What is an Independent Audit?
An Independent Audit is a crucial, unbiased evaluation of your BSA/AML Program. This review verifies your compliance with the BSA/AML Program, ensuring it:
- Effectively addresses your risks related to money laundering and terrorism financing (ML/TF).
- Meets legal requirements.
- Functions as intended.
What does AML Checked check?
AML Checked utilizes a unique methodology for Independent Audits, assessing your BSA/AML Program's technical compliance, execution level, and effectiveness through:
- Evaluating the overall integrity and functionality of the BSA/AML Program, including its policies, procedures, and controls.
- Reviewing the adequacy of your ML/TF risk assessment.
- Checking the sufficiency of Customer Due Diligence (CDD) policies, procedures, and processes against regulatory standards.
- Verifying staff adherence to the AML/CFT policies, procedures, and controls.
- Conducting transaction tests, focusing on high-risk activities (products, services, customers, and locations).
- Assessing the training's adequacy in terms of content, frequency, attendance tracking, and follow-up on non-participation.
- Confirming compliance with laws and regulations across operational jurisdictions.
- Inspecting the accuracy and reliability of management information systems in the BSA/AML Program.
- Testing the transaction monitoring software's ability to detect unusual activities.
- Reviewing case management and Suspicious Activity Report (SAR) systems, including the process for identifying and reporting suspicious transactions.
- Evaluating policies for managing accounts with multiple SARs, including closure procedures.
- Checking the record-keeping and retention processes' adequacy.
- Monitoring the correction of previously identified deficiencies.
- Assessing the Board of Directors' responsiveness to past audit findings.
- Reviewing the training program and materials for adequacy.
- Examining disciplinary measures for policy and regulatory non-compliance.
Summary of the AML/CFT Independent Audit Methodology
As part of the Independent Audit, AML Checked evaluates three primary indicators:
- Technical Compliance Assessment focuses on your adherence to specific AML/CFT laws and regulations. This evaluation looks at whether your policies, procedures, and controls are effectively designed to prevent misuse of your business for money laundering and terrorism financing (ML/TF). These elements are the foundational components of your AML/CFT framework.
- Execution Level Assessment measures how well you are implementing the policies, procedures, and controls that you have established. It estimates the degree to which your business follows these designed guidelines.
- Effectiveness Level Assessment is distinct from the evaluations of technical compliance and execution. This assessment aims to determine the adequacy of your implemented policies, procedures, and controls, identifying how well you achieve specific outcomes crucial to a strong AML/CFT system. The focus here is on whether the implemented measures are yielding the intended results.
Analyzing these three aspects provides a comprehensive view of your compliance with AML/CFT regulations and the effectiveness of your AML/CFT system in meeting regulatory standards.
Audit Report
Following the review process, the Independent Reviewer compiles the findings into an Audit Report. This report includes:
- Methodology and Grading Indicators Description: An overview of the audit methodology used and the criteria for grading the audit findings.
- Testing Overview: Details on what was tested, the methods employed for testing, and the size of the samples used.
- Reviewed Documents and Materials Index: A comprehensive list of all documents and materials reviewed during the audit.
- Findings List: A compilation of all findings from the audit, highlighting areas of compliance and concern.
- Recommendations List: A set of actionable recommendations for addressing any identified issues and enhancing the BSA/AML Program's effectiveness.
If you're unsure where to start with enhancing your compliance program or need to assess your current AML/CFT efforts, reach out to AML Checked today. Our comprehensive Independent Audit service is designed to provide you with a clear understanding of your program's effectiveness, pinpoint areas for improvement, and offer specific recommendations to strengthen your compliance framework. Act now to safeguard your business from the risks of financial crime and ensure you meet regulatory standards with confidence.
