Purpose
The AML Audit is designed to independently assess the adequacy, design, and operational effectiveness of the organization’s Anti-Money Laundering framework. The audit ensures that policies, procedures, and controls align with applicable AML laws, regulations, and guidance (e.g., FATF Recommendations, local AML/CFT legislation, OFAC/EU sanctions requirements). The aim is to confirm that the organization can effectively identify, manage, and mitigate money laundering and terrorist financing risks, while fostering a culture of compliance.
Scope of Audit
The audit should cover the following key areas in depth:
Governance and Oversight
- Review of the AML governance framework, including Board and senior management oversight responsibilities.
- Evaluation of the AML compliance program’s structure, roles, and responsibilities (e.g., Money Laundering Reporting Officer (MLRO), compliance team).
- Review of escalation and reporting lines for AML-related issues
AML Policies and Procedures
- Assessment of the comprehensiveness, accuracy, and currency of AML policies and procedures
- Verification that policies reflect legal requirements, regulatory guidance, and industry best practices.
- Review of documented risk appetite statements related to AML/CFT.
Customer Due Diligence (CDD) and Know Your Customer (KYC)
- Examination of customer onboarding processes, including identity verification, beneficial ownership determination, and risk classification.
- Review of enhanced due diligence (EDD) for high-risk customers, politically exposed persons (PEPs), and cross-border relationships.
- Sampling of customer files to verify compliance with documentation and verification standards.
Transaction Monitoring and Reporting
- Review of transaction monitoring systems, including rule sets, thresholds, and alerts configuration
- Testing of the timeliness and effectiveness of suspicious activity reporting (SAR/STR) to regulators.
- Evaluation of false positive management and escalation procedures
Sanctions and Adverse Media Screening
- Assessment of sanctions screening tools and processes, including screening against OFAC, UN, EU, and other jurisdictional lists.
- Verification of adverse media screening processes and frequency of updates.
- Testing of hit investigation and clearance procedures.
Training and Awareness
- Review of AML training programs for employees, including frequency, relevance, and completion tracking.
- Assessment of role-specific training for high-risk functions (e.g., relationship managers, operations staff).
- Evaluation of measures to embed a strong compliance culture.
Record Keeping and Retention
- Verification that records (CDD, EDD, transactions, SARs) are maintained in accordance with statutory retention periods.
- Assessment of data integrity, accessibility, and security controls
Audit Methodology
- Document Review: AML policy manuals, procedures, risk assessments, training materials, system configurations
- Interviews: Key stakeholders including MLRO, compliance officers, operations staff, and frontline business teams.
- Walkthrough Testing: Review of process flows for customer onboarding, transaction monitoring, and sanctions screening.
- Sample Testing: Random and risk-based sampling of customer files, transactions, and alerts to verify compliance.
- System Testing: Validation of automated monitoring and screening tools.
Benefits of AML Audit
- Regulatory Compliance: Ensures adherence to AML/CFT laws and reduces the likelihood of regulatory breaches or penalties.
- Risk Mitigation: Improves detection and prevention of money laundering, terrorist financing, and other illicit financial activities.
- Operational Efficiency: Identifies control gaps, inefficiencies, and opportunities for process improvement.
- Reputation Protection: Enhances trust with regulators, clients, and counterparties.
- Continuous Improvement: Provides actionable recommendations for strengthening AML controls and governance.
ABM Anti-Money Laundering (AML) Audit
ABM Global Compliance provides an in-depth AML audit that goes beyond mere checklist compliance. Our audit process includes:
- Review of AML Policies and Procedures: We assess whether your AML policies align with current regulations such as the Financial Action Task Force (FATF) recommendations and local laws.
- Risk Assessment: We analyze your customer base, transaction types, and geographic exposure to identify inherent money laundering risks.
- Controls and Monitoring Evaluation: Our experts test the effectiveness of your transaction monitoring systems, suspicious activity reporting (SAR) mechanisms, and know-your-customer (KYC) procedures.
- Employee Training and Awareness: We review your AML training programs to ensure employees are equipped to recognize and report suspicious activities.
- Regulatory Reporting: We assess your processes for timely and accurate reporting to regulators, enhancing your transparency and compliance credibility.
