Anti Money Laundering (AML) Services

Anti-Money Laundering

You Can’t Afford the Risks

Audit | Tax | Advisory

The Risks Associated With AML/Sanctions Compliance Are Just Too Great to Ignore Continued increases in regulatory scrutiny and rigorous enforcement have turned compliance with the global and U.S. sanctions and anti-money laundering (AML) regimes into a front-burner issue for providers of financial services. The European Union Anti-Money Laundering Directives and implementing legislation, global sanctions regulations, Wolfsberg Principles, and guidance from the Financial Action Task Force comprise a subset of the laws and regulatory guidance governing the global AML environment. These regulations and guidelines require businesses to be vigilant in identifying and reporting suspected money laundering, terrorist financing, and other criminal activities.

Anti-Money Laundering: You Can’t Afford the Risks

Parliament and law enforcement have turned up the heat, calling on regulators to look more closely for compelling evidence of good governance, effective model risk management, strong business processes and controls, and robust programme documentation. Failing programmes mandate immediate corrective actions which, more often than not, pose considerable one-time and recurring costs to the institution. Crowe Horwath can help you create a risk-based AML programme tailored to your specific needs in today’s complex environment. From large global banks and organisations challenger banks to building societies and credit unions; from gaming and casino operations to money transmit¬ters and money services businesses; from startup financial technology companies to established payment processors, and other financial services companies; Crowe services draw on years of experience and thought leadership to create customised and scalable solutions for all types and sizes of financial services companies and institutions.

The risks of noncompliance are substantial: ■■ Reputation risk ■■ Regulatory compliance risk ■■ A broad range of operational and strategic risks ■■ High-value customer risk ■■ Earnings and performance risk With compliance requirements and expectations stemming from unique risk profiles, meeting evolving AML requirements has become a complex exercise involving a moving target. As businesses struggle to comply, regulatory requirements, and expectations pose another challenge: how to meet compliance obligations without damaging customer relations or impeding business growth, and innovation.

Addressing AML Compliance Requirements Offers Significant Benefits ■■ Demonstrated commitment to protecting the global financial system ■■ Reduced risk of reputation damage from regulatory action and negative publicity ■■ Increased protection of corporate and shareholder value and goodwill ■■ Proactive human and technology resource planning on AML initiatives rather than regulator-driven compliance projects ■■ Cost-effective compliance with AML laws, regulations, and regulatory expectations ■■ Effective decision-making and risk management through AML analytics Leading providers of financial services are also looking at the impact of an AML programme on competition and customer relationships, viewing AML compliance as an opportunity to expand their knowledge of customers and deliver a higher level of service.

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Crowe CLAMP®: Our AML Operating Model for Regulated Financial Services Companies The Crowe CLAMP (Crowe Closed-Loop Anti-Money Laundering Programme) operating model allows financial services companies to achieve a high level of capability maturity in nine AML areas and is designed to verify that each area interacts with the others to provide appropriate and ongoing feedback. Our model includes:

1. A Strong Enterprise Foundation

3. Demonstrated Execution

5. Activity Monitoring

Every AML programme must dem-

The goal of AML activity monitoring

Surrounding an organisation’s AML

onstrate the ability to execute on the

is to identify potentially suspicious or

programme is an enterprise foundation

plan and the designed organisational

prohibited customer activity through

that determines an organisation’s

components. An AML risk assessment

high-quality alerts while minimising

ability to respond to changes in

produces a risk profile based on

false positives. Meaningful transaction

both the busi¬ness and regulatory

products, geography, distribution

analysis requires leveraging rules-

environments. The foundation consists

channels and customer, and account

based, profiling, or machine learning

of four components: corporate

characteristics, resulting in a guide

technologies, as well as advanced

governance/enterprise risk manage-

for organisational priorities. Effective

analytics. Transaction monitoring

ment, model risk management, and

internal controls demonstrate a history

systems must consider an organisa-

model governance, independent audit,

of adequate and sound responses to

tion’s unique risk profile and inte¬grate

and the ability to establish effective

areas in need of attention. Staffing and

with CDD to effectively detect unusual

policies that have been approved by

training take place at all levels of the

and suspicious activity. Structured

the board.

organisation, especially at those with

analysis, tracking, and follow-up are

responsibility for the AML programme.

required in order to properly manage

Models and systems relied upon for

each potential suspicious incident.

2. Principal Capabilities Four principal capabilities serve as the backbone of an organisation’s AML programme: an enterprisewide compliance risk assessment weighs the

AML compliance must be calibrated and validated to ensure their accuracy and effectiveness.

