Question
You are newly appointed to the role of Money Laundering Risk Officer (MLRO) for your jurisdiction, reporting to the Global Head of AML of a large regulated financial services firm. Part of your role is to complete a thorough review of the AML policies, systems and controls in place in your jurisdiction following a regulatory review that highlighted significant deficiencies in respect of AML/CTF.
The key comments from the regulator indicated issues including:
- incorrect classification of clients based on established international risk ratings
- a poor culture of CDD checks where many of the files reviewed showed evidence of missing or non-existent identity documents or inadequate verification
- a lack of appropriate training in AML/CTF at all levels in the firm
- inadequate systems and controls in relation to quality, audit and production of management information
- The internal Suspicious Activity Report (SAR)/Suspicious Transaction Report (STR) reporting system was ‘cumbersome' and lacked clarity, which resulted in a very low percentage of reports submitted and those that were did not contain the appropriate information.
a) Evaluate the comments made by the Regulator and highlight the issues and risks for the firm flowing from the situation.
b) Evaluate the measures you would take to remedy the situation and put the firm into line with international best practice.