Ronin Resources International consultant Karl R. Oroz is, among other things, a certified fraud examiner, former IRS criminal investigator, AML expert and all-around nice guy. Here, he offers three keys for an effective AML program:
1. Risk Assessment
- Know what products and services your customers provide.
- Be aware of any business conducted abroad. The USA Patriot Act is very specific about the limitations on overseas partners with which you can conduct business, based on potential terrorist involvement.
- Know how your customer was introduced to your business.
- Consider how business is conducted (both with and by your client): in person (the preferred method), or by mail or over the Internet (riskier).
- Know the source of customer funds.
2. The Four 'Musts' That Are Looked at by Regulators and Law Enforcement
- Employees and customers MUST be familiarized with written policies, procedures and controls.
- You MUST have a designated compliance officer, with defined duties and accountability.
- There MUST be training on legal and regulatory requirements, internal procedures and susceptibilities, and course content needs to be evaluated by an independent party.
- You MUST have an independent audit procedure and test of the AML program.
3. Know Your Customers and Know Your Employees
- This is required under section 326 of the USA Patriot Act.
- Entails consistent identification of customers, entities and ownerships, and identification of unusual activity.
- Every employee should undergo criminal background, credit history, employment and reference checks when hired.