In today's financial landscape, robust anti-money laundering (AML) procedures are more important than ever. As regulatory frameworks evolve, firms must adapt their strategies to ensure compliance and mitigate risks. In her session, Practical Procedures for AML in 2025, Elaine Jackson outlines practical AML measures your firm should implement in 2025, based on best practices and emerging trends.
1. Update Your AML Manual
The cornerstone of any AML program is a well-maintained manual. Start the year by revising your AML manual to align with the latest regulations. While no major changes are forecasted for 2025, staying informed about planned updates is crucial. Regularly review your manual to ensure it reflects current rules and best practices.
2. Appoint or Reappoint Key AML Roles
A Money Laundering Reporting Officer (MLRO) plays a pivotal role in your AML framework. While not legally required, appointing a Deputy MLRO is advisable to ensure seamless operations during absences. These roles come with significant responsibilities, so carefully assess your firm's needs and capabilities before making appointments.
3. Conduct Comprehensive AML Training
Training is a critical component of AML compliance. Initial and annual refresher training sessions should be mandatory for all staff, focusing on:
Relevant legislation
Firm-specific policies and procedures
Customer due diligence (CDD) protocols
Red flag indicators of suspicious activities
Internal and external reporting processes
Whether conducted internally or through external providers, these sessions ensure your team is well-equipped to identify and respond to potential money laundering activities.
4. Launch a Bi-Monthly AML Awareness Campaign
Continuous education is key to maintaining AML vigilance. Implementing a bi-monthly awareness campaign can reinforce knowledge and keep AML practices top of mind. For example, dedicate one period to customer due diligence and another to identifying red flags. This approach is particularly beneficial for junior staff, who are often the first to encounter potential issues.
5. Maintain an Accurate Client List
An up-to-date and detailed client list is fundamental to effective AML compliance. Ensure your system can generate reports showing all clients, their risk levels, and the corresponding CDD measures applied. This information feeds into your firm's business risk assessment and helps identify potential vulnerabilities.
6. Educate Clients About Their AML Obligations
Some clients, such as high-value goods dealers or art traders, have their own AML responsibilities. Informing clients about their obligations under regulatory authorities like the Financial Conduct Authority or the Gambling Commission can add value to your services. If necessary, consider charging for this advisory service.
7. Review Customer Due Diligence Documentation
Regularly audit CDD records to ensure they are complete and up to date. If a client’s circumstances change—such as expanding into high-risk jurisdictions—reevaluate their risk profile and implement enhanced due diligence as required.
8. Perform an Annual Firm-Wide Risk Assessment
Each year, conduct a comprehensive assessment of your firm's AML risks. Evaluate the services you provide, the controls in place, and the risks posed by your client base. This process helps identify areas needing attention and strengthens your overall compliance strategy.
9. Conduct an Annual AML Compliance Review
Internal or external AML compliance reviews are essential for identifying gaps and opportunities for improvement. These reviews assess whether your procedures are practical and adhered to by staff. If a procedure is consistently ignored, investigate why and make necessary adjustments to improve its effectiveness.
10. Foster a Culture of Continuous Improvement
AML compliance is not a static process. Regularly evaluate your procedures and identify areas for refinement. Engage your team to ensure processes are practical and align with your firm’s operations. Remember, the goal is not perfection but consistent progress.
Implementing and maintaining effective AML procedures is an ongoing commitment that requires diligence, education, and adaptability. By following these steps, your firm can create a robust AML framework that not only meets regulatory requirements but also fosters a culture of compliance and integrity. As we move into 2025, let these measures guide your efforts to safeguard your firm against money laundering risks.
For the full session, please click here. In this course Elaine Jackson covers the following topics;
- The AML Procedures that a Firm should implement
- The Firm’s Internal AML Compliance Review
- Core Customer Due Diligence Requirements
- The role of the Money Laundering Reporting Officer
The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article. The information at the time of publishing was accurate and could be subject to final changes.
