Part 1: Introduction to AML/CFT Compliance
Are you meeting your corporate compliance obligations in the UK?
Corporate compliance is a crucial aspect of successfully running a business in the UK as it involves following laws, regulations, and industry standards to ensure that stakeholders are protected and the integrity of the business is maintained. This blog is the first in a series setting out what corporate compliance entails, and some of the ways your company can stay compliant with the current legislation in force.
What is corporate compliance and why does it matter?
Corporate compliance refers to the set of rules and regulations that businesses must adhere to in order to operate legally and ethically. These regulations cover various aspects, including anti-money laundering (AML), combating the financing of terrorism (CFT), data protection, anti-bribery and corruption (ABC), anti-facilitation of tax evasion (AFTE), and health and safety, amongst others. Non-compliance can lead to serious consequences such as fines, legal actions, and damage to reputation.
In this first blog, we will be focusing on AML (and CFT) compliance.
Understanding the significance of AML Compliance
To begin with, what is money laundering? Money laundering is the process of disguising the origins of illegally obtained money, making it appear legitimate.
AML compliance is therefore highly important in the efforts to combat illegal financial activities, protect your business’s reputation, and contribute to a secure financial environment. It requires adhering to laws and regulations designed to detect and prevent money laundering and the financing of terrorism. Failure to comply with AML regulations can result in severe consequences, including criminal liability and/or large fines.
How can you ensure that your business is AML compliant?
Identifying Relevant AML Regulations
As a starting point, it is important to identify the AML regulations that are currently in force and how they may apply to your business activities. These regulations include (but are not limited to):
- The Proceeds of Crime Act 2002 (POCA);
- The Money Laundering Regulations (MLRs);
- The Terrorism Act 2000; and
- The Terrorism Act 2006.
The AML regime undergoes regular reviews and revisions by the relevant authorities, so it is necessary to remain constantly aware of the ever-changing landscape.
Implementing Robust AML Policies and Procedures
The AML regulations can be complex and require strong attention to detail in order to develop and implement satisfactory internal AML policies that outline your company’s commitment to combatting financial crime. These policies should include:
- due diligence processes for customer onboarding;
- risk assessment procedures; and
- guidelines for reporting suspicious transactions.
Employee Training and Awareness
As part of a robust compliance program, regular AML training is key to ensuring that employees refresh their knowledge and reminding them of the role they play in preventing and detecting financial crime. In particular, this concerns employees who are directly involved in customer interactions or financial transactions, as they need to understand the red flags associated with suspicious activities.
Conducting Regular AML Audits
Regularly reviewing and auditing your AML compliance measures will identify any gaps or areas for improvement. Audits can help ensure that your company’s practices align with the evolving AML landscape.
Record-keeping
Efficient record-keeping of all AML-related checks aids in establishing a clear trail of financial actions, which in turn aids in compliance verification and audit checks (both internal and external). Well-kept records offer evidence of identity checks, transaction histories, and risk assessments. These records not only bolster transparency but also serve as useful evidence confirming a company’s efforts against money laundering and terrorist financing.
Utilising Legal Expertise
Given the ever-evolving landscape, compliance considerations require consistent attention to ensure continued efficacy. Engaging legal professionals with expertise in AML compliance can greatly assist your efforts.
At Gherson, our specialist financial crime lawyers can provide tailored advice catered to your industry, helping you implement and maintain satisfactory compliance strategies, including by providing firm-wide training and assisting with setting up or reviewing and revising compliance policies and programmes suitable to your specific needs.
How Gherson can assist
Gherson’s regulatory, white-collar and investigations team are highly experienced in providing assistance, advice and guidance on how you can successfully navigate and adhere to legal requirements regarding corporate compliance. This includes providing a comprehensive and unparalleled range of regulatory and compliance services to prospective customers.
If you have any questions arising from this blog, please do not hesitate to contact us for advice, send us an e-mail, or, alternatively, follow us on Twitter, Facebook, Instagram, or LinkedIn to stay-up-to-date.
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.
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