The Importance of Corporate Culture in AML

How important is a firms culture in mitigating AML Risk to a business and what role do senior managers have in the success or failure of their AML system?

Course Overview

The fundamental obligation of senior management within a financial service firm is to create a system of internal controls that will effectively manage risk, including compliance risk.

Thus, compliance risk can be defined as ‘the risk of legal or regulatory sanctions and the financial and reputational loss that may be suffered as a result of a failure to comply with laws, regulation and other standards of good practice’.

Within the area of compliance risk, we have a subset that can often be seen as the biggest fundamental area of risk to a business, this is AML/CFT.

The Basel Committee published guidelines 247 on the sound management of risk related money laundering and the financing of terrorism. Although these were written specifically for banks, it is certainly a good reference guide for all financial institutions. The guidance advises that:

“The inadequacy or absence of sound ML/TF risk management exposes banks to
serious risks, especially reputational, operational, compliance and concentration risks. Recent developments, including robust enforcement actions taken by regulators and corresponding direct and indirect costs incurred by banks due to their lack of diligence in applying appropriate risk management policies, procedures and controls, have highlighted those risks. These costs and damage could probably have been avoided had the banks maintained effective risk-based AML/CFT policies and procedures”.

This along with issues raised in the Dear CEO letter to Wealth Management Firms and Stockbrokers in November 2023 raises the key question – “who is responsible for managing AML/CFT compliance risk?”

Contrary to popular opinion the senior management team of a firm is ultimately responsible for the compliance of a firm, be it with AML/CFT regulations, or regulatory requirements in broader terms.

Relevant senior management will be held accountable for any breakdown of AML/CFT systems and controls.

This course will equip delegates with a full understanding of what is expected by the regulator allowing them to engage with the process; own the process and ultimately be confident in the compliance of the company’s AML systems.

Learning Objectives

• To be properly up to date on the effectives of the AML system in place within the organisation.
• To be able to provide leadership within their relevant areas of business, helping to establish the right culture for the company in its work against money laundering.
• To establish the degree of knowledge required by Senior Management to be satisfied with the engagement of its internal audit with corporate AML systems.
• To be in frequent and close contact with the appointed MLRO/MLCO of their company.
• To be in receipt of the management information required to make the strategic decisions about AML / CFT activity.
• To be fully conversant and confident in how their company is functioning in quality assuring the effectiveness of its money laundering regime.
• To fully buy into and engage consistently with the company’s AML/CFT policy.
• To be well equipped to make the key decisions about how the institution should implement and maintain a risk-based approach that would greatly support the business of the company.
• To be able to effectively identify loopholes within their organisation in relation to internal fraud and AML.

Course Modules

• Update on AML requirements and the focus of the regulator
• Analysis of the impact of rules on senior management
• Analysis of the role of culture in the success of a business in its AML strategy
• Case studies of recent important cases and their impact in the financial sector
• Mapping the best way forward for senior managers