Assessing AML Control Effectiveness for an Audit Firm

Assessing AML Control Effectiveness for an Audit Firm

AML UAE assessed the effectiveness and efficiency of existing AML control measures for a UAE-based audit firm.

The client was a leading audit firm providing external audit services. It faced challenges in identifying gaps in the existing control measures and implementing effective control measures to combat financial crime risks, including ML/FT and PF.

Customer Goals:

The client struggled with the measurement of AML/CFT control effectiveness. Therefore, the client wanted an assessment of its AML control measures to identify any gaps in the control program and strengthen the quality of its Anti-Money Laundering compliance framework.


Assessing AML Control Effectiveness for an Audit Firm

The main challenge was navigating complex AML regulations and assessing the effectiveness of control measures. With evolving trends in financial crimes and constantly changing compliance requirements, it became difficult for the client to stay ahead of illicit activities with the existing ML/FT and PF control measures.

Further, the client wasn’t sure if the enforced AML/CFT controls were working as intended. The qualitative review of AML/CFT controls implementation was a major challenge since the underlying data was available in silos, and most of the compliance processes were manual.

Legal Background:

The audit firm was governed by the following regulations:

The regulatory framework lists audit firms among the Designated Non-Financial Businesses and Professions (DNFBPs). Therefore, it is mandatory for all audit firms established in the UAE to comply with the regulatory framework governing AML compliance.

As part of the AML regulatory framework, DNFBPS needs to draft and implement internal policies, procedures, and control measures. To combat ML/FT crimes and PF risks, they need to implement effective and efficient control measures.

Solution Provided by AML UAE Team:

AML control measures are crucial to prevent illicit activities, and assessing these measures ensures they are effective and working as intended. AML UAE conducted a thorough assessment of AML control measures of the audit firm and documented gaps and areas for improvement.

AML UAE provided a thorough AML/CFT consultant who performed the following tasks:

  • Carried out a review of the Risk-Based Approach adopted by the audit firm, risk appetite statement, and Enterprise-Wide Risk Assessment.
  • Conducted a thorough review and assessment of AML policies, procedures, and controls.
  • Carried out tests of controls to identify if controls exist and they are effective.
  • Conducted interviews with the front office, back office, compliance, and senior management to understand the awareness about the controls and the quality of implementation.
  • Documented control weaknesses and action items.
  • Performed gap analysis, documented control weaknesses and action items, and suggested alternative controls wherever controls were difficult to implement

End Result:

We helped the client transition from a tick-box approach to a risk-based approach, which resulted in savings in time and costs, regulatory compliance, and a robust framework to counter financial crimes.

Enhancing the quality of controls and implementing alternative or new controls to counter ML/TF brought the residual risk down to an acceptable level.

Through our efforts, we aided the client in reinforcing regulatory compliance and aligning it with global AML standards.

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