6. Investigations and Reporting Suspicious activity, regardless of its origin, requires detailed investigation

risk of legal or regulatory sanctions,

4. Customer Due Diligence

and documentation by qualified

financial loss, or damage to reputation

The goal of customer due diligence

individuals. Requests for investiga-

and franchise value; comprehensive

(CDD) is to identify, screen, and

tions may be initiated through the

processes guide the development,

manage the organisation’s new and

organisation’s CDD efforts, sanctions

implementation, and use of models for

existing customers that present a

screening, activity monitoring systems,

AML compliance; effective monitoring

higher risk for money laundering and

or fraud detection processes, or

and self-testing of AML controls by

terrorist financing. CDD provides the

externally via production orders and

the AML group prepares the organisa-

mechanism to implement the due

subpoenas or other avenues. Unusual

tion for review by indepen-dent audit;

diligence and sanctions screening

activity deemed to be suspicious is

and written procedures reflect the

processes required for every customer

reported to law enforcement on a

institution’s current AML programme.

and the enhanced due diligence pro-

suspicious activity/transaction report.

cesses required for customers posing a higher risk.

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Anti-Money Laundering: You Can’t Afford the Risks

“CLAMP” and the CLAMP AML framework diagram are protected intellectual property of Crowe Horwath LLP.

7. Single Customer View

8. Data and Document Management

9. Programme Management

An organisation must have the ability to demonstrate that it understands its

The Money Laundering Regulations

includes project and regulatory rela-

customer information and has properly

2007 and other mandates require

tionship management. Organisations

associated linked relationships both

maintenance of documents and

should dem¬onstrate an ability to plan,

within a line of business and across

historical data for minimum durations.

organise, and manage AML projects

subsidiaries. The convergence of

Backups and archives must be set

through a programme office. Further-

expected and actual risk requires that

up to allow retrieval in an organised

more, projects must be consistently

an organisation not only understand

and timely manner. Audit trails track

executed on time and within budget

who the customer is, but also what

data and enable document capture to

to create regulator confidence in an

he or she is doing. A robust single

assist with information and document

institution’s ability to deliver on what

customer view will help drive use of

warehousing, which in turn help

is promised.

advanced analytics to further manage

improve management and operational

AML risk and increase programme

reporting as well as compliance and

efficiency.

litigation support.

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Effective programme management

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Crowe Offers a Comprehensive Closed-Loop AML Solution Crowe brings together an integrated team of financial services industry professionals specialising in the areas of: ■■ Regulatory compliance ■■ Enterprise risk management ■■ Business process management ■■ Customer experience management ■■ Technology systems integration and implementation Our unique combination of in-depth industry knowledge, broad-based business competencies, and the Crowe CLAMP operating model offers our clients a comprehensive, closed-loop AML solution. Our solutions are configurable: they can be implemented holistically for organisations with high regulatory expectations or as point solutions targeting specialised areas of need for organisations with specific regulatory requirements.

Anti-Money Laundering: You Can’t Afford the Risks

AML Solutions to Match Your Risk Profile Our team of AML specialists can help you create a risk-based AML compliance programme tailored to your organisation’s specific needs. Because there is no such thing as a one-size-fits-all programme, Crowe AML solutions are customised to your organisation based on risk profile, business model, size, location, customer base, corporate culture, delivery channels, products, and service offerings.

Crowe AML/BSA Services and Solutions At Crowe, we view AML compliance as a continual process of vigilance grounded in a proactive programme that raises red flags when significant changes, variances, and contradic¬tions occur. Our AML solutions can be implemented as a comprehensive compliance programme or customised to focus on specific challenges.

Model Risk Management

With the legislation from the Fourth Money Laundering Directive and SYSC rules, financial institutions, need to adapt their existing AML risk management programmes to the most current industry and regulatory standards. Crowe has an established model risk management methodology and framework that help organisations meet regulatory expectations. These services include: ■■ Identifying and managing the AML model inventory ■■ Assessing AML model risks ■■ Developing and implementing AML models and systems ■■ Validating models relied upon for AML compliance ■■ Calibrating or optimising AML system parameters ■■ Establishing governance and oversight for the model risk management programme

AML Analytics and Reporting

Independent AML Testing Services

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Enhanced analytics and statistical techniques are necessary to effectively analyse and calibrate AML models to provide accurate customer risk rating, transaction monitoring, and sanctions screening capabilities. Other critical components of a strong AML programme include data warehousing, integration, and governance, as well as effective data visualisation and dashboards to provide management with enhanced visibility. Crowe services include: ■■ Defining AML analytic programmes

■■ Calibrating AML system parameters

■■ Establishing programme KPIs and KRIs

■■ Designing and developing management reporting capabilities

Crowe conducts annual AML/CFT and sanctions independent testing services for more than 100 financial institutions around the globe through a dedicated professional team with AML and audit experience. The Crowe approach is designed to adapt to each of our clients’ unique AML risk profiles, empowering institutions to satisfy regulatory requirements while applying our leading perspectives. Our experiences and approach have withstood the scrutiny of examination and review in some of the most intense regulatory environments in recent history.

