Ashley Bass 19 Feb 20 7 min read

How to respond to the FIU Annual Report.

In April of 2019 the FIU published their annual report ‘National Risk Assessment of money laundering and terrorism financing’ that summarises the findings of their monitoring activities from the period from 1 July 2016 to 30 June 2018, which marked the fifth year of monitoring compliance with the Act. The FIU outlined its expectation of reporting entities (RE) to “consider the findings and observations in this report and, where required, update their AML/CFT policies, procedures and controls to ensure compliance with their obligations.” It’s been almost a year since the report was published; if you haven’t already, now is the time to consider how to take appropriate action.


Warnings for organisations not complying with AML legislation

The review undertaken by the FIU found that several reporting entities were failing when it came to the fulfilment of their AML/CFT programme. Each of these REs were served with compliance warnings for reasons ranging including not meeting key obligations in risk assessments, failing to take reasonable steps to determine whether a customer or any beneficial owner is a politically exposed person, and failing to report suspicious transactions to the FIU.

At a higher level, the FIU report highlighted key areas of concern for the FIU that REs need to pay special attention to the points below.

  • The ability of an RE to evolve its AML/CFT programme based on new AML regulation, and new business practices and products. The FIU noted several deficiencies with AML/CFT programmes in this regard.
  • Deficiencies in conducting enhanced customer due diligence (ECDD) when required and account monitoring systems are still not fit for purpose.

The FIU will continue to intensify investigations and penalties for non-compliance, including “more in-depth reviews of areas such as client on-boarding and account monitoring processes.”


How can you respond to the FIU Annual Report?

You can respond to the FIU’s report by reviewing your own AML practices and tools: are you doing enough to ensure AML compliance and avoid penalty? This could mean going from nothing to basic AML practices, basic to better, or better to best. But even at ‘best’ you need to keep improving your anti-money laundering processes.

Improving your AML/CFT programme can be done manually, and this may work for some businesses. However, manual compliance is heavily resource intensive, prone to risk, and doesn’t easily scale or evolve in response to higher volumes of customers and transactions, business growth, and changes in the regulatory landscape. Does this mean you have to spend significant money to avoid penalties and deliver an evolving compliance programme? Not with the right system and processes.


Make AML compliance simple with automated software

The right AML software or automation tool is one of the answers to stepping up your compliance game! Stay compliant and give yourself the ability to evolve and scale over time, at lower cost and with higher confidence.

Remember, the FIU report makes it clear that you should get a system that is fit for purpose, helps you evolve over time, and makes it easy to prove compliance. With this in mind, what should you look for in an automation tool?


What to look for when choosing AML automation software

Rule management
Rules are essentially the guidelines you set up to recognise suspicious activity. And as regulations or your risk profile change, so too will your rules. Having a system that lets you directly edit these yourselves can save you considerable dollars in the long run. Having the ability to edit rules also helps you use what you learn to keep false positives low. 

AML Reporting Automation
Submitting reports in a timely manner is a clear requirement for reporting entities. Choose a system that makes it easy to act on suspicious behavior and file suspicious activity or transaction reports faster. Better yet, a system that automates submitting prescribed reports directly to the FIU will save not only time, but valuable staff effort.

Ease of use
Many AML automation systems say they’re easy to use, but not all of them are. This means businesses can invest in software which either doesn’t get used, or is only used for a fraction of its functionality. Having a truly easy-to-use system means your employees can get started quickly and optimise their efforts over time. It’s a bonus if your automation vendor has local support and expertise, in case your staff need help or advice.

Integrated transaction monitoring and ongoing customer screening
Automating two key aspects of your compliance into a single system that is built for purpose and scale creates operational efficiencies and streamlines compliance workflows.

Visibility and auditability
Be sure to choose a system that holds all the critical data you’ll need to prove (and improve!) compliance activities for both internal and external parties.


Take a step forward today

If you’re aware that the cost of non-compliance is far greater than the cost of compliance, then you’ll also know that now is the time to act. If you want to take the next step in your AML compliance programme, contact us to discuss a smart way to stay AML compliant.




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