Clearly, AML compliance is not something that a CFO (or anyone) can do in their spare time. The list of activities is vast – many of them require meticulous deliverables – and the collective level of effort would be overwhelming for a single employee and likely impossible for a part-time employee to handle.
It is also critical to consider internal components such as the development of procedures for reporting and escalation, the prioritization of ongoing training and development and the effective integration of AML compliance with other departments, such as legal, IT, procurement/vendor management, product development, corporate development, and all front line customer facing teams to ensure a seamless flow of information throughout the process.
Technology
While it’s costly to hire experienced professionals who can run your AML program effectively, and the processes involved are extensive and time-consuming, the technology component should not be taken for granted.
In short, there are certain tools that you simply need to have – and these tools are not inexpensive. For certain small-to-medium sized entities, the costs can be significant or even burdensome. And if you’re thinking that maybe increased technology could effectively replace some or all of the personnel needs discussed earlier, you’d better think again. The technology component is a critical piece of the puzzle.
The technology that would likely be required as part of an AML compliance program includes:
· Know your customer (KYC) software: A solution that checks the Office of Foreign Assets Control (OFAC) and other sanctions lists, Politically Exposed Persons lists, and adverse media
· Customer identification tool: Software that helps verify the identity of your customers
· Electronic customer file: A tool for maintaining 360 degree views of customers, including all onboarding, CIP, CDD/EDD, and KYC information, and for performing customer risk rating and periodic reviews
· Transaction monitoring software: A tool that ingests transaction information for customers and flags suspicious activities The cost of these technologies could exceed $100,000, but it’s important to note that AML technology – not to mention the other components we touched on earlier – are not a static cost. There is a constant evolution of new money laundering typologies (and innovative fraud-fighting technologies) to combat new types of fraud and nefarious methods that are infiltrating the marketplace. In addition, as organizations grow in size and complexity, the need for global AML functionality increases as well.
As a result, AML compliance is not just a “set it and forget it” situation. The people you put in place need to receive regular training and maintain certifications. The policies must constantly evolve to reflect
changes in financial crimes and the associated regulations, as well as your own evolving risk profile. And the technology component never sits still, as the tools must develop at a rate that outpaces the fraud they’re designed to combat.
