3 Keys to Effective AML

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.