Overlooking tailored risk assessments

Advice from our founder, Jacques Malan

Which type of clients are you working with? Is it tech startups, construction companies or high street retailers? Probably a combination of the above and many others. Or you may specialise in one particular category.

No firm is the same and the type of customers you work with and services you provide will be different from other firms. 

By using predefined templates to evaluate risk and by not customising them to your own circumstances you are losing all the benefit you might otherwise gain from performing client risk assessments.

Having inadequate policies and procedures in place

An AML policies and procedures document should not be a downloaded template that gathers dust.

In the same way risk assessment templates should be unique to your firm, your policies and procedures should be too.

It is important that your staff are aware of them and that it acts as a user guide to all staff to guide them through every AML related scenario that might present itself.

Make sure your policies and procedures reflect the tools which you are using to perform customer due diligence and cover areas such as training, suspicious activity reporting and record keeping.

Underestimating technology’s role

AML software can be much more than the provision of identity verification checks and PEP or Sanctions screening.

These are extremely important and useful components of an AML system but it should be integrated seamlessly into a solution which ultimately helps you to evaluate and report on AML risk within your firm.

By providing a means for recording client risk assessments, consolidating that information and combining it with the aforementioned checks, AML software can provide you with an environment which not only provides you with peace of mind for when your supervisory body schedules a review, but also actively help you monitor and prevent unforeseen risk from entering your firm.

Inadequate training

Executing your policies and procedures require staff to be trained appropriately. Training should include the awareness of what money laundering is and the CCAB guidelines.

Furthermore, staff should be made aware of and have access at all times to your internal AML policies and procedures. They should receive further training on how these are implemented within your organisation and how processes to mitigate risk have been implemented.

Training should be continuous, and records of training should be kept as your supervisory body would want to see these as part of a review.

Overlooking ongoing monitoring

AML compliance is not a once off onboarding procedure. It is required that you evaluate the risk within your client base periodically, typically once a year at least.

Ongoing monitoring consists of a number of elements. Monitoring the activity of your clients and recognise events, such as large transactions or a change of ownership, which might change the level of AML risk attributed to them.

You should also monitor the services you provide and assess whether any new services you are adding to your offerings might carry more risk and thus could impact on the risk of clients these services are offered to.

Out of date firm-wide risk assessments

A firm-wide risk assessment is a summary of the risk carried by your firm with an explanation of how such risks are being mitigated. By not having an up-to-date firm-wide risk assessment, this document loses its value to your firm.

By using software to track client risk in real time and through regular reviews of policies and procedures, especially when services or structure of the firm changes, you will be able to keep your firm-wide risk assessment up to date more easily.

Firm-wide risk assessments should be updated at least once a year, but you may choose to do so more often should ongoing monitoring highlight significant changes that should be recorded within your firm-wide risk assessment.

At Xama, we offer a comprehensive AML solution for professional firms with no contract or minimum spend required.  

View our list of services or effortlessly book a demo here.