The Anti-Money Laundering Act of 2020 (AMLA) continues to evolve as 2021 progresses. This blog provides highlights from our recent webinar “The AML Act of 2020: Where Effectiveness Meets Efficiency.” Read on for considerations for setting priorities to optimize compliance with the AMLA and capture opportunities to increase efficiencies across your compliance program.
Align with current regulatory objectives
The AMLA reaffirms the strategic priorities of the current treasury AML regime. The AMLA clarifies that financial institutions are expected to implement a risk-based anti-money laundering/counter terrorism financing (AML/CTF) program designed to detect and prevent both money laundering and financing of terrorism. Financial institutions (FIs) should execute a compliance program that supports the fundamental principles and purposes of the AML regime:
- Safeguard the U.S. Financial System
- Prevent money laundering and terrorist financing
- Track money movements throughout the system
- Report highly useful information for law enforcement to utilize
- Share information to strengthen risk visibility for participating institutions and regulators
The AMLA guidance provides financial institutions with clear directive to implement a risk-based compliance program that helps prevent illicit activity.
Understand the expectations that define effective
The AMLA also clarifies the Treasury’s definition of an effective and reasonably designed compliance program as one that:
- Identifies, assesses and mitigates risks
- Assures and monitors recordkeeping and reporting
- Provides regulators with useful information
Effective compliance programs balance business goals and regulatory priorities. Language in the AMLA bill, as described on www.govinfo.gov, recognizes the interdependence between enterprise performance and efficient compliance: “…financial institution attention and resources should be directed toward higher risk customers and activities, consistent with the risk profile of a financial institution, rather than lower risk customers and activities.”
This refined framework gives businesses the flexibility to reallocate resources to higher priority tasks that reflect specific risk-based parameters to help effectively align compliance resources with AMLA priorities. Businesses can streamline lower-risk compliance processes and realize time and cost efficiencies by utilizing technologies, including machine learning, artificial intelligence and robotic process automation.
Evaluate AMLA essentials up-front
Businesses can prepare for successful compliance with the AMLA by proactively evaluating core policies, critical processes and key compliance workflows. Establishing the foundation to support a strong AML/BSA compliance program that meets the final requirements will ease the transition when AMLA takes effect. Important questions to consider as you prepare for the AMLA:
- Can you meet the upcoming requirement to have a formalized risk assessment in place?
- Are you able to articulate and demonstrate the policies and procedures that underpin your model risk management approach?
- Do gaps exist in your technology ecosystem? Does your current compliance technology work across the enterprise or is it a siloed function?
- How would you rate the quality of your customer data? Do you need to complete remediation?
- Does your data optimally support core risk policies and compliance activities?
- Is there transparency and buy-in around compliance objectives in relationship to other functions like marketing and client development?
Identifying and implementing the internal controls and technology solutions to simplify screening, monitoring and reporting contributes to longer-term enterprise advantages.
Create enterprise value through effective compliance
The refined regulatory parameters in the AMLA create an opportunity to improve efficiencies across the compliance function and add value at the enterprise level. LexisNexis® Risk Solutions helps businesses enhance processes, realize cost and time efficiencies and build better synergies across compliance workflows and enterprise operations. We provide compliance expertise, innovative solutions and advanced technologies that are the cornerstone of an effective compliance program.
To learn more, please watch the webinar or connect directly with us.
Note: This information is for educational purposes only and should not be construed as legal advice. LexisNexis® Risk Solutions does not guarantee the functionality or features of LexisNexis® Risk Solutions products identified. LexisNexis® Risk Solutions does not warrant this document is complete or error-free.