Version:1.0StartHTML:0000000237EndHTML:0000008735StartFragment:0000003061EndFragment:0000008699SourceURL:file://localhost/Users/koko/Desktop/CLT%20-%20AML/CLT%20-%20Assignment%20-%20CON-000234051%20-%20Draft%20-%2017Jan18.docAML Budget The report states: “thedecision of senior management to cut the AML budget for the last three yearshas had an impact on the effectiveness of the AML division.” This puts thefirm at risk of having a poorly trained and inefficient AML division, poorlytrained employees, and insufficient and ineffective AML policies, proceduresand controls.
The BMA (2016) statesthat senior management must “ensure that adequate resources are devoted to theRFI’s AML/ATF policies procedures and controls.” The firm’s policies,procedures and controls must be determined using a risk-based approach, whichwill enable it to balance the cost of AML compliance resources with its moneylaundering risk assessment, and ensure that resources are allocated where theyhave the greatest impact. The risk-based approach should identify and assessinherent risks facing the firm, establish risk tolerance, establish andimplement risk mitigation measures, ascertain residual risks, and monitor andreview risks on an ongoing basis.
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Without a risk-basedapproach the firm is at risk of AML costs being disproportionate, AML policies,procedures and controls being weakened, and compliance requirements beingover-burdensome (CLT International, 2017). If budget cuts areattributable to overall limited resources, senior management should considerestablishing a low-risk tolerance, which would be more compatible with limitedresources and only accept or keep customers with low-risk ratings. Conclusion Senior management mustbe educated in its legal, regulatory and ethical responsibilities in the fightagainst money laundering and must lead by example to promote a healthy AMLculture within the firm.
Senior management mustappoint a Compliance Officer, separate from the MLRO, as leader of the AMLdivision who will oversee the establishment, maintenance and effectiveness ofAML policies, procedures and controls, monitor compliance with Acts andRegulations, and support senior management in promoting a healthy AML culture. The Manual and thetraining programme must be updated to include all the information andrecommendations noted in this paper.