• Banking and Finance

  Key Component of AML (Anti Money Laundering) Compliance Program

  Posted by Kevin Young on October 25, 2022 at 3:44 am

  As part of the fight against financial crime, governments across the world require their financial institutions to put in place anti money laundering compliance programs. A financial institution’s anti-money laundering policy should form part of its wider compliance regime and should be designed to meet the requirements of its legislative environment. Practically, this means US financial institutions must navigate an increasingly complicated BSA compliance landscape, often involving a significant administrative burden and serious legal consequences. FINRA Rule 3310 requires that members develop and implement a written AML program reasonably designed to comply with the requirements of the BSA, and the implementing regulations promulgated thereunder by the Department of the Treasury.

  What Should an AML Program Do?

  In practice, an AML compliance program should ensure that an institution is able to detect suspicious activities associated with money laundering, including tax evasion, fraud, and terrorist financing, and report them to the appropriate authorities. An AML compliance program should focus not only on the effectiveness of internal systems and controls developed to detect money laundering, but on the risk posed by the activities of customers and clients with which an institution does business.

  

  FINRA reviews a firm’s compliance with AML rules unde FINRA Rule 3310, which sets forth minimum standards for a firm’s written AML compliance program. The basic tenets of an AML compliance program under FINRA 3310 include the following.

  • The program has to be approved in writing by a senior manager.
  • It must be reasonably designed to ensure the firm detects and reports suspicious activity.
  • It must be reasonably designed to achieve compliance with the AML Rules, including, among others, having a risk-based customer identification program (CIP) that enables the firm to form a reasonable belief that it knows the true identity of its customers.
  • It must be independently tested to ensure proper implementation of the program.
  • Each FINRA member firm must submit contact information for its AML Compliance Officer through the FINRA Contact System (FCS).
  • Ongoing training must be provided to appropriate personnel.

  Anti-Money Laundering Forms

  • Suspicious Activity Report (SAR)
  • Currency Transaction Report (CTR)
  • Report of Foreign Bank and Financial Accounts (FBAR)
  • Report of International Transportation of Currency or Monetary Instruments (CMIR)
  • Blocked Properties Reporting Form (OFAC)
  • Voluntary Form for Reporting Blocked Transactions (OFAC)
  • Voluntary Form for Reporting Rejected Transactions (OFAC)

  

  What Is Required for An AML Compliance Program

  A company’s AML compliance program should be able to detect money laundering; tax evasion; fraud; and terrorist financing through its accounts. It should have systems to immediately report money laundering activity to relevant authorities and also evaluate its client’s risk profile.

  Kevin Young replied 1 year, 6 months ago 1 Member · 0 Replies
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