10 Step Guide to Anti Money Laundering Compliance – Best Practices, Tips, Tools, and More

At PlanetVerify, we take the issue of Anti-Money Laundering compliance very seriously. Indeed, we work alongside many of the World’s leading companies helping them implement a secure, streamlined, and data compliant AML process. As specialists in this area, we have developed a 10 step process to help your organization meet AML compliance requirements.

→ Case Study: How RSM Streamlined and Secured their AML Document Collection Process 

What is Anti-Money Laundering Compliance?

Before we delve into our 10 step guide, it is worth taking a moment to understand exactly what is meant by AML compliance.

AML compliance is essentially a blanket term that covers the myriad of laws, regulations, and procedures that organizations must follow to uncover, monitor, and report on the use of illegally-obtained funds disguised as legitimate income. The following two statistics underline the importance of AML compliance:

• Global money laundering activities are estimated to reach as high as $2 trillion per year.
• Global AML non-compliance fines reached $4.17 billion in 2022.

The risks of AML can not be ignored. Apart from the financial implications, AML non-compliance can cause major reputational damage and negative publicity for a company. To meet the evolving threat of AML non-compliance it is vital that companies develop effective and robust AML compliance processes. Our 10 step guide to AML compliance will help you understand the areas your company should focus on to develop industry-leading AML processes.

10 Steps for Anti-Money Laundering Compliance

1 – Assess your AML compliance program

First things first, take some time to analyze the current state of your AML program. Run a risk assessment that focuses on the following areas:

• Threats: What are the current and emerging AML threats your business is facing? Another question to consider – is your current AML compliance program sufficiently robust to meet the latest AML threats?
• Regulations: When it comes to AML regulations, the goalposts are constantly moving. As criminals find new and innovative ways to launder money, lawmakers need to adapt and keep regulations up-to-date. Crypto, for instance, is a relatively new form of currency that became widely adopted in the underworld. Some of the most recent regulations to keep in mind include the US The Anti-Money Laundering Act of 2020 (AMLA), the proposed EU Authority for Anti-Money Laundering, and ongoing Chinese AML reforms.
• Best Practices: Assess your current AML processes from the standpoint of what works well, what doesn’t work, and what could work better. Identify, share, and implement AML best practices across your organization.
• Employee Education: Awareness and employee understanding is a key pillar of AML compliance. Assess the state of your current AML compliance training program – identifying strengths and weaknesses in this area.
• Technology: Identify and evaluate all the systems used as part of your AML compliance program. Consider how effective each system is and the precise role it plays in your AML program. You should also look into user metrics that will give you some insight into the usability and level of user adoption.
• Reporting: Transaction monitoring and suspicious activity reporting are key AML activities. Assess the state of your current reporting procedures weighing up the number of false positives and other non-financial risks that might leave your company exposed.

2 – Build your AML Compliance Team

Once you have conducted your risk assessment, it is time to build out your AML compliance team. If you already have a strong AML compliance team in place, you might only need to make minor tweaks in terms of personnel, but, if you are starting from scratch, there are a few key positions you should try to fill as soon as possible.

Most AML legislation requires that companies appoint a Chief Compliance Officer (CCO), AML Compliance Officer (AMLCO) or a Money Laundering Reporting Officer (MLRO). It is the responsibility of this person to oversee the entire AML program including areas such as compliance audits, development of best practices, technology, reporting, and employee training. The best candidates in this field will typically have a background in compliance, finance, or even cybersecurity. AML is an evolving space and cross-functional expertise is becoming more important.

3 – Think Holistically

Apart from hiring the relevant personnel, it is important to remember that any AML compliance program is only as strong as its weakest link. The best way to establish a robust AML compliance program is to think holistically and build strong AML processes that go company-wide. Even the most well-planned compliance program will fail if it does not gain support across the organization. For compliance leaders, one of the most important ways to build cross-functional support is by including influential stakeholders from other departments into AML plans. Key people from areas like risk management, legal, IT, and finance will all have important contributions to make in terms of AML compliance – and they can also help you to ingrain a culture of AML compliance throughout their teams.

