Know where you stand with your AML compliance

Struggling to get a gauge on if you’re AML compliant or not? Get a comprehensive understanding of what AML compliance foundations you have in place with our free AML compliance assessment, and get tips to help strengthen your current AML compliance measures.

The AML Maturity Framework

The AML maturity assessment has been built using the AML maturity framework at its core. The framework provides a structure for UK accounting and bookkeeping firms to be able to assess their level of AML competence across three core pillars: people, process and technology. It provides a clear pathway to a higher level of competence (or maturity) and supports our goal of ensuring every firm is meeting its AML obligations.
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Don’t just take our word for it

Firmcheck have done a great job in surveying AML compliance by a range of accountancy firms across the UK and using that information to create a simple categorisation of where your own firm stands on its AML compliance journey. Each accountancy firm is unique and so most likely will exhibit features of more than one of the categories, but the Firmcheck Maturity Model for UK Accounting Firms attempts to inform firms of where they stand in terms of AML compliance and to direct each firm’s attention to its most important next steps.

David Winch

Director - MLRO Support Limited

Defining AML maturity:  
the components of the AML maturity framework

People

This relates to the individuals doing the AML compliance work, managing the obligations for the whole firm, and being the advocate or go-to person(s) for AML. It also includes the depth and breadth of AML knowledge and training frequency at the firm.

Process

The polices, tools, and processes that the firm has in place to make sure they are meeting their AML compliance obligations and making it more streamlined.

Technology

The way the firm is using technology to make their AML work more efficient and also hit their AML obligations inline with the legal rules and regulations.

Level 1

Undefined

AML compliance is an afterthought, and there is nothing formally in place to demonstrate AML compliance.

Firms have an awareness that they need to do something, and might have plans to bring in a more formal AML process, but don’t know where to start, and whilst may have named their MLRO, limited steps have been taken by that person towards AML compliance. There is a low level of understanding concerning their compliance obligations and the firm is currently not compliant with AML compliance requirements. Due to the almost non-existent AML processes, there is a high level of firm risk, whereby you may be subject to fines, and reputational damage – the chance that a client is engaged in money laundering could be higher due to poor AML controls.

To level up your AML practices, and make steps towards being compliant you should implement the following:

Create a process

you should develop, formalise and document a process for managing AML compliance at your firm

Be more active

ensure your MLRO is an appropriately senior individual in your firm, and ensure that they have done some training to begin to understand exactly what is involved, so they can start taking small steps towards compliance

Understand what to do

get to grips with your AML supervisor's requirements, you’ll find each supervisor has varying levels of templates and guidance available. Your supervisor for AML, if you practice as a member of a professional body e.g. ACCA or ICAEW, will be the professional body you’re registered with, and if you don’t have (or know) who your supervisor is, then by default your supervisor for AML may be HMRC – now is a good time to check this before you start tailoring your AML compliance program

Level 2

Limited

AML compliance is ad hoc, disorganised and there is limited awareness of the requirements – some work is being done to meet some of the compliance requirements but not all.

Firms are doing what they can to tick some AML boxes – but don’t understand their compliance obligations and likely are not compliant with their AML obligations in some areas. Not all of their clients might have an AML record, or determination and therefore some gaps and risk exposure exist within the firm. There is generally a low level of understanding of policies, low technology adoption, or a consistent process to manage AML. Firms might be using some tools to check and verify the identities of clients under the impression that this makes them AML-compliant and is enough to meet their obligations.

To level up your AML practices, and gather confidence that you’re meeting your compliance obligations you can try implementing the following:

Get the foundations in place

a consistent AML process for new and existing clients including a documented risk assessment and due diligence process, beyond just checking and verifying IDs

Upskill all your staff

and get a grasp on the basics of AML, and the requirements for accountants, including those unique requirements for your AML supervisor

Consider how technology might help you

consolidate your AML process into one place, especially your risk assessments, as opposed to perhaps requesting information via email, or storing documents on a hard drive

Level 3

Competent

AML compliance is understood, and enough is being done to meet legal requirements.

Firms are doing enough to be AML compliant – there is an understanding of what they need to do, and do the minimum to avoid harsh penalties or fines from their industry bodies. AML is often still perceived as a burden and just something ‘done’ to maintain integrity as a firm.

