Recommended practices for anti-money laundering compliance.
Compliance has taken an interesting twist this year as the provisions of Dodd-Frank managed to sink their regulatory tentacles deep into companies’ wallets. But as the legislation is moving into its second year since enactment in 2010, another major hurdle has surfaced – anti-money laundering (AML) compliance.
The Dodd-Frank legislation may reach every nook and cranny of business operations, but it does not suggest that companies should have AML programs in place. On the other hand, even though AML compliance may not be required now, money laundering remains a serious financial crime that some companies aren’t equipped to avoid.
A recent Deloitte poll reveals that in 2012 financial institutions will spend a lot of time ramping up their AML compliance efforts. Approximately 25 percent of those surveyed said that making sure certain overseas locations are in full compliance with the Office of Foreign Assets Control (OFAC) rules would present the greatest economic sanction concern in 2012; while a staggering 50 percent of those polled felt mostly concerned about understanding new and existing regulatory expectations.
Walter Pagano, a forensic accountant at tax advisory firm EisnerAmper, says many companies will continue to operate under increased scrutiny from government agencies over the next year. However, if firms can detect or even prevent illegal and suspicious activities from within their operations then combating money laundering will not seem as complex.
Pagano says there are several critical areas that corporate secretaries and general counsels should focus on when building or modifying an AML compliance program.
• Financial institutions must adopt, clearly articulate, implement and vigilantly monitor compliance with (1) core values; (2) ethical and professional standards; (3) regulatory and statutory standards; and (4) internal policies, procedures and protocols, which include the Bank Secrecy Act (BSA) and AML regulatory compliance obligations.
• Companies must have an organization-wide BSA/AML compliance awareness program to emphasize compliance obligations among all employees – not just those in the BSA/AML department.
• Financial institutions must regularly train their BSA/AML compliance employees to recognize the ‘red flags’ of suspicious activities.
• Companies must ensure that BSA/AML compliance employees are adequately supervised to prepare and complete, in detail, Suspicious Activity Reports (SARs).
• Equally important, companies should regularly publish best practices in BSA/AML for bank customers to follow as this can help them understand and raise awareness of such crime.
Pagano believes that if implemented effectively and carefully monitored, these recommendations will make up a comprehensive and rigid money laundering compliance program to help corporate secretaries navigate their way through this new era of compliance.
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