4 – Set your AML Compliance Goals

The ultimate goal of any AML compliance program is to both protect the company from nefarious AML activities and ensure the company is in full compliance with AML regulations. At a lower level, there are other smaller wins that compliance leaders can focus on that can help achieve their key target of AML compliance. Some lower level goals to consider include:

• Build AML compliance into company culture – continuous employee training can help you achieve this aim as will incentivizing ethical behavior and aligning with department leaders on the importance of AML compliance.
• Develop scalable processes – look to digitally transform where possible. AML compliance processes that become overly manual and too time-consuming will be immediately resented by employees.
• Implement new technologies successfully – the key metric here is user adoption. If you implement a new AML compliance system with lots of great features, but no users, then you are opening the door to AML risks.

5 – Communicate your AML Compliance Plan

This step almost goes without saying – but it is amazing how many times even the best laid plans go to ruins after a communication breakdown. Research shows that even in 2023 many companies are not communicating very effectively. In terms of communicating your AML compliance plan, it is worth noting the following best practices:

• Socialize plans with key stakeholders before making any changes official and look to build support. You don’t want to face any high-profile resistance from key stakeholders that could derail a plan before it even gets off the ground.
• Keep an open mind to suggestions. Obviously there will be some areas that are set in stone, but it might help you win support for your plan by allowing for a degree of flexibility.
• Incorporate multichannel communication. Use a mix of one-to-one meetings, email, internal webinars, company wikis, slack channels, etc. to get your AML program front and center.

6 – Think Digital

The ubiquity of technology in our daily lives means that modern employees are considerably less tolerant of time-consuming and overly manual processes than perhaps they once were. On a given day, a typical employee might interact with platforms and tools like Slack, Alexa, ChatGPT, and any number of video conferencing options. Then, if an AML compliance process is reliant on the use of paper-based or even legacy tools like email, employees are going to be less likely to adopt such a measure. A typical example might be the way many companies still collect AML documents via email and other dated methods – leading to productivity bottlenecks as well as compliance and security risks. Instead, look to digital technologies such as automated AML document collection that have the dual benefit of helping your company achieve AML compliance and also streamlining internal processes.

7 – Implement AML Compliance Systems

System implementation is a tricky business and can make or break a project.

• The very first step is to understand clearly the business outcomes that need to be achieved. Think about the current issues your company is facing, threats, weaknesses, and any possible bottlenecks.
• With clearly defined business objectives, you can move on to the internal stakeholder dialogue, establishing clear roles within the project group, building support, and setting clear expectations.
• Next, and most importantly, you need to focus on system selection. Weigh up the strengths and weaknesses of each vendor submission through the prism of an established assessment methodology.
• System roll-out is vital. Schedule regular training sessions and look to identify some power-users who can act as evangelists and product owners for your new system.
• Finally, you should track metrics on an ongoing basis focusing on user adoption and establishing some KPIs that can illustrate the impact of any new system.

8 – Conduct Regular Employee Compliance Training

Training is a key component of AML Compliance. AML compliance for new employees as well as regular refresher courses should be mandatory for all employees – to cater for the evolving nature of AML today.

9 – Keep Data Compliance Regulations in Mind

While your ultimate focus should be on AML compliance, it is important not to overlook GDPR and other data protection regulations. Both new client and employee onboarding are areas that are fraught with danger from a GDPR perspective. Remember that as you collect personal data as part of your AML activities, there are limits and restrictions on the way this data must be managed. You should build GDPR compliance into your AML activities and incorporate tools that can help you achieve both aims.

10 – Continuously Improve

Once your Anti-Money Laundering compliance program is up and running, the next step is figuring out ways you can make it better. Areas to consider are:

• Process and system improvements – Ask yourself questions such as are your AML processes sufficiently robust to handle evolving threats and can your processes be made more efficient?
• Independent Audits – These are one way to help you identify weaknesses in your program around due diligence, monitoring, reporting, and training.
• Organize regular retro meetings –  Meet with your key stakeholders to analyze your Anti-Money Laundering compliance plan from the perspective of what is working well, what isn’t working, and what could be improved upon.