.
  • Its delivery channels.
  • The nature and volume of its transactions.

What are the Main Areas Businesses Need to Address in their AML Compliance Programmes?

There are four key areas that a regulated business in the UK must address in its AML compliance programme:

  1. Know Your Customer (KYC). This is a mandatory process for banks and other financial institutions to identify a customer or client’s identity when opening an account. This information must also be verified periodically over time.
  2. Customer Due Diligence (CDD). This involves conducting background checks and undertaking a risk assessment of potential and existing customers. Minimum CDD checks include:
  3. Full name.
  4. Residential address.
  5. Date of birth.
  6. Photo ID.
  7. Customer and transaction screening. This involves overseeing customers’ activity to check for any suspicious activity.
  8. Suspicious activity reporting. Suspicious Activity Reports (SARs) alert law enforcement to potential instances of money laundering or terrorist financing. SARs are made by financial institutions and other professionals such as solicitors, accountants and estate agents and are a vital source of intelligence. Companies submit SARs to the National Crime Agency (NCA) through an online portal.

What else should an AML Compliance Programme Include?

 Every AML programme should include the following measures:

  • Effective AML Training. Regulated businesses must ensure that all employees know their AML obligations and receive the training necessary to respond effectively.
  • Ongoing monitoring. Businesses should monitor existing customers on an ongoing basis, including overseeing transactions and checking existing documentation.
  • Money Laundering Reporting Officer. Every firm must appoint a Money Laundering Reporting Officer to oversee their firm’s AML compliance programme.
  • Reporting obligations. Firms must comply with reporting obligations and submit SARs to the NCA when potential money-laundering activity is detected.

Effective AML Training Courses

At AML and Compliance, we understand precisely what is required from all regulated businesses and have the experience to help devise and produce an effective AML compliance programme to fit your needs.

We can help organisations of all shapes and sizes from across different sectors undertake a risk assessment to ensure that they are compliant with AML regulations and have the necessary policies and procedures in place to avoid any breaches.

A risk assessment provides valuable insight into a business when performed correctly. Along with an overview of risk, these crucial assessments also highlight issues within the business, so it is essential to undertake a risk assessment properly. All a company’s building blocks must be considered, including its staff, clients, operations, and finances.

By working with AML and Compliance, a business can be assured that we will bring the required level of knowledge and expertise needed to perform a risk assessment which has value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that include:

  • Consultancy.
  • Compliance Policies.
  • Training.
  • Handbooks.
  • Auditing.

Our services focus on businesses’ Anti-Money Laundering and Regulator requirements through the implementation of effective policies, procedures, training, and consultancy.

AML and Compliance Services

At AML and Compliance, we provide essential training to compliance officers and staff of all levels on:

  • The key element of the AML Regulations.
  • What is money laundering?
  • How the regulations affect the business.
  • How the regulations affect individuals.
  • The tactics used by criminals to launder money.
  • How to identify potential AML issues.
  • The action to take when AML is a concern.
  • The requirements of a business and the policies and procedures required to comply with the AML regulations.
  • An overview of the business policies, what they mean, the action that must be taken and how they protect the business and its staff.
  • Recording and Reporting of AML-related issues.
  • Reporting to NCA, how and why.
  • What to do in the event of direct contact with someone who the business suspects to be money laundering.

We have several courses that are aimed at ensuring the various levels in the business receive the training that is relevant to them.

Get In Touch with Our Compliance Specialists

To enquire about our risk assessment services and how AML and Compliance can work with your business, call us on 0203 985 8553, email us at info@amlandcompliance.co.uk or complete an enquiry form. Click here for more information about our services.