Which business would say no to new potential clients? No one would. Because the potential clients increase the profit number and grow the institutions by bringing stability and reputation in the market. However, one wrong client with a criminal background, either from the PEP list or the sanctioned list could change the business numbers drastically.
Therefore, the Financial Action Task Force strictly obliged every business to conduct the AML compliance checklist on every new customer to stay compliant and secure from exposing any money laundering crime. What AML checks should be included and what benefits they can bring to businesses? well, if we define the benefits in the shortest possible way.  Does the AML compliance checklist help the organization in knowing its customer background history?
Yeah! if the organization properly incorporates the AML compliance checklist into their AML efforts, the companies will know whether they were involved in money laundering or not. That is why, in this blog, we will discuss the what are AML compliance checklist and why companies should opt it.
What is the Role of an AML Compliance Checklist?
Adhering to the AML checklist isn’t optional for organizations, but it is essential because the compliance checklist ensures that Organizations are following the AML regulations to combat money laundering and other financial crimes. Is AML compliance really helpful for businesses? If implemented properly and headed by the compliance team who are experts in handling.
This could be beneficial for business in many ways.
5 Essential AML Compliance Checklist Items for Financial Institutions
Organizations can’t skip the KYC process and so can the AML compliance checklist. Because both are essential in knowing their customers as well as in implementing a comprehensive CDD process. Though there are many checklists that businesses must adhere to, the following 5 compliance efforts are essential to have in your counter-financial crime toolkit.
- Know who your customer is
The first and foremost checklist comes in the list of knowing your customer, often known as customer identification. As you know your customer identification, the process becomes even easier and straightforward for the compliance team. So to do that, you need to gather some information like what’s his real name, what he does, National ID card number.
If he is an employee of a company, ask him for the employment letter, and salary slip. In case the person shows himself as the owner, don’t hesitate to ask him the company address, source of income, and company record. don’t forget to ask him to mention his home and commercial address that is locatable. And yeah, phone numbers and email addresses are also essential to have on your client information page.
- Assess the Risk level
Although businesses can create an assessment file manually based on their transaction history, where they operate the business, and other risk factors, for better efficiency, we suggest the organization opts for the automated AML compliance checklist system that generates the risk profile based on client history with zero false positive results.
- Investigate the Client’s source of income
Have details about your client’s source of income, where he makes transactions, how many bank accounts he already has, and where he gets the money for specific transactions. If you find these answers about your clients, the financial organization will be able to find whether the transaction money was obtained from legal sources or illegal.
For that, ask your clients to provide you the legal paper about your earnings, against what services they receive such a huge amount. Particularly when your client is a high-risk profile, like a Politically exposed persons. Because they often get involved in corruption, fraud, embezzlement, and money laundering activities.
- AML Screening and Transaction Monitoring
While onboarding new clients, financial institutions must screen them against the different sanctioned lists, peps lists, global watchlists, and adverse media to ensure they are not involved in any criminal activities. Once you onboard them after comprehensively conducting the know your customer and customer due diligence process, financial institutions need to keep an eye on all their transaction for better compliance efforts.
- Reporting
Monitoring and detecting suspicious transactions is the first step in fight against the money laundering, but here comes the most important step and that is reporting suspicious transactions to the relevant department.
Therefore, all AML compliance checklists must include the reporting part, with clarity that transfers the case automatically to the relevant department for further action.
For better efficiency, it is recommended to train your staff on how to detect suspicious transactions and how to promptly react to such transactions for better compliance efforts.
AML compliance checklist becomes even more effective when financial institutions integrate the advanced AML software solution into their business operation. It helps them detect the suspicious transaction automatically and report it to the relevant department. So businesses looking to make their compliance effort more efficient and accurate must adopt the AML screening and monitoring software.
