inancial institutions continue to be fined for failures to comply with AML/CFT regulations and continue to fail in remediation of these errors. See for instance this article https://www.reuters.com/article/bc-finreg-laundering-detecting/anti-money-laundering-controls-failing-to-detect-terrorists-cartels-and-sanctioned-states-idUSKCN1GP2NV
How is that possible? After all, AML/CFT is not easy but it’s not rocket science either, here are five points to get right:
- KYC is here to stay
Too often – when management is confronted with an issue - it is remediated but the root causes are not addressed after which everybody goes back to ‘normal’. The thing is though: normal is different. The continued and increased attention that is given to AML/CFT issues in the aftermath of a breach of policy should be the normal state of affairs in a financial institution.
- There will always be peaks in the work load
The work is never done… requirements will always increase, new clients will be onboarded, portfolios of clients will be bought etc. Institutions need to accept there will always be peaks in CDD and alert handling work and they need to cater for that. In-house or with the help of an external provider.
- Remediation is a core capability
For the same reasons remediation needs to be a core capability of any financial institution. Either in-house or with the help of an external provider an institution should have the ability to quickly remediate breaches and at the same time take measures to prevent the breach from re-occurring.
- Compliance is not compliance
Institutions still make ‘being compliant’ the responsibility of the compliance team. That won’t work. It’s not about policies and procedures; that’s the easy part. It’s about operational compliance in the 1st Line-of-Defense, so that’s where the focus should be.
- Better, faster, cheaper
If an FI accepts all the above it needs to focus on the operational functioning of all processes and manage them to make it work well, fast and cheap. Just like processes for account opening, applying for a mortgage, a car loan or working capital. Processes need to be taken seriously to prevent policy breaches, to keep customers happy and manage costs.
Want to learn more? i-KYC knows how to do all this – email us now < link >