The essentials of a great anti-money laundering program
The essentials of a great anti-money laundering program

The essentials of a great anti-money laundering program

By Guest post - 11 Jul 2020

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Anti-money laundering is an important aspect for traditional financial institutions (FIs) and cryptocurrencies alike so it is important to have adequate programs.

With several countries implementing strict anti-money laundering (AML) regulations, many are struggling to strengthen their safety measures and end up paying millions of dollars in non-compliance fines. 

The ever-changing landscape of financial regulatory compliance means institutions must heavily rely on technology for their AML needs. While state-of-the-art AML software forms the core of any good anti-money laundering program, there are plenty of non-tech components that must be in place to ensure compliance. 

The makings of a great AML Compliance Program 

An anti-money laundering compliance program refers to a predefined process of compliance measures, which is usually tailor-made for a company. It is true that AML regulations vary across industries and jurisdictions, but a couple of key aspects of an AML compliance program are consistent:


The first and foremost step for any bank or organization is to outline their AML compliance policies. This includes any measures they must take to prevent money laundering, methods of performing AML screening on customers and how often the risk rating for each customer will be updated. 

At this stage, companies usually decide whether to develop an internal AML screening solution or opt for an AML screening software. Considering the ever-evolving nature of AML compliance regulations, it is wiser to opt for a pre-existing software program, but we’ll talk about that later. 

Compliance department and AML Compliance Officer

More often than not, establishing an independent AML compliance department is a part of regulatory guidelines for Financial Institutions. This includes hiring an AML compliance officer who is an expert in the field. The officer must have an in-depth knowledge of AML laws as well as an industry-specific understanding so they can oversee operations. 

AML compliance officers also need to collaborate with other departments to keep them informed about any changes regarding AML screening practices. The most important function of an AML compliance officer is to flag off any unusual transactions by customers and report it to the authorities in a timely manner. 

Customer AML screening

Now that the anti-money laundering policies are designed and an AML compliance officer is hired, the most important part of the compliance starts, which is customer AML screening. This begins at the time of customer registration along with the Know-Your-Customer (KYC) screening. FIs can only start dealing with a customer once they have ascertained their true identity. 

Considering the perceived higher risk posed by cryptocurrencies, FIs may also want to determine the purpose and intended nature of the business relationship, in order to keep a closer eye on crypto transactions.

Efficient AML compliance checklist

Most businesses and FIs do perform AML compliance to a degree but lack severely and often stick to just following minimum AML regulations. The key to effective AML compliance for FIs and businesses lies in going the extra mile and being thorough in their efforts. Creating a comprehensive AML compliance checklist that is updated yearly to include new trends is imperative to assure success.

Technology is the future of AML Compliance

Gone are the days of manual AML compliance. Conducting customer screenings and monitoring transactions closely while cross-checking against ever-changing AML regulations is too important a task to subject to the probability of human error. 

AML software powered with artificial intelligence like blockchain and machine learning make this process much more efficient and accurate. These software verify the identity of a customer and screen their name against global watchlists that are updated regularly. 

They can be custom designed to perform AML screening after predetermined intervals. AI allows these systems to be smart and constantly learn and detect new patterns. So AML compliance is no longer a hectic task for FIs or business.

Adeendren Iyan

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