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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3
Crowe Horwath
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.
4
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
5
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.
7
Crowe Horwath
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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9
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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11
Contact Information
Clayton Mitchell
+44 (0) 20 3457 7129
clayton.mitchell@crowehorwath.com
www.crowehorwath.com/AML
@Crowe_AML
© Crowe Horwath Global Risk Consulting, Independent Member of Crowe Horwath International
RISK-16001-011B