Regulatory Compliance also describes the goal that corporations or public agencies aspire to in their efforts to ensure that personnel are aware of and take steps to comply with relevant laws and regulations. This includes monitoring, reviewing, controlling and retaining data or records which can be used for the purpose of implementing or validating compliance.
A key component of Regulatory Compliance is the variety of policies and processes firms must have in place to meet regulatory requirements. This includes processes to thwart crime, in particular money laundering, fraud and counter terrorist financing. There is probably nothing that can damage the reputation of a business more nor leave it more exposed to serious regulatory sanction and fines than the suggestion that it has been used as a conduit for money laundering or, even worse, a terrorist act.
Even if the institution is an innocent participant, the very link of its name to an incident can be damaging. So the institution needs as much help as possible to identify, control, regulate and monitor communications that could pose a risk to the business or its employees. With the proper technologies and processes in place the business can catch and prevent an incident before it occurs and sometimes catch a criminal in the act.
Money laundering is a frequent concern to businesses and the government as the act of money laundering is typically centered around making the proceeds of criminal activity appear innocent and legal. This criminal activity includes drug trafficking, bribery, extortion, embezzlement, and theft. The government has steadily sought out those that permit the laundering of unscrupulously attained funds as it always leads to a criminal or the planning of a crime.
Anti-Money Laundering processes and controls helps banks and financial institutions protect themselves and their reputation from these criminal activities.
Key elements of a sound Anti-Money Laundering program are:
- Minimum Standards and Policies, which clearly set out your philosophy on crime prevention and business requirements
- Strong “Know Your Customer” checks at customer on-boarding to identify and exclude known criminals but also to ensure you know the true identity of the customers you do take on
- Processes (very often automated) that monitor the activities on customer accounts to identify suspicious activity and to check incoming and outgoing payments for unauthorized transactions
- Retention of customer data, files and records of transactions for required legal and audit periods
- Enforcement and escalation process for investigating and acting on suspicious activity
