Anti-Money Laundering (AML) Program Guide

Anti-Money Laundering Program Guide

AML Program Requirements

Five Pillars of AML Compliance

1. Designation of Compliance Officer

   • BSA/AML Officer
   • Adequate authority and resources
   • Board reporting

2. Internal Policies and Procedures

   • Written AML program
   • Risk-based approach
   • Regular updates

3. Independent Testing

   • Annual testing
   • Qualified independent party
   • Scope based on risk

4. Training Program

   • Initial and ongoing training
   • Role-specific content
   • Documentation

5. Customer Due Diligence (CDD)

   • Risk-based approach
   • Ongoing monitoring
   • Beneficial ownership

Customer Due Diligence

Standard CDD

• Customer identification
• Verify identity
• Understand nature of business
• Assess risk level

Enhanced Due Diligence (EDD)

For higher-risk customers:

• PEPs (Politically Exposed Persons)
• High-risk countries
• Complex ownership
• Correspondent banking

Beneficial Ownership

• Identify 25%+ owners
• Identify controlling individuals
• Verify and update

Ongoing Monitoring

• Transaction monitoring
• Periodic reviews
• Trigger-based updates

Transaction Monitoring

Risk-Based Approach

• Customer risk ratings
• Transaction typologies
• Red flags and alerts

Key Components

• Rules-based detection
• Behavioral analytics
• Alert investigation
• Case management

Common Red Flags

• Unusual transaction patterns
• Structuring (smurfing)
• Geographic concerns
• Third-party payments
• Rapid movement of funds

Suspicious Activity Reporting

SAR Filing Requirements

• Suspicious transactions $5,000+
• No criminal activity threshold
• 30-day filing deadline
• No tipping off

SAR Content

• Subject information
• Suspicious activity description
• Supporting documentation
• Narrative summary

Regulatory Framework

• Bank Secrecy Act (BSA)
• USA PATRIOT Act
• FinCEN regulations
• OFAC sanctions
• FATF recommendations

Record Retention

• 5 years for most records
• Longer for SARs
• Accessible for examination