How To Set Up A Successful AML Compliance Programme Part 1

In this three-part series, we will be summarising the steps you need to take to set up a successful AML compliance programme for your business.

This series is meant to help Lawyers, Accountants, Real Estate Agents and Financial Services subject to the AML/CTF Act. This guide is designed for anyone in the organisation involved in the AML/CTF Compliance Programme.

If you’d like to go straight into the thick of it, you can download the complete guide for free here!

Let's start with the first three things you have to consider when setting up your AML compliance programme.

1. Appoint a Compliance Officer

This first point cannot be overstated. Under the Act, a reporting entity is required to appoint an AML/CTF Compliance Officer. The Compliance Officer must be at a managerial level and they are responsible for ensuring that your business meets AML/CTF regulations. They manage the day-to-day operations of your AML/CTF programme, and they're the key liaison between your business and AUSTRAC. Note: If you're a sole trader, you may choose to engage with a consultant or independent adviser in order to comply with the AML/CTF Act. Key duties of a Compliance Officer include:

• Ensuring your business complies with its AML/CTF obligations
• Reporting to your board and senior management about how your compliance programme is performing and any issues that arise
• Day-to-day management of your AML/CTF programme
• Being the key liaison between your business and AUSTRAC including submitting reports, organising audits, and addressing any feedback from them directly.

2. Develop a Risk Assessment Framework

The foundation of your AML/CTF Compliance Programme is an adequate and effective Risk Assessment. The Risk Assessment is the core document of a proportionate risk-based AML/CTF framework. Your AML/CTF supervisor expects you to have a clear understanding of the money laundering (ML) and terrorism financing (TF) risks and vulnerabilities you face during the course of business. When identifying how your business may be vulnerable to ML/TF risks, consider the types of customers you have, the designated services you provide, and the foreign jurisdictions you operate in. Each risk you have identified must be assessed in terms of the likelihood it will occur, and the impact it may have should it occur. You can use a risk matrix to obtain a risk score.

Likelihood x Impact = Risk Level

You must apply controls to manage these risks, and review your risk assessment regularly.

3. Develop Part A & B of your compliance programme based on your Risk Assessment

Part A must include elements to help you identify, mitigate and manage your risk of money laundering (ML) or terrorism financing (TF). This includes creating an employee due diligence and training programme, implementing systems and controls, and ongoing customer due diligence processes. Part B is focussed on identifying customers and beneficial owners, including politically exposed persons (PEPs). This includes determining what customer information you collect and verify, how you determine if your customer is a PEP, and how you respond to discrepancies. You can find detailed elaboration of the points above and more in the Complete Guide to Setting Up a Successful AML Compliance Programme. Download it for free today and be on your way to setting up a successful compliance programme for your business.