With a number of high profile money laundering cases and investigations in the media lately, many responsible administrators and managers are taking the opportunity to think seriously about how to mitigate similar occurrences in their company.
A good starting point is existing guidance and feedback. Australian Center for Transaction Reporting and Analysis (“AUSTRAL”) has previously published a report on governance, including key information developed by AUSTRAC as part of its regulatory activities. The report is designed to help reporting entities understand AUSTRAC’s governance expectations. In the report, AUSTRAC notes that governance “involves more than just having AML/CTF as a standing point to mention in meetingsThey go on to note that all staff should be aware of the various risks affecting the business and the systems and controls in place to deal with those risks.
In order to protect your business and minimize the risk of money laundering (“ML“) and the financing of terrorism (“TF“), reporting entities must have strong leadership and oversight protocols in place. By regularly reviewing the systems and controls you have in place, you can ensure that your business is complying with AUSTRAC’s expectations regarding reporting obligations. governance and oversight.
To adequately meet all oversight and governance obligations imposed on your business, responsibilities are shared between senior management and compliance officers.
Responsibilities of the Board of Directors and Senior Management
It is the responsibility of all board members and senior management to ensure that a company complies with AML/CFT obligations. AUSTRAC expects the board and senior management to be fully engaged in the protocols and procedures implemented within the company with respect to AML/CTF compliance.
Some board and senior management responsibilities include:
- Approve AML/CTF program documents;
- Investigate and take ownership of any ML/FT risk the company is facing;
- Update risk-based systems and controls based on any newly identified ML/FT risk; and
- Ensure that independent reviews of AML/CFT capacity and compliance occur at appropriate intervals.
AML/CTF Compliance Officer
The AML/CTF Compliance Manager should oversee all AML/CTF compliance procedures and protocols within the company and report to the board and senior management. The flow of information to the board and senior management is particularly important and the AML/CTF compliance officer must ensure that accurate and complete information reaches the board and senior management.
Expectations of the AML/CTF Compliance Officer include:
- Regularly review and update client products and services and any other factors contributing to ML/FT risk;
- Identify potentially suspicious issues through transaction monitoring;
- Report regularly to the Board of Directors and senior management of the company, including providing updated risk assessments for review; and
- Ensure that independent reviews of the AML/CTF program are carried out at regular intervals or when circumstances require.
The role of the AML/CTF compliance manager is particularly important as they ensure that the board and senior management are informed of the various risks affecting the business, enabling them to develop the appropriate systems and controls. to these risks.
The importance of AML/CTF programs
An AML/CTF program will help a reporting entity identify, mitigate and manage ML/FT risks. Your AML/CTF program documents the systems and controls in place to manage ML/FT risks and ensures that all AML/CTF processes are properly documented and can be implemented across all relevant teams and personnel. If AML/CFT processes are not adequately documented, the reporting entity may not identify and address ML/CFT risks affecting the business.
Compliance with these obligations will not only protect your business from criminal exploitation, but will also prevent serious penalties applicable under AML/CTF legislation.