AML Budget


The report states: “the
decision of senior management to cut the AML budget for the last three years
has had an impact on the effectiveness of the AML division.”


This puts the
firm at risk of having a poorly trained and inefficient AML division, poorly
trained employees, and insufficient and ineffective AML policies, procedures
and controls.


The BMA (2016) states
that senior management must “ensure that adequate resources are devoted to the
RFI’s AML/ATF policies procedures and controls.”


The firm’s policies,
procedures and controls must be determined using a risk-based approach, which
will enable it to balance the cost of AML compliance resources with its money
laundering risk assessment, and ensure that resources are allocated where they
have the greatest impact. The risk-based approach should identify and assess
inherent risks facing the firm, establish risk tolerance, establish and
implement risk mitigation measures, ascertain residual risks, and monitor and
review risks on an ongoing basis. 


Without a risk-based
approach the firm is at risk of AML costs being disproportionate, AML policies,
procedures and controls being weakened, and compliance requirements being
over-burdensome (CLT International, 2017).


If budget cuts are
attributable to overall limited resources, senior management should consider
establishing a low-risk tolerance, which would be more compatible with limited
resources and only accept or keep customers with low-risk ratings.




Senior management must
be educated in its legal, regulatory and ethical responsibilities in the fight
against money laundering and must lead by example to promote a healthy AML
culture within the firm.

Senior management must
appoint a Compliance Officer, separate from the MLRO, as leader of the AML
division who will oversee the establishment, maintenance and effectiveness of
AML policies, procedures and controls, monitor compliance with Acts and
Regulations, and support senior management in promoting a healthy AML culture.


The Manual and the
training programme must be updated to include all the information and
recommendations noted in this paper.


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