At this point process might not be fully refined and might still be spread over multiple tools/places. Still, there is a consistent process for onboarding, ongoing due diligence, document storage and risk assessments, additionally, all staff are trained at least once per year and there is a record.

The 6 fundamental elements to reach AML compliance are:
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having a firm-wide AML risk assessment,
a policies, controls and procedures document,
AML training for relevant staff and a record of that,
clients and their beneficial owners’ ID verified,
AML risk assessment conducted for each client,
and, an annual system of periodic reviews to test and update the firms AML compliance.

Firms can grow in AML maturity by thinking about some of the following ideas:

Ensure that all staff understand your AML process

and how it can be valuable, start reframing the process as less about compliance and more about a way to learn more about any new clients you’re onboarding or building relationships and spotting other opportunities with existing clients, and longer-term helping to reduce financial crime

Implement technology

to help you with the documentation, collection and storage of all AML records beyond just the basics of checking and verifying IDs

Level 4

Systematic

AML is a core part of understanding your clients and a clear process is well understood and documented – you are likely going above and beyond your requirements.

Firms are doing more than just the minimum to be AML compliant – there is a clear and confident AML focus and an emerging understanding that it can be a key part of the business, not just from a compliance perspective. There is a deeper understanding of the ‘why’ behind AML and what role accountants play in helping to reduce financial crime. Technologies are being leveraged to automate key parts of the process and there is a ‘smarter’ way of managing AML.

To reach the next step, firms need to continue to build on the strong foundations:

Search for new values

to extract additional value from your AML processes, this could include adopting additional technology to develop a deeper understanding of your clients, or leveraging automation to make the ongoing management easier

Ensure that all of your staff are well versed

in your firm's policies, controls and procedures and how to use them – empowering anyone to ‘run’ AML should they need to

Dive into the data

and see how you might be able to leverage the information you’ve captured during initial onboarding and AML reviews to expand service offerings and value-added services with clients

Consider implementing a compliance team

or a dedicated compliance officer if the size of your firm warrants it. A dedicated compliance officer in addition to your MLRO, can strengthen your AML compliance, by bringing another layer of responsibility – the compliance offer with particular responsibilities for ensuring the firm’s compliance can complement the MLRO, who can continue to focus on the record-keeping and compliance requirements for managing new and existing clients

Level 5

Excelling

AML is a core component of firm operations, and the value it adds to new and ongoing relationships is widely understoof, from a compliance perspective you're excelling above and beyond your AML requirements

Firms are exceeding the requirements of bodies and their legal obligations and it’s understood how it can be invaluable in helping develop a complete picture of a client, and how components of AML compliance can help prompt other work with clients, and inform engagements.

Proactive, ongoing, technology is a key ingredient as is organisational alignment on AML, and a solid understanding of all areas of the firm. All relevant staff have a high level of AML training and a good understanding of the requirements due to the frequency of training that has been, and continuous reflections on AML policies, controls and procedures.

Reaching this level of AML maturity is the ultimate goal, but maintaining this level requires some commitment:

Continue to provide ongoing training to staff

to ensure they have a current understanding of the latest developments in AML, but also continue to understand any changes to firm policies, controls and procedures

Ensuring you’re constantly updating and assessing your risk assessments

including your firm-wide risk assessment and keeping policies and procedures up to date

Leveraging smart technologies

to create an integrated AML processes that is low touch, easy to maintain, audit ready and makes meeting the ongoing management of clients easy

What sets AML mature firms apart?

In our recent ‘Landscape of AML’ report, we surveyed over 200 accounting and bookkeeping firms to understand where exactly firms are excelling, and where they are being caught off guard – these findings helped us to understand what gaps exist, and what best practice AML management looks like.

The report is packed full of other insights about how firms are doing with their AML compliance, plus additional information on the AML maturity framework and some tips to help you strengthen your AML compliance foundations.

Download The Full Report

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They follow a standardised risk assessment template for new and existing clients

A strong policies, procedures and controls framework is in place, and being followed

Technology is being leveraged to manage all aspects of AML compliance, from client ID verification to client risk assessments, and more

They carry out regular reviews of their client's risk profiles on at least an annual basis

AML training is done at regular intervals and all staff have a good understanding of AML

Firms have a strong understanding of their overall risk profile, with a documented firm-wide risk assessment that is regulary updated

Frequently asked questions

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