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AML: the 10 most common compliance issues

Find out the most common issues our quality assurance team sees on monitoring visits and access recommended resources to support improved compliance in these areas.

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The below information is based on the results of our 2022/23 anti-money laundering monitoring reviews.

1. Updating customer due diligence

The most common finding from our 2022/23 AML monitoring reviews related to updating customer due diligence. Where we made this finding, firms were not performing, and updating, their customer due diligence throughout the duration of the client relationship.

Tips for getting compliant

2. Risk assessing clients

Our second most common finding is that firms have failed to perform a risk assessment of the client. Often, firms have focused on verifying the identity of the client without assessing the risk to determine the amount of evidence that must be obtained.

Tips for getting compliant

3. Customer due diligence on new clients

Customer due diligence (CDD) is a process of checks designed to identify, risk assess and verify your client to make sure they are who they say they are. We found that some firms don’t perform CDD on all their new clients.

Tips for getting compliant

4. Incomplete criminal record checks on BOOMs

We find that some firms haven’t yet obtained criminal record certificates for the beneficial owners, officers and managers (BOOMs) in the firm.

Tips for getting compliant

5. Review of policies, controls and procedures

We find that some of the firms we review haven’t performed a regular review of the adequacy and effectiveness of their policies, controls and procedures.

Tips for getting compliant

6. Reporting discrepancies in PSC register

A person with significant control (PSC) is someone who owns or controls a company. If firms identify a discrepancy between the information they gather while carrying out their regulatory obligations on their corporate clients and the information their client has provided on the PSC register, they must report that discrepancy to Companies House or HMRC. We find that firms do not have the required policies and procedures in place to record and report any identified discrepancies.

Tips for getting compliant

7. Firm-wide risk assessments

The risk-based approach underpins the MLR17 – firms should focus their resources on the services and clients that have the highest risk of money laundering. To determine how and where resources should be focused, firms must perform a risk assessment to understand the risk that the firm may be used to conceal or launder the proceeds of a crime.

Tips for getting compliant

8. Training

The Money Laundering Regulations stipulate that a relevant firm must provide AML training to all staff and agents. Training ensures that staff/agents are aware of their suspicious activity reporting obligations and understand and how to comply with a firm’s AML policies.

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9. No written procedures

We will ask to see firms’ written procedures that set out how they comply with the Money Laundering Regulations. Where firms have subscribed to a training provider manual, we will expect to see this tailored to the circumstances of the firm.

Tips for getting compliant

10. No AML supervisor

We automatically supervise our member firms through ICAEW’s Practice Assurance scheme. Where we find that a firm isn’t supervised, it is normally because the firm thinks it is an ICAEW member firm, but it isn’t.

Tips for getting compliant
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