What is AML Compliance Program?

In order to counter financial crimes, it is important for credit unions, banks as well as other financial institutions and audit firms across the globe, to develop and implement Anti-Money Laundering (AML) Compliance programs/procedures.

What is AML Compliance Program?

AML compliance programs consist of processes and procedures, in compliance with the relevant laws and regulations, which a relevant entity should follow to prevent as well as detect money laundering and terrorist financing activities. AML compliance program is a process that keeps on updating mainly due to changing laws and regulations. It is important for all the organization, who have a mandatory AML compliance requirement, to develop a proper understanding about Anti Money Laundering in UAE, its purpose and objectives, and how to develop solutions that not only meet the compliance requirements but also automate AML compliance.

What Should an AML Program Do?

In practice, an AML compliance program should help an institution in ensuring that it is able to identify suspicious activities relating to money laundering, including terrorist financing, fraud, tax evasion and report them to the relevant authorities. The program should not only focus on the effectiveness of internal controls and systems developed to identify money laundering, but also on the risk of money laundering posed by a company’s activities and how to manage that risk.

The foundation of the compliance program should be based on strong regulatory understanding, and the program should be overseen by personnel that are knowledgeable and experienced enough to create an environment of compliance at every level in their organization.

Developing an AML Compliance Program

When developing an AML program, the senior management is required to create a set of policies and processes that control the anti-money laundering compliance requirements in UAE. While, a number of factors may impact the shape and size of your program, but it should be ensured that your compliance system is strong enough to monitor and control suspicious activities in all the stages of money laundering. Below are some of the very important factors that must be included in your AML compliance program:

Risk: Risk assessment is an integral element of AML compliance and is a very important step in developing an effective compliance program. Different institutions face different types of AML risks. Your compliance program should take into account factors such as your products and/or services, your geographic location, and customers.

Your approach towards managing your risk should suit your company’s needs and requirements – ideally, your AML program should avoid the potential legal jeopardy of under-compliance as well as the administrative burdens of over-compliance. There is no standard solution for addressing inherent challenges caused by the financial landscape; institutions are expected to develop a solution that works well for them and at the same time meets compliance requirements.

Internal Controls: In the UAE, AML program should focus on the internal systems and controls which the an entity uses for detecting and reporting financial ill-regularities and crimes. The compliance program should include a review of all the AML compliance systems and controls on a regular basis to ensure the effectiveness of the aforementioned controls and systems in meeting the requirements of the compliance laws and standards.

Internal controls relating to AML compliance extend to an entity’s employees too, who should be aware of their roles and responsibilities within the system, how to navigate procedures and policies, and how to conduct due diligence on business activities to ensure compliance with all the applicable money laundering laws and regulations.

AML Training: It is important for all the employees within your organization to have a working knowledge of AML policies and processes. However, specific employees will have greater responsibility in connection to the development and implementation of an entity’s AML compliance program. Many applicable businesses conduct basic level training to all employees, and provide further training to employees that have more AML-specific duties and responsibilities. Therefore, an AML compliance program should ensure that all the employees having AML-specific duties receive regular training so that they know how to carry out assigned tasks and duties.

A variety of organizations offer AML compliance training programs for employees who need to update their knowledge and competencies.

Compliance Officer: In UAE, financial institutions and DNFBPs are required to appoint a compliance officer, having appropriate knowledge and skills, and adequate experience, to ensure that the institution is complying with all the relevant and applicable AML laws and regulations. Some of the duties of a compliance officer include reviewing AML policies and processes, communicating with auditors and authorities, briefing top level management, and making recommendations regarding AML policies based on audits and reports.

Independent Audits: An effective compliance program should also include testing and auditing of AML systems and internal controls by third-party organizations. Independent testing should be conducted every 12 to18 months. However, institutions working in high risk environment may consider a more frequent testing schedule than the one mentioned above. The firm selected for AML compliance testing must be qualified enough to carry out a risk-based audit appropriate to the needs and requirements of your organization.