In recent years the U.S. regulators have enjoyed flexing their Anti-Money Laundering (AML) and Sanction enforcement muscles, over $12 billion worth of fines have been settled with some of the world’s largest banks for violating the AML & Sanctions legislation in place. It could not be clearer; the regulators are committed to tougher and more resilient punishments for any financial organisation who wishes to cross them. Although this matter is far from solved by just a short blog post, here is a snippet of how to make AML & Sanction regulations digestible.

1. Legislation

Firstly (and most importantly), the understanding of regulations in place for AML & Sanctions can take a lifetime to read and even longer to understand. Globally, the Financial Action Task Force (FATF) set the standards of AML whilst the Financial Conduct Authority (FCA) is the UK leading regulators. Recognising these officials authority and their developments is essential to gaining the knowledge to help build company policies and procedures.

On top of this, it is important to know the Sanctions regulations. Understanding Sanctions lists is hard because it is endlessly changing, but this is no excuse for not ensuring you are thorough with your policy and procedures. Unlike AML where there is margin for error, Sanctions are firm rulings. Subsequently, the UK Sanctions regulations set by Her Majesty’s Treasury (HMT) and also the U.S. regulators Office of Foreign Asset Control (OFAC) will be fundamental to having the best awareness of Sanctions law. Therefore, these Sanctions lists will be crucial to keeping your business from out of harms (regulators) way.

2. Customer Due Diligence

Customer Due Diligence (CDD) provides complete knowledge of customer risk, this is also known as Know Your Customer (KYC). This is crucial because ensuring CDD & KYC procedures are in place will mean better identity, management, and mitigation of each individual customer. Creating a CDD & KYC strategy will ensure the legislation knowledge gained by the organisation is then represented in the everyday work produced by them.

3. Auditing

Like any area of business, auditing is highly important for AML & Sanctions to give authentication of the organisation’s processes. In order to ensure that the legislation is known and CDD is accomplished efficiently; monitoring and auditing must be performed to validate the procedures and policies in place. This creates timely (e.g. year-on-year) reporting that can devise strengths & weaknesses resulting in action plans to improve the business’s policy & procedures.

Although these 3 discussion points are fundamental to having sufficient AML & Sanctions policies in place for your organisation’s, it is obvious that there is nothing ‘simple’ about it. However, it is indispensable to safeguarding any financial organisation from record breaking fines and suspect clientele. Unless you have billions of pounds to spare, I suggest that AML & Sanctions should become your new best friend.

Governmental bodies and regulators provide useful information, follow the appropriate links below:

FATF: http://www.fatf-gafi.org/

FCA: http://www.fca.org.uk/

HMT: https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets

OFAC: http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx

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