Common Issues Arising on AML Monitoring Visits
The various professional bodies are ramping up their anti-money laundering (AML) inspection regime, as there is more and more pressure coming at EU level, on professional bodies, to improve the consistency of the inspection system.
The main issues that are arising for Irish firms on recent AML inspections are:
- Lack of written procedures which evidence that firms are complying with AML regulations and legislation. These procedures ideally consist of an up to date AML Policies & Procedures Manual. Many firms have such policies and procedures already in place, but they are often out of date and do not clearly identify the MLRO. The latest changes to legislation came into effect on 23 April 2021 and the up to date AML Policies & Procedures Manual in use in the firm should reflect this.
- Client due diligence (CDD) – this consists of the following parts:
- Client verification – the ID obtained has not been signed and dated by the firm to evidence that they are ‘Certified Copies of the Originals’.
- Details of the client’s business, legal structure, sources of funds and geographic risks are often not properly recorded.
- Risk assessment and CDD procedures are not carried out prior to acting for the client.
- Firm-Wide Risk Assessment (often referred to as the Business-Wide Risk Assessment) – there is often little evidence that this written assessment (introduced in law since November 2018) has been completed or where it has been completed, the assessment is often not sufficiently detailed or up to date in accordance with Section 30A of the ‘Criminal Justice (Money Laundering and Terrorist Financing) Acts, 2010 to 2021’
- AML Compliance Review – Annual compliance review not completed or a inadequate review has been carried out. The review findings and implementation plan are extremely important. We carry out such external documented reviews for firms with advice on corrective action.
- Training – Appropriate AML training has not been undertaken by all relevant staff. We provide in-house and online AML Training delivered in a format tailored to each firm’s requirements.
- Annual Return declarations – Incorrect AML information disclosed on the firm’s Annual Return to its professional body. Attention to detail is important here and this will be reviewed as part of the AML Compliance Review we carry out.