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How to monitor Anti-Money Laundering
- For all clients opening accounts with financial institutions, comprehensive due diligence on their source of funds is mandatory.
- The KYC (Know Your customer) process should ensure they are not Bad Actors by verifying against International Sanctions Lists, OFAC (Office of Financial Asset Controls) , PEP Lists of (Politically Exposed Persons) and adverse media checks. They should not have Beneficiary Ownership in organizations that are involved in terrorist activities and do not work in conjunction with Sanctioned Entities and Sanctioned Countries. They should also be checked for Adverse Media reports against them
- After clients comes on board, ensure that their transactions do not reflect money laundering trends. It is mandated by regulations that the organization should report suspicious activities to FINCEN through the SAR (Suspicious Activity Report)
- Huge Fines and Punishments face organizations that are found guilty of not having the process in place to identify money laundering.
The AML Challenge
- Organizations face challenges in ensuring AML is being effectively monitored
- Manually keeping track of each client, verifying them against all of the sanctions lists, ensuring that the money transfers are not done to companies that are involved in criminal and terrorist activities is a daunting task, specially so if there is a lot of client activity. Compliance staff can be over whelmed with the amount of manual labor involved and may miss trends that may be easily noticeable if they had a system in place.
- An integrated system for AML Policy Management, Training of staff, Risk Assessments to verify defined policies and procedures for AML identification are being followed,
- AML verification is done on each client and SAR reporting done for each suspicious case after detail investigation can save lots of dollars by making the process efficient and effective as well as save many hours of manual labor
What does GRACE AML do
It provides the system for organizations to
- Set up the Policies and Procedures for AML Monitoring
- Ensures online attestation of Policies and Procedures by all the staff to ensure they know the processes to follow
- Conduct risk assessments of the business’s various entities on a calendar basis to ensure all branches, IT systems, customer facing staff and other members involved in AML processes are following the process defined by the organization
- Help the compliance staff ensure that AML verification is conducted by automating the process of verification against all the required sanctions list to ensure the client is not a Bad Actor listed on any of them by a click of button and API Based connectivity and pulling in information as well as ensure that the client is not a beneficiary owner in any of the sanctioned entities as well as does not have Adverse Media information on them.
- Ensure that the client is not wrongly reported in case of false positive information
- Monitor all funds transfers, and patterns of money movement
- Report Issues and keep documentation of any suspicious activity
- Report SARs (Suspicious Activity Report) to the relevant authority
- Ensure staff is trained in the right processes for identification of suspicious behaviour
The financial penalties for failing to comply with AML are going up into Millions – ING was fined $900 Mil for failing to spot money laundering
Keep track of AML Policies and Procedures
- Management of Policies and Procedures reviews, release, version management
- Ensure On-line Attestation so staff knows of the procedures to be followed
Client Information management
- Manage Client Information including residences, jurisdictions, legal entities, dependents, relations etc to track AML across customer entity
- Manage Automated AML, risk flagging and build client risk profile
For all new clients, get and verify automated information from Industry respected data sources for clients existence in worldwide PEP (Politically Exposed Person) list, sanctions lists, watch lists with automated red flagging
Get information on all the beneficiary legal entities they operate and check if any of these legal entities are in sanctions lists
Get Adverse media information and red flag it
Generate client risk rating based on above information
Automatically get informed on new sanctions, beneficiary ownership, adverse media information as they happen and take action
Report Suspicious Activity to FINCEN
Load all transactional information for clients like funds transfers, ACH, wires on the system
Monitor transactions to see suspicious trends based on rules and red flag them
Report Suspicious Activity to FINCEN
AML Risk Assessments
- Set up and Use standardized checklists based on NIST standards for periodic risk assessments
- Set up Calendars for assessments and receive alerts
- Send out Risk Assessment Questionnaires Online and use Survey like function to collect information
- Conduct the assessments, record findings and risks
- Classify risks, assign responsibilities and manage mitigation 15
- Helps you have an integrated system for handling all AML requirements and a single repository of information for all queries, examinations and audits
- Relieves compliance staff of many manual hours of labor to search for information on the client against various sanctions list
- Ensures all violations are caught through the automated process
- Be able to know new information available in the sanctions list or adverse media even when they are not looking for it.
- Ensures the staff have a consistent process which can be followed at all times.
- Manages risk assessments and identifies loop holes in the process
- Monitors High Risk Clients and manages SAR(Suspicious Activity reporting) in an organized way
- Creates a visible process for identifying and manage high risk client violations
- Provides proof of process to regulators during examination