What is an AML Compliance Officer and His/Her Responsibilities?

6 mins

AML Compliance Officer

It is imperative that financial institutions and banks hire an Anti Money Laundering (AML) Compliance Officer to oversee internal anti-money laundering policies and ensure compliance with important criteria.

Anti-money laundering (AML) compliance officers operate as guardians of regulatory compliance within financial institutions and are frequently viewed as the last line of defence against financial crime. Governments all over the world mandate that their financial institutions implement anti-money laundering compliance measures. The Bank Secrecy Act (BSA), first established in 1970, has been changed several times since then, most recently by the Patriot Act. As a result, US financial institutions must navigate an increasingly complicated BSA compliance landscape, which often comes with a high administrative cost and serious legal ramifications. It is usual to appoint an AML Compliance Officer to supervise the development and implementation of their institution’s anti-money laundering policy in order to achieve compliance.

What does an AML Compliance Officer do?

In an institution’s battle against money laundering, AML compliance officers play an important role. Here are the responsibilities of an AML compliance officer in the context of a financial institution.

  • Understanding the compliance tone of the institutions they work with is the primary responsibility of a compliance officer.
  • They need to thoroughly understand the compliance norms and standards, often set by the senior management.
  • Compliance officers should familiarise themselves with the institution’s compliance environment and must be aware of the areas where compliance breaches occur.
  • They should have sufficient knowledge of legal matters related to AML compliance and evaluate their institutions’ business practices to assess compliance risk.
  • They should audit compliance processes and ensure crisis plans are in place to deal with compliance violations.
  • AML compliance officers should brief and report to senior management on AML compliance programs.
  • Senior compliance officers should conduct training and learning sessions for newly recruited officers.
  • They should prudently manage resources allocated to the compliance department to avoid wastage and improper use of resources.
  • Compliance officers should be able to effectively communicate their institution’s compliance principles, policies and programs. They need to draft and revise the company’s compliance policies.
  • Compliance officers should act as guardians of their institutions’ compliance culture. They need to articulate the vitals of compliance programs to each and every employee, helping them practice good conduct in accordance with their organisation’s compliance objectives. They need to educate and train other employees on regulatory matters and industry practices related to compliance.
  • In addition to internal compliance policies and procedures, the AML compliance officers handle external regulatory and legal obligations. They should help internal and external auditors in their activities.
  • Compliance officers should properly understand the regulatory risk appetite of their organisations and work with managers and staff to ensure proper risk management.
  • AML compliance officers should report regulatory breaches to relevant authorities as they occur and ensure measures to avoid future occurrences. They should also keep and maintain records of high-risk customers.

 

Appointing the AML compliance officer

The AML Compliance Officer must be well-versed in all aspects of financial policy and procedure, as well as financial crime techniques.

Senior management must choose a candidate who not only has the competence and expertise to accomplish their duties effectively, but also fits their institution’s particular professional needs when making the appointment.

Qualifications and AML Certifications

Here are the qualifications expected from a compliance officer and certain certifications that would be helpful in performing their duties better.

  • Bachelor’s degree in accounting, finance, economics, law or any other related discipline
  • Prior experience in investment banking, business law or financial management
  • IT skills and experience using prominent compliance software solutions
  • Certifications such as Certified Regulatory Compliance Manager (CRCM), Certified Regulatory and Compliance Professional (CRCP) or Certified Anti-Money Laundering Specialist (CAMS)

 

Self assurance

Considering the numerous legal ramifications of AML compliance, it’s critical that your Compliance Officer has enough authority to carry out their duties.

AML Officers are responsible for not only monitoring and handling a range of sensitive financial data, but also for interacting on a regular basis with senior management, the board of directors, and the financial authorities. An AML Officer would preferably be a director-level professional with industry knowledge and the self assurance to contribute in all elements of work culture.

AML Compliance Programme and Compliance Officers

AML compliance officers assist all types of financial institutions in adhering to various money laundering requirements. While governments throughout the world create rules and regulations to combat money laundering and terrorist funding, such as the Bank Secrecy Act (BSA) in the United States, AML compliance officers are in charge of the micro-level implementation and oversight of these legislation. They play a key role in the development, implementation, and monitoring of anti-money laundering (AML) compliance procedures.

AML Compliance Programme is a set of regulations and procedures that financial institutions follow in order to combat financial crime. It is an ongoing process: it is everything a company does in relation to compliance: be it built-in internal operations, user-processing policies, accounts monitoring and detection, or reporting of money laundering incidents.

The aim and agenda of an AML compliance programme is to expose and react accordingly to inherent and residual money laundering, terrorist financing, and fraud-related risks.

An AML Compliance officer is responsible for the effective creation and implementation of AML compliance programmes for the institutions they work with. Both the creation and implementation of compliance programmes are tedious tasks as governments across the world periodically change legislation. For example, the US administration, which set up the Bank Secrecy Act (BSA) in 1970 as the pillar of the country’s AML/CFT regulation, introduced the Patriot Act among other amendments. In order to understand the implications of new laws and amendments and accordingly manage their compliance programs, financial institutions should make use of the service of AML compliance officers.

Chief Compliance Officer

The chief compliance officer (CCO) works as the head of an institution’s compliance department. The CCO heads various levels of managers and compliance officers within the compliance team, depending on the size and corporate structure of the institution. The CCO generally reports to the Chief Executive Officer (CEO) and is often part of the core management team.

Responsibilities of a CCO

  • Creating, overseeing and maintaining control systems for regulatory compliance
  • Preparing and implementing internal compliance policies and programmes, including whistle-blower programmes
  • Developing an annual compliance plan and making changes to the plan if necessary.
  • Working closely with other departments such as legal and technology to ensure inter-departmental clarity on compliance matters
  • Identifying potential compliance risks and taking appropriate measures to rectify those
  • Providing advice and training to subordinate employees and guiding the compliance team to ensure optimal productivity and minimise risk.
  • Developing compliance strategies, educating senior management on compliance and creating clear reports for management
  • Keeping abreast of the regulatory developments within the jurisdiction they operate in and creating best practices to manage change
  • Cooperating with regulators with their reporting requirements, examinations, inquiries and enforcement actions

 

Why AML Compliance is Important

Failure to comply with regulatory requirements can be disastrous for institutions. Breaches can lead to enforcement actions including fines, penalties and sanctions. In addition to the monetary losses, including a steep fall in stock prices in the case of a listed company, institutions would lose market reputation, which they took several years to build up.

Therefore, it is important for companies to have proper compliance programmes and manage them effectively. AML compliance officers are indispensable staff for institutions as they help manage compliance programmes and mitigate compliance risk.

In the present times, when technological changes have significantly changed the financial crime landscape, institutions should make use of the services of skilled AML compliance officers and modern technology solutions. AML compliance software such as Tookitaki Anti-Money Laundering Suite, developed in line with changing criminal behaviour, makes the work of AML compliance officers easier and more secure. Our AML software helps mitigate emerging AML risks and improves the efficiency of compliance staff.

For more information about our AML solutions, speak to one of our experts.

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