Building a Robust Governance Framework for AML Compliance
Building a Robust Governance Framework for AML Compliance
An Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) governance framework is an essential component of a regulated entity’s AML/CFT strategy. Framing an effective AML governance is important to detect and deter financial crimes, including money laundering, financing terrorism and proliferation financing (ML/FT and PF).
Here is the list of key pillars for building an effective AML/CFT governance framework:
Clearly defined roles and responsibilities:
AML governance requires defining clear roles and responsibilities surrounding AML/CFT within the AML framework of the reporting entity. This measure should help with proper staff engagement in combating ML/FT and PF risks.
With clear roles, every employee knows what they are supposed to do, which leads to effective implementation of the AML framework in a smart manner without wasting resources.
Senior management oversight:
AML/CFT governance requires the oversight of senior management for establishing a robust AML framework, because they have an overall responsibility to ensure an effective AML/CFT compliance framework is adopted. Additionally, regular updates about compliance initiatives, risk identities, mitigation measures, and suspicious activity reports should be shared with senior management to take timely actions.
Proactive senior management engagement in the AML/CFT governance system can help a regulated entity implement a strong AML framework and maintain an effective compliance culture.
Continuous training and awareness:
Compliance officer and staff have a duty to carry out responsibilities in the AML/CFT framework for successful compliance with their organisation’s AML regulatory framework. Thus, an AML/CFT governance must incorporate a training program tailored to staff based on their role and responsibilities. Further, in order to have effective AML governance, the reporting entities must undertake periodic and up-to-date training program activities and maintain training records.
With periodic and tailored AML training programs, employees can easily understand ML/FT and PF risks and, therefore, employ measures required to fight such risks.
Health check:
The AML/CFT legal and regulatory landscape and trends in criminal activities keep changing, thus requiring a measure to manage and incorporate changes in the AML framework. The reporting entity, in order to cope with such changes, should establish AML health check measures in its AML framework. This measure includes developing, implementing, and maintaining quality assurance and testing the efficacy of AML programs.
With this measure your organisation can evaluate how effective your control measures are and gaps in compliance obligations, which further aids in adopting a more constructive AML framework.
Reporting structure:
A reporting structure is required for better implementation of the AML framework to combat ML/FT and PF risks. Thus, the reporting entities must develop and maintain a reporting system in their AML governance.
Reporting entities, as part of this measure, must include systems for maintaining data for the number of customers rejected, terminated relationships, transactions monitored, and alerts generated, and also include systems for reporting suspicious transaction reports and suspicious activity reports STRs/SARs via the goAML system.
If you want to build and implement a robust AML/CFT governance structure, AML UAE is your go-to partner!
