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Welcome to the ACAMS Web Seminar

Focus on AML Audit:

Improving Practices & Procedures May 15, 2013

12:00 Noon– 2:00 pm ET

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Welcome to the ACAMS Web Seminar

Focus on AML Audit:

Improving Practices & Procedures May 15, 2013

12:00 Noon– 2:00 pm ET

Panelists:

William Badinelli, SVP/Audit Partner Group Internal Audit- Americas, AML and Regulatory Risk Royal Bank of Scotland

Diana Liska, Esq., CAMS, CCEP, CFE Senior Auditor First National Bank of Omaha

Moderator:

Laura H. Goldzung, CFE, CAMS President & Principal Examiner AML Audit Services, LLC

Key Controls of AML Compliance Program

• Management Oversight • Written AML Policies & Procedures • Internal Controls • CIP / KYC / OFAC Screening • Transaction Monitoring & BSA Reporting • Training for Appropriate Personnel • Independent Testing

Independent Testing

• Can be performed by internal or external audit or other independent qualified parties

• Should use a risk-based approach to cover all aspects of the AML program

• Should report directly to the Board of Directors or senior management

• All testing & audit documentation must be available for review by the examiners

Regulatory Expectations for Independent Testing

• Qualified & Independent

• Frequency – Dependent on Regulator/SRO (12-18 mo)

• Assessment of:

• Risk Assessment

• Training

• Monitoring Systems

• Reporting & Recordkeeping

• Resolution of deficiencies

• Risk-based transactions testing of: • Policies, procedures, and

processes • Record keeping and

reporting • MIS • High-risk operations

• Reports to the board of directors or senior management

• Tracking & Resolution

Audit Considerations

• Ensure that proper documentation exists to support the risk assessments that were performed

• It must be clear how the risk assessment is aligned with and drives the rest of the company’s AML program

• Ensure that proper documentation exists in the KYC area, and that all necessary details are being captured to support transaction monitoring efforts

Elements of an Effective Audit Program

• Appropriate for the organization’s risk profile

• Covers all applicable regulations and guidance

• Effective discovery, scoping and planning

• Ensures proper testing and sample size

• Program covers all appropriate areas

• Work is properly documented

• Work papers are well-organized

Elements of an Effective Audit Program, Continued

• Conclusions are well supported

• Exceptions are communicated effectively

• Violations are identified and risks explained

• Includes appropriate corrective actions; and tracking

• Findings and actions are tracked

• Results are timely communicated to senior management

Key Auditable Elements Policies & Procedures

• Senior management approved program containing regulatory requirements

• Contains and describes internal controls

• Comprehensive & Tailored

• Stated AML Policy

• Applicable updated regulatory requirements

• Describes management oversight

Key Auditable Elements CIP/KYC

• Identify key risks and controls • Written Customer Identification Program and

Verification procedures / Implementation • Sufficiently documented risk-based customer due

diligence and applicable enhanced due diligence • Mitigation tactics and system for monitoring high risk

customers • Past findings / corrective actions taken • Systemic issues, if present

Key Auditable Elements Suspicious Activity Process

• Clearly stated escalation process

• Timely filings

• Quality of SAR narratives

• Actions taken following reporting

• Rationale for non-filings

• Sufficient investigative due diligence and documentation

• Experience of analysts

Key Auditable Elements Transaction Monitoring

• Verifying system testing and validation documentation

• Disposition of alerts

• Documentation around the closing of alerts

• Sufficiency of resources

• Monitoring tools

• Documentation of compliance monitoring

Key Auditable Elements AML Training

• Comprehensiveness of training

• Training mapped to regulations and business of the FI

• New hire vs. refresher training

• Targeted to job function

• Frequency / Methodology

• Content

• LMS / Tracking timeliness, record keeping

• Attendance Records, Tracking & Recordkeeping

• Senior Management & BoD Training

Key Auditable Elements Independent Testing

• Qualified and Independent

• Risk-based scope and plan

• Transactions tested (transparent)

• Quality reporting

• Corrective actions / systemic issues identified

• Action plan / risk-based timely resolution

Risk Assessment Common Deficiencies

• Risk assessments not performed or documented

• Did not incorporate all lines of business or entities

• Did not consider all major risk categories

• Policies did not specify frequency of updates

• No methodology for assigning risk rankings

• Policies and procedures not commensurate with institution’s risk profile

Independent Audit Common Deficiencies

• Audits not performed by qualified professionals

• Inadequate testing / sampling

• Not conducted commensurate with risk profile

• Deficient scoping / frequency

• Insufficient documentation and workpapers

• Lacking overall conclusion on adequacy of program

If you have additional questions for today’s experts, or

suggestions for future web seminars,

please send those to:

training@acams.org

Thank you for joining us today!

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Future Web Seminars

JUNE 05 – Emerging Crime Trends in Digital Wallets and Mobile Banking Level: Intermediate/Advanced Noon to 2:00pm EDT

JUNE 12 – Effectively Analyzing, Organizing and Communicating AML Metrics Level: Intermediate/Advanced Noon to 2:00pm EDT

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