Job Description
AML (Anti-Money Laundering) work involves practices, regulations, and procedures designed to prevent money laundering and financial crimes. Money laundering is the process of disguising the origins of illegally obtained money, typically by means of transfers or financial transactions that make the money appear legitimate.
AML efforts aim to detect, deter, and report suspicious activities and ensure compliance with local and international laws and regulations. Here are key components of AML work:
- Customer Due Diligence (CDD)
- Know Your Customer (KYC): Financial institutions must collect and verify information about clients before offering services. This includes identification documents and background checks.
- Enhanced Due Diligence (EDD): For higher-risk clients or transactions, more detailed scrutiny is applied, such as monitoring unusual activity or examining sources of funds.
- Suspicious Activity Reporting (SAR)
- Financial institutions must file SARs to report transactions that appear suspicious or inconsistent with a customer’s known profile or behavior. This can include unusual wire transfers, large cash deposits, or transactions that seem designed to evade detection.
- Transaction Monitoring
- Banks and other financial institutions often use automated systems to monitor transactions for patterns that may suggest money laundering activities, such as structuring (smurfing), layering, or rapid large transactions.
- Monitoring systems track both domestic and international transactions.
- Risk-Based Approach
- AML practices should be tailored based on the level of risk associated with different clients, products, and regions. Higher-risk customers or countries might require more intensive monitoring and stricter controls.
- Record Keeping
- Financial institutions must retain records of customer information, transaction details, and any reports of suspicious activity for a specified period (often 5-7 years). These records help regulators investigate potential illicit activities.
- Sanctions Screening
- Financial institutions must screen transactions against lists of sanctioned individuals, entities, and countries (e.g., OFAC list, EU sanctions list). This helps prevent transactions with parties involved in illegal activities.
- AML Training
- Employees in financial institutions and other sectors are required to undergo regular AML training to stay informed about the latest risks, regulations, and detection methods.
- Regulatory Compliance
- AML practices are heavily regulated. Key regulatory frameworks include:
- The Bank Secrecy Act (BSA) in the U.S.
