For many smaller firms, it is not possible to
achieve the requirement of independence where the person conducting the test
cannot perform or be supervised by any person who performs any of the tasks to
administer the AML program. Larger firms either require or prefer to have a
third party to perform the test of this critical function. Our staff provides an independent and expert test of a firm’s anti-money laundering
program. The test consists of reviewing documents and conducting interviews of
AML staff and supervisory personnel which address the following areas:
Risk Assessment – does the firm conduct a risk assessment of its AML program; and if so
are the risks identified addressed in the written procedures?
Written procedures – test to determine if the written procedures of
the firm are up to current standard. AML procedures seem to change every year
and firms are expected to remain abreast of the changes and implement new
procedures as required.
Customer Identification Program (CIP) – test to determine if the firm has the critical
components to identify customers on account opening and to perform maintenance
review of customers. Does the CIP provide procedures based on risk of client
and account types?
Suspicious Person Review – test to ensure the firm has adequate procedures
to review suspicious persons lists; test to insure that the firm responds to
Suspicious Transactions and Activity Reporting – test customer files to determine if CIP is fully
and meticulously implemented, determine if the firm has certain customers that
present more AML risk. Tests on transactions to look for activity that displays
characteristics of money laundering; test to ensure that the firm follows up on
any activity identified as suspicious; test to determine if the firm has
adequate SAR reporting procedures.
Notice to Customers – test to determine if the required disclosures
are made to customers regarding the firm’s AML program.
AML Training – test to determine if the firm conducts AML training that is
customized to the firm’s specific operations.
AML Testing – has the firm maintained a consistent AML testing program and has the
firm corrected any deficiencies highlighted by testing; has senior management
signed off on the AML test and the AML program?
Test results are discussed with firm personnel to
allow for further input and to discuss noted deficiencies. A final written
report is provided that fulfills the required evidence of AML testing required
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