This is the first article in a three part series on common issues identified during the completion of external AML/CTF independent reviews. In this series, James Cozens, Director, Commercial, and Brooke Benson, Senior Consultant at CompliSpace, will build upon the key issues typically identified during the completion of external independent reviews, as well as commentary on common issues identified by AUSTRAC.
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As Compliance Officers across the country celebrate getting through another busy audit period, the champagne will be kept on ice for those with Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) obligations as they start to turn their minds to a formal independent review of their AML/CTF Compliance Programs.
Most AML/CTF reporting entities are required to submit their next annual s 47 Compliance Reports between 1st January and 31st March 2017. As part of this reporting process, reporting entities will be asked whether an independent review of their Part A Program was undertaken over the 2016 calendar year and, if so, whether this will be conducted by an internal or external party.
Independent reviews focus on four key questions, namely:
- How effective is your Part A Program, having regard to the money laundering/terrorism financing risk that your business faces?
- Does your Part A Program comply with the AML/CTF Rules?
- Has Part A of your AML/CTF Program been effectively implemented across your business?
- Have you complied with your Part A Program?
Once an independent review has been completed, any report or recommendations that are produced must be provided to the governing board and senior management of the reporting entity.
The frequency of independent reviews is not fixed within the AML/CTF Rules, rather reporting entities are only required to undertake regular independent reviews. Similar to many other parts of the AML/CTF regime, reporting entities are left to apply a risk based approach to review frequency, broadly based on their size, complexity and the ML/TF risk they face.
How regular is regular?
From our experience, reporting entities either specify the time frame for independent reviews to be undertaken within their Part A Program, or they remain silent on this. For those reporting entities who specify a frequency, we encourage you to check your Part A Program, and your records, to ensure that you are complying with your documented requirements, particularly as it is not uncommon for us to find gaps between what is documented and what has actually been undertaken.
Common independent review findings
The s 47 lodgement period seems like a long way off. However, working backwards, if you require an independent review to be completed by the end of December, you will need to get the ball rolling over the next few weeks. Over the coming two weeks, and to assist reporting entities to prepare for a possible independent review, we will be publishing a list of the ten most common independent review issues that we typically find when undertaking numerous external AML/CTF independent reviews each year.
The first five of these common issues will be released later this week.
About the CompliSpace Service
Our AML/CTF experts are engaged to complete numerous external independent reviews each year, across all reporting entity types. The AML/CTF regime is complex and has seen near constant change over the last few years (we are up to 70+ Chapters of the AML/CTF Rules now!!).
We have also written numerous blogs – see here and here, on these changes, particularly the detailed and complex Customer Due Diligence (CDD) changes triggered in June 2014 which many reporting entitles are still struggling to implement.
The AML/CTF regime is complicated, and is subject to almost constant change. CompliSpace assists its clients to unravel the complexities in this area, providing a full suite of AML/CTF services, ranging from external independent reviews, in house training, AML/CTF Program design and KYC services.
For more information contact James Cozens
This blog is a guide to keep readers updated with the latest information. It is not intended as legal advice or as advice that should be relied on by readers. The information contained in this blog may have been updated since its posting, or it may not apply in all circumstances. If you require specific or legal advice, please contact us on (02) 9299 6105 and we will be happy to assist.
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