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Regulatory Response and Remediation

Crowe has extensive experience working with regulators to help institutions address examiner concerns and offers a broad array of AML-specific services for institutions facing regulatory issues and enforcement actions. These credible and respected services include: ■■ Independent third-party monitoring services ■■ AML look-back reviews ■■ Consent order validation and independent testing services ■■ Financial investigation services for either ongoing support or special assignments ■■ Exam preparation and management

AML Programme Enhancement Services

As part of its broad AML programme enhancement services, Crowe frequently is called upon to provide programme oversight and compliance integration services in addition to specific enterprise risk assessment efforts. Crowe services include: ■■ Enterprise compliance, AML, and sanctions risk assessment ■■ Formulation of policies, procedures, and programme standards ■■ AML programme assessment and future-state road map documentation ■■ Formation and optimisation of financial intelligence units ■■ Convergence of financial crimes programmes ■■ Merger and acquisition management ■■ Ongoing advisory services and thought leadership ■■ Business-as-usual support and optimisation ■■ Annual and ongoing AML, and Sanctions training Crowe also has extensive experience helping institutions with exam preparation and management and maintaining compliance with global trade and economic sanctions requirements.

Customer Due Diligence

Know your customer (KYC), CDD, and accurate customer risk rating capabilities are essential components of an effective AML programme. Crowe offers in-depth knowledge and technological expertise in helping institutions: ■■ Establish enhanced due diligence (EDD) processes and procedures ■■ Support business-as-usual EDD reviews ■■ Design and develop customer risk rating models ■■ Implement CDD and single-customer-view systems ■■ Design and execute calibration for customer risk rating models ■■ Validate CDD and customer risk rating models

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Anti-Money Laundering: You Can’t Afford the Risks

Suspicious Activity Monitoring

Crowe offers ongoing support in the design, development, and implementation of transaction monitoring systems, including system assessment, system enhancement, and pre- and post-implementation calibration and validation. Services include: ■■ Alert triage to support business-as-usual processes ■■ Designing, developing, and implementing suspicious activity monitoring models ■■ Designing and executing calibration for suspicious activity models ■■ Validating suspicious activity models

Investigations and Reporting

Along with supporting regulatory mandated look-backs, Crowe provides suspicious activity monitoring, enhanced due diligence, and sanctions alert review services.

Crowe brings experienced investigators to support business-as-usual processes and also assists with the optimisation of AML compliance operations teams and investigations units.

Data Management

As BSA/AML programmes increase their reliance on technology for effective and efficient compliance, data management, and quality grow in importance. Crowe provides services to assist with: ■■ Mapping and integrating data sources to AML systems ■■ Assessing data quality and completeness ■■ Developing data management strategies ■■ Leveraging data visualisation tools to support AML compliance and reporting

Technology

Through collaboration with clients and extensive experience, Crowe has developed technology solutions that support and bring efficiency to AML programme components. This technology includes: ■■ Crowe Model Risk Manager – assists institutions with supporting an end-to-end model risk management programme ■■ Crowe Dynamic Customer Insight – facilitates the collection of customer information, evaluation of customer risk rating, and execution of enhanced due diligence, and high risk customer reviews ■■ Crowe Caliber – assists institutions in calibrating their transaction monitoring systems and the associated parameters, adding efficiency to the tuning process ■■ CARS® (Crowe Activity Review System) solution – leverages dynamic questioning and automated narrative generation to significantly reduce the amount of effort required to review suspicious activity alerts

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Anti-Money Laundering: You Can’t Afford the Risks

Crowe Horwath LLP: The Unique Alternative® Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting, consulting, and technology firms in the United States. Under its core purpose of “Building Value with Values,®” Crowe uses its deep industry expertise to provide audit services to public and private entities while also helping clients reach their goals with tax, advisory, risk, and performance services. With offices coast to coast and 3,000 personnel, Crowe is recognised by many organisations as one of the country’s best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest global accounting networks in the world. The network consists of more than 200 independent accounting and advisory services firms in more than 120 countries around the world.

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Contact Information Clayton Mitchell +44 (0) 20 3457 7129 clayton.mitchell@crowehorwath.com

www.crowehorwath.com/AML @Crowe_AML

Š Crowe Horwath Global Risk Consulting, Independent Member of Crowe Horwath International

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