Understanding Internal Policies, Procedures, and Controls in AML CFT Compliance (Full Transcript)

Speaker 1: part of AML CFT compliance program series where we will discuss an important element of AML CFT compliance program which is a system of internal policy procedure and control in more detail. Do subscribe to our channel or at least give us a thumbs up this will motivate us to create more videos on AML KYC concepts. In the previous video we have spoken about five elements of AML CFT program however today we will discuss internal AML policy procedure and control in more detail. The establishment and continued development of a financial institution policies procedures and control are foundational to a successful AML CFT program. Together policies procedure and controls define and support the entire AML CFT program while at the same time act as a blueprint that outlines how an institution is fulfilling its regulatory requirements. They should be clearly indicate the risk appetite of the business in other words what risk the business is prepared to accept and those it is not. So let us understand all three of them in little detail. So policies are high level statements that are uniform across the entire organization approved by executive management or the board of director defines the high level responsibility of the stakeholder. A procedure would define the AML CTF policy into an acceptable and workable practice. These are the instruction on how an institution want something done. A mainly defined or developed at the operational level. Controls are other tools used to ensure the AML and CFT program is functioning as intended and within predefined parameters. Alerts compliance to potential outlier or deviation from normal policy. Controls may include management reports, automated review system or the utilization of multiple reviewer in the process. Now we understand the difference between AML policy procedure and control. Now let's understand what all need to be defined within the AML policy procedure and control. So first of all AML policy procedure control should be well documented and should be in writing. It should meet all regulatory requirements and recommendation for AML CFT compliance. Timely updates the implement changes in regulation. A financial institution that operate in multiple region or country will need to meet the local regulatory requirement as well as global regulatory requirements. So this may be achieved by having a different version of AML CFT program or having a country specific agenda to the global AML CFT program. Implement risk-based CDD policy procedure and processes. Identify high-risk operations like products, services, delivery channels, customers, geographic location. Provide for periodic update with the institutional risk profile and provide for an AML CFT compliance program tailored to manage risk. Comply with all record keeping requirements including retention and retrieval of records. Assign clear accountability to persons for performance of duties under the AML CFT program. Provide segregation of duties. Develop and maintain a system of metrics reporting that provides accurate and timely information on the status of the AML CFT program including statistics on key element of the program such as the number of transaction monitored, alert generated, cases created, suspicion transaction reports filed. Establish training requirement and standards in order to ensure that the employers are made aware of and have a working understanding of the procedure to be followed and their relevance to mitigate AML CFT risk in their departments or in their area of responsibilities. Develop and implement screening program to ensure high standard when hiring employee. Implement appropriate disciplinary action for employee who consistently fail to perform in accordance with the AML CFT program. Develop and implement quality assurance testing programs to assess the effectiveness of the AML CFT program implementation and execution of its requirement. So, this is separate from the independent audit requirement but serves a similar purpose to assess the ongoing effectiveness of the program. So, these are few of the requirement which AML policy procedure control should meet for financial institution or bank and the level of sophistication of financial institution need to maintain or concerning its policy procedure and control directly correlates to the institution size, structure, risk and complexity of product amongst other items. Failure to establish, perform, follow or maintain educate policy procedure and control can lead to severe enforcement against the institution or designated individual involved. So, that's all about AML policy procedure and control which is an important element of AML CFT compliance program. Thank you so much for your time. You have a nice day.