In our previous article titled Creating a Strong AML Compliance Culture, we talked about the elements of a strong compliance environment. Here, you can find our top tips for the Compliance Department.

One of the basic elements for establishing a strong compliance culture within an organization is the designation of a skilled and knowledgeable Compliance Department that will oversee the compliance function on a daily basis, and meet challenges head-on. These are our top tips to help Compliance Departments navigate the demanding requirements of the AML and CFT Law and implement an efficient and effective AML Compliance Program.

Tip #1

An effective Transaction Reporting and/or Suspicious Activity Reporting procedure should provide the AML Compliance Officer with the following key information:

• The unique identifier for the Client(s) involved
• The unique identifier for the transaction(s) involved
• A short description justifying the suspicion
• The reporting officer.

Tip #2

An AML Compliance Program should include the following basic components:

• A system of internal controls
• A designated Compliance Officer
• Training sessions for appropriate staff
• Independent testing of the program

Tip #3

The Compliance Department should ensure that the below elements are fully understood and adopted by all staff members in order to create a successful culture of compliance throughout the Organization:

• Efficient and effective customer due diligence and enhanced due diligence programs are to be put in place and utilized regularly
• Manuals and guidelines are to be established for the automated AML systems and these are to be communicated to all relevant parties and updated on a systematic basis
• Compliance factors are to be embedded into staff performance evaluations and compensation decisions
• Training, procedures, and clear communication are to take place in order to emphasize that compliance is the responsibility of the entire organization, not just a specific department.

Tip #4

When it comes to managing AML Risk, the Compliance Department must undertake the following responsibilities:

• Establish clear roles and responsibilities for reporting risks, which are to be communicated to all departments
• Each operating line of business (first and second lines of defence) should be made aware of their specific role in the ownership and management of risk through regular training and continuous education
• Keep proper records for procedures and measures when addressing risk management and deficiencies.

Tip #5

The 4 important factors of a correct Know Your Client (KYC) procedure:

1. Proper client identification
2. Assessment of overall risk
3. Adoption and verification of information
4. Efficient monitoring of client’s transactions or related actions.

Tip #6

When it comes to assessing Suspicious Transactions/Activities, the Compliance Department should be aware that:

• An employee may be personally liable for failure to report information regarding money laundering or terrorist financing
• Should the above occur, employees are expected to cooperate and must immediately report anything that comes to mind in relation to transactions for which there is a slight suspicion of money laundering or terrorist financing
• According to Article 27 of the AML Law, any person who knows or reasonably suspects that another person is engaged in money laundering or financing of terrorism offences must report this information to MOKAS as soon as it comes to their attention. Failure to do so is considered to be a criminal offence.
• Failure to report these circumstances is punishable with a maximum of five years imprisonment or a fine of €5,000 or both of these penalties simultaneously.

Tip #7

An effective Client Acceptance Policy (CAP) should include the following factors:

• A description of the types of client that are likely to pose a higher than average risk to the organization
• Clear guidelines and descriptions for clients that are not accepted and/or require enhanced, normal or simplified due diligence
• Categorization of clients into at least 3 risk categories of Low, Medium and High
• An outline of the client’s nature of business activities, type of client, and the origin and destination of funds.

Tip #8

The Compliance Department must immediately reject any client who displays the following characteristics:

• Holds prior convictions regarding Money Laundering or Terrorist Financing
• Has been placed on an EU or UN Sanctions List
• Practices activities of unknown or doubtful legal status
• Fails or refuses to provide the relevant information required for assessment

Tip #9

When putting together a proper Client Profile, the Compliance Department must include:

• Identification details (KYC)
• Financial/Economic Profile
• Anticipated Activity/Transaction Profile
• Purpose of using your products or services

How can CX Financia help you?

At CX Financia, our experienced team of professionals has trained multi-cultural teams on Governance, AML/CFT, Compliance & Risk. We are passionate about building trust and security with our clients by providing a high level of personalized service.

You can find more information about our Regulatory AML Compliance and Support services here.

If you need further insights on addressing modern challenges in today’s regulatory climate, as well as information on our package training solutions, you can contact us at [email protected].