AML: managing risk
Richard Simms explains how the AMLCC software can help your firm – and it is free to all ICPA members
Regulations setting out the anti-money laundering (AML) compliance requirements for accountants were updated last summer. At AMLCC we’re encouraging firms to look beyond pure compliance and see the actual risks that exist for the firm and their clients.
What is AMLCC?
AMLCC is an online package of tools that delivers AML risk management and compliance.
Tailoring the AMLCC package to how your firm works is important. Adding comments to the answers to questions and personalising the AML policy for your firm’s approach are examples of making AMLCC yours. All aspects of your firm’s compliance can be updated as part of your firm’s ongoing commitment to keeping its AML measures up-to-date.
The flexibility of AMLCC facilitates the implementation of a risk-based approach to AML and countering the financing of terrorism (CFT), allowing firms to allocate their resources to the higher risk areas. The implementation of a firm risk-based approach to AML/CFT is a mandatory requirement of MLR 2017.
Firm AML policy
The firm policy is drafted to be wide in its scope and to contain an educational content. If you work with a team, staff members must read and acknowledge their understanding of the policy within AMLCC. The draft policy is available in a text editable format through the online AMLCC system. Any changes your firm makes to bring the policy in line with your firm’s approach and operating structure will be saved with a date and time and can be edited at any time.
The firm services list is another important part of tailoring the AMLCC system to your specific firm. The MLRO can update the list at any time and a revised report of the services is saved and stored.
Where appropriate, guidance and links have been included for individual firm services. The firm services are cross-referenced to those your firm lists as being provided to any particular client.
Firm risk assessment
The AML regulations require every firm to perform a firm risk assessment alongside the client risk assessment that it is already undertaking. The AMLCC online firm risk assessment will take your practice through a series of questions that will document the risks that your firm may be subject to. Guidance and mitigation steps are an additional benefit.
The new risk mitigation function in AMLCC discussed below will provide a simple way for your firm to show that it has understood and mitigated against the money laundering and terrorist risks to your firm by assessing customers, countries of operation, products and services and delivery channels for those products and services.
Client risk assessment
A client risk assessment for every client of your firm is required. A series of questions for different client types will guide you through the key risk areas. You now have the ability to add comments, read guidance and mitigation and follow links to useful documents and sources.
The MLR 2017 are more detailed; more areas are covered in greater detail within the client risk assessment. We’ve worked to simplify the client risk assessment process by introducing some ‘dependent’ questions that will be either pre-populated or marked as ‘not applicable’, depending on the answer to an earlier question.
Risk mitigated function
This is to give firms more control over the risk profile of their clients and to be able to demonstrate that they have taken positive steps to understand and mitigate the risks identified for a client.
When a user is completing a client risk assessment process they can flag a high-risk answer to a question as one they believe that the risk has been mitigated for. The MLRO for the firm (or addressed directly if the risk assessment is being performed by the MLRO) can then accept or reject that the risk has been mitigated.
If all the high-risk answers to a client risk assessment have been successfully mitigated, then the client will move out of the high-risk category and into the risk mitigated category.
This feature will be available in the near future.
Saved Template Answers Function
Where a firm has any number of clients with similar profiles the firm can save a set of template answers for a client risk assessment. Each saved template would be assigned to a particular client type, e.g. personal or corporate client.
A user can then select a set of saved template answers when creating a new client or updating an existing client risk assessment.
The selection of a set of template answers will fill the answers to the client risk assessment. A template will include any comments on answers as well. The template answers can then be edited to match the precise risk profile of that particular client.
This feature will be available in the near future.
If it’s not written down it didn’t happen. Your records are your firm’s defence to criticism.
Keep a record of your key AML documents on AMLCC. Keep a history of updates and amendments along with an audit trail of key changes. Upload important documents including copy ID documents.
Suspicious Activity Reports (SAR)
Regulated firms are legally obliged to make SARs to the National Crime Agency (NCA). Failure to do so could have legal, regulatory and disciplinary consequences.
Reports can be made between staff and the firm’s MLRO within the system. Reports to the NCA will need to be reported directly to them.
Continuing professional development
The training of both staff and senior management is a responsibility of the firm. Any lack of training could leave the firm exposed to legal, regulatory and disciplinary action if the regulations and sector guidance is not followed.
Two levels of online training videos are both accompanied with a deck of slides. The online tests allow users to demonstrate an understanding of AML. A log is kept within AMLCC of the videos being watched by users and a certification confirming successful completion of the test of also produced.
The detailed policy template provides additional educational content as do the guidance, links and mitigation steps available across the risk assessments and firm services tools.
Customer Due Diligence
It is crucial to identify and verify all your firm’s clients and their beneficial owners by obtaining copies of ID, conducting online identity verification checks and ideally meeting the client face to face. Access to Equifax verification checks is available via AMLCC.
Enhanced Due Diligence (EDD)
There are circumstances that the regulations explain require EDD. Enhanced meaning a higher level of due diligence. AMLCC guides you through when to apply EDD and what measures to apply as EDD.
If you’re an ICPA member then you have access to the Anti-Money Laundering Compliance Company (AMLCC) for free. This package usually costs £197 plus VAT per annum, so this is a significant saving. The free access for your firm includes the MLRO (Money Laundering Reporting Officer) and three staff.
- Richard Simms is Managing Director of the AMLCC
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