With the growing complexity of our regulatory environment , financial institutions ( FIs ) and businesses continue to be subject to ever-increasing scrutiny and legal obligations to combat money laundering and terrorist financing . In the Caribbean , there is no difference . For Caribbean compliance practitioners who have oversight of multiple jurisdictions , it has been even more daunting as the cycle of seemingly never-ending changes in acts , regulations and guidance have slowed down , but continue since 2016 . 1 Simply , the establishment of a robust anti-money laundering ( AML ) compliance program is essential for mitigating risks , protecting the reputation of the organization and ensuring compliance with applicable laws and regulations .
When an FI can demonstrate that it has complied with applicable AML / counter-terrorist financing ( CTF ) laws and regulations , designed its program to provide highly useful information to government authorities , and implemented a reasonable and risk-based set of controls to prevent and detect financial crime ( for a specific threat or the overall AML / CTF program ), this should be considered as strong evidence of the FI ’ s effectiveness . 2 The key to an agile and robust AML compliance program is to continue being driven by a risk-based approach versus maintaining technical compliance . Against this backdrop , developing , implementing and maintaining a compliance program for a business to be protected has become imperative . Therefore , this article outlines the components of a compliance program and discusses why each step is crucial for the success of the program .
1 . Risk assessment : To establish an effective AML compliance program , a comprehensive risk assessment is essential . Organizations can allocate resources effectively , implement appropriate controls , and tailor policies and procedures by identifying and understanding their specific risks . An organization can focus its efforts on vulnerable areas and prioritize areas of higher risk through a risk-based approach .
2 . Leadership and governance : As mentioned in The Nassau Guardian , “ Compliance , ethics , and anti-fraud programs should be fully understood by the board of directors and C-suite leadership . The responsibilities of an organization ’ s leadership should be clearly defined and assigned . They should be documented in welldeveloped and socialized written policies and procedures , which establishes an atmosphere of accountability . These policies and procedures should be reevaluated on a documented regular basis , in my opinion not exceeding a calendar year .” 3
3 . Independent compliance officer ( CO ) designation : On the CO designation , The Nassau Guardian also noted , “ Depending on the industry , this role is either required or suggested by guidance . The financial service industry in the Bahamas and the [ U . S .] both require a compliance officer . Conversely , the [ health care ] industry in the [ U . S .] only requires the designation if they partake in the Affordable Care Act ( ACA ) and in The Bahamas , there is no documented requirement …. The CO should be a member of senior management and have unfettered access to the board of directors , [ and ] internal and external legal counsel . A regular operation of the working relationship between the compliance function and other key operational areas should be conducted as well .” 4
4 . Written policies and procedures : Employees need clear and comprehensive policies and procedures as guides to navigate AML regulations . Documents such as these outline expectations for the organization , outline rules and processes to follow , and clarify how suspicious activities can be detected , reported and mitigated . Organizations ensure consistent compliance efforts by establishing standardized practices , enabling employees to make informed decisions within legal constraints . These policies and procedures should be based on relevant local and global AML documents and practices .
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