Why are periodic reviews critical to an effective Anti-Money Laundering (AML) framework?
It is crucial that the identity verification data available to a financial institution is up to date; stale documentation does not serve the purpose of an AML programme and documents have to be regularly reviewed and updated. This is why regulators place such an emphasis on periodic reviews.<br/><br/>
Ensuring documentation remains up to date also helps reveal whether there has been a material change to a customer's profile and helps financial institutions to ensure risk ratings assigned to a customer remain applicable.<br/><br/>
Regulators perform regular audits of financial institutions to ensure that all internal compliance controls, policies and procedures are fit for purpose and implemented properly.<br/><br/>
It is mandatory for financial institutions to have fully auditable records that are 'regulator-ready' at the end of the day. This includes the recording of all compliance decisions as well as data, documentation and the back-up required to evidence the basis for these decisions.