Compliance training is often seen as a ‘tick the box’ activity, without much thought being given to the return on investment to be gained. From an AML/CTF perspective, the main point of requiring reporting entities to undertake employee training is not simply to establish compliance. It is to establish an effective anti-money laundering program.
Training indicates the seriousness of the organisation’s program, and identifies whether its risk assessment and risk profile have been adequately assessed, effectively communicated to staff and successfully translated into operations.
Having undertaken countless Independent Reviews since 2008, not to mention regular communication with AUSTRAC since the commencement of the AML/CTF regime, it is fair to say that many reporting entities fall short of the minimum requirements when it comes to AML/CTF training.
For many, AML/CTF training is just seen as a one-off short course upon induction, often just containing a generic overview of what money laundering (ML) or terrorism financing (TF) is. Reporting entities often question why this isn’t enough, arguing that ‘most staff have no involvement in client transactions’ or ‘we know all our clients so we are low risk’.
Well, a good starting point is the Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules). Chapter 8 requires reporting entities to design their risk awareness training program to enable employees to understand:
(1) your obligations under the AML/CTF Act and Rules
(2) the consequences of non‑compliance with the AML/CTF Act and Rules
(3) the type of ML/TF risk that your business might face and the potential consequences of such risk
(4) the processes and procedures in your AML/CTF Program that are relevant to the work carried out by the employee.
Training promotes understanding and awareness and is a key control measure to minimise ML/TF risks arising in your business. Such risks could include the risk of:
- developing and introducing new products or delivery channels without understanding how these may expose your organisation to money laundering
- your staff failing to identify events that require your business to carry out additional KYC or beneficial owner information collection and verification
- not identifying and reporting Suspicious Matters to AUSTRAC.
So which staff members should be invited to attend training sessions? A useful starting point is to consider the different roles within your business. Ask yourself:
- What roles may be involved in the operation of your AML/CTF Program?
- Which roles are involved in product development, distribution and client relationship management?
- Do certain roles present a higher risk of the employee being in a position to facilitate the commission of a ML or TF offence?
Once you have done this you can then determine the frequency and focus of training content including:
- Content – for some employees more basic training may be enough to promote awareness and understanding. However, for employees involved in performing key functions within the operation of your AML/CTF Program, you may need to develop more tailored training.
- Delivery – e-learning is great to introduce AML requirements to your staff, but on-the-job training is also useful, as are in-person workshops which promote discussion and shared experiences.
- Duration – again, one hour induction training is only going to get you so far, so consider a range of training formats with the duration determined by the complexity of the subjects covered, and the risk profile of the staff attending.
- Frequency of training – if you commit to annual training for all staff then expect the regulator or an external independent reviewer to ask for evidence of this training. Alternatively, if you determine that AML/CTF training will be less frequent then can you justify this, based on your ML/TF risk?
Finally, AML/CTF Risk Awareness Training will be scrutinised by both AUSTRAC and any external party undertaking an Independent Review of your AML/CTF Program. Having dealt with the regulator many times over the years we have seen increased scrutiny of AML/CTF staff training registers, including the type, frequency and duration of training, as part of any desk or site review.
We also undertake numerous Independent Reviews each year, a key aspect of which is assessing the effectiveness of each AML/CTF Program. The AML/CTF training program is a really good indicator of the effectiveness of each reporting entity’s Part A Program, and also whether it has been effectively implemented.
How CompliSpace can help?
CompliSpace assists its clients to unravel the complexities in this area, including our AML/CTF Masterclass training series. These interactive group workshops are designed to fast track your understanding of key AML/CTF obligations and AUSTRAC expectations, provide practical guidance to meet your AML/CTF obligations and highlight key tips and traps when preparing for an external Independent Review.
We also provide a full suite of AML/CTF services, ranging from external independent reviews, in-house training, AML/CTF Program design and KYC services.
Please contact Brooke Benson to discuss your AML/CTF requirements further.