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An AML Client Risk Assessment will establish the risk exposures that a client presents to facilitating money laundering and/or financing of terrorism. This is why AML Client Risk Assessments are fundamental to an AML/CFT compliance framework.
To ensure efficiency and seamless integration into day-to-day business operations, processing the AML Client Risk Assessment needs to be streamlined without reliance on human resourcing. Any reliance on human resourcing for the risk analysis process will quickly push up AML/CFT compliance costs.
AML360™ provides your business with practical and cost effective solutions that deliver on AML/CFT compliance efficiency.
An AML Client Risk Assessment supports obligations of Know Your Client (more often referred to as Know Your Customer).
Know Your Customer has three primary principles –
#1. Independently verify that the customer is who they claim to be. Ordinarily this includes using a national identity card, passport or driver license, along with an official record with matching name.
#2. Understand the nature and purpose of the customer’s intended or existing business relationship. This requires knowing the expected account activity and the general reasons for the account activity.
#3. Ongoing monitoring is the third component of the Know Your Customer framework. Ongoing monitoring has the purpose of confirming customer account activity is expected and not unusual.
Anti-money laundering compliance laws require businesses to be informed on the types of money laundering / financing of terrorism risks they must manage.
Applying a risk-based approach to an AML Client Risk Assessment requires the use of data that has relevance to ML/FT risks.
This type of data will collectively capture risks linked to the type of customer, whether the customer has links to business activity that increases risks, such as cash intensive trading or trading in virtual currencies, geography risks and the expected number of transactions and the expected value of transactions.
The results of ongoing monitoring will progressively improve the knowledge-base that the business has over the customer’s nature and purpose of business.
As the business relationship continues, the business will become more adept in making decisions of what is unusual and what is expected.
Red flag alerts, escalations and explanations should always be retained. These records demonstrate that the business is operating with systems that have capability of informing risk-based decision making.
The customer presents the greatest risk to the business in unwittingly facilitating money laundering and/or financing of terrorism.
The AML Customer / Client Risk Assessment is fundamental to the adequate operations of the AML/CFT compliance framework.
Informed decision making is fundamental to the proper and adequate operations of an AML/CFT compliance program. Providing a Suspicious Activity Report when the business was never in a position to be informed could potentially be seen as negligence by the business operations and customers and clients victims of that negligence.
This is why informed decision making is of utmost importance to effectiveness and adequacy of an AML/CFT compliance framework.
The benefits of AML360™ regulatory technology include:
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