According to the ACAMS Study Guide, an effective AML program should include four key elements: internal controls, independent testing, designated compliance officer, and training1. Internal controls are policies, procedures, and processes that help prevent, detect, and report money laundering and terrorist financing activities. One of the essential components of internal controls is customer due diligence (CDD), which involves identifying and verifying the customer, understanding the nature and purpose of the customer relationship, and conducting ongoing monitoring of customer transactions and risk profiles2. Ongoing monitoring is crucial for detecting and reporting suspicious activities, updating customer information, and reassessing customer risk ratings3.
In this case, the bank's written AML program does not address monitoring of customer account activity, which is a significant gap in its internal controls. The bank serves high-income, high net-worth clients who include non-residents and offshore businesses, which are considered high-risk customers for AML purposes4. The bank should have enhanced due diligence (EDD) measures for these customers, such as obtaining additional information, conducting more frequent reviews, and applying stricter transaction limits5. The fact that the consultant and the bank have mutual clients does not affect the risk rating or the due diligence requirements of those customers. Therefore, the consultant should recommend the bank to revise its procedures to better assess ongoing customer activity and comply with the AML standards.
Reference:
1: ACAMS Study Guide, Chapter 2: Developing an Effective Anti-Money Laundering Program
2: ACAMS Study Guide, Chapter 3: Conducting Customer Due Diligence
3: ACAMS Study Guide, Chapter 4: Ongoing Monitoring and Suspicious Activity Reporting
4: ACAMS Study Guide, Chapter 5: Identifying High-Risk Customers
5: ACAMS Study Guide, Chapter 6: Applying Enhanced Due Diligence Measures