AML supervision

AML visits and AML compliance reviews are proceeding to review supervised members’ compliance with the AML Regulations and consider investigations under SIP 2 (for relevant cases).

Members should also remember that AML is reviewed and considered on general inspection visits, and this includes reviewing adequate due diligence work and assessment of case risks even where the IPA is not the supervisory authority for the firm.

Some trends are being highlighted on visits and reviews, and the issues members should consider in respect of your own AML work are:

  • The use of glossary codes in submission of SARs – remember under Reg 66(1)(a) of MLR17, your AML Supervisory Authority has the power to require you to provide copies of SAR disclosures to the NCA.
  • Failing to submit SARs where there is a suspicion of money laundering/criminal activity – this is linked to the investigation of bounce-back loans and other COVID support schemes, where there is clear misuse of the schemes, but IPs are failing to make reports.
  • Ensuring that SARs policies are clear on DAML requests. There should be an explanation of what a DAML request is, when it may be required (examples of circumstances when a request should be considered would assist) and that no action should be taken on the case matter until there has been consent to the DAML request, or the seven working day period has expired and the NCA have not rejected the request.
  • Failing to consider ‘red flags’ from electronic checks of debtors/directors/shareholders – where your electronic checks highlight a potential risk matter, these must be reviewed, considered and clearly dealt with
  • Case risk assessments being used as a ‘tick-box’ check – we continue to see firm policies and procedures advise what would constitute a high-risk case, and when these risk matters arise in a new appointment, the case assessment treats these as ‘normal’ risk and the enhanced due diligence that should be undertaken is not carried out. Where there are higher risk indicators in a case, there must be a clear file note held which explains why the final consideration of the case risk was reduced to a normal risk, otherwise the indication is that there is a lack of understanding of AML risks in the firm.
  • Ensuring AML training logs are kept updated – these should include details of the content of training, any test score from the training, details of when new joiners received AML training and details of any MLRO/MCLO training.