The Plain English Version

Money laundering is the process of making criminal proceeds appear legitimate. Anti-money laundering rules require firms to know who their customers are, monitor transactions for suspicious patterns, and report concerns to the relevant authorities.

AML obligations apply to banks, payment firms, lenders, insurers, law firms, accountants, estate agents, and increasingly to crypto asset businesses. If your firm handles other people's money or assets, AML rules almost certainly apply to you.

Core AML Obligations

  • Customer Due Diligence (CDD) - Verify the identity of customers before onboarding and monitor relationships on an ongoing basis.
  • Enhanced Due Diligence (EDD) - Apply additional scrutiny to higher-risk customers, including Politically Exposed Persons and customers from high-risk jurisdictions.
  • Transaction Monitoring - Detect unusual patterns such as structuring, rapid in-and-out movement of funds, and counterparty concentration.
  • Suspicious Activity Reporting (SAR) - File reports with the National Crime Agency (UK) or relevant financial intelligence unit when suspicion arises.
  • Record Keeping - Retain CDD records, transaction records, and SAR documentation for the required period.
  • Training - Ensure all relevant staff understand AML obligations and can recognise red flags.

The MLRO

Every regulated firm must appoint a Money Laundering Reporting Officer (MLRO). The MLRO is the nominated officer under the applicable AML legislation, responsible for receiving internal suspicion reports, deciding whether to file SARs, and overseeing the AML programme.

The Business-Wide Risk Assessment

Regulators expect every firm to conduct a Business-Wide Risk Assessment (BWRA) that documents the money laundering and terrorist financing risks inherent in the business. The BWRA covers customer risk, product risk, geographic risk, channel risk, and typology risk. It is the foundation of a risk-based AML programme and the first document a regulator will ask for on an inspection.

Key Regulatory Frameworks

  • FATF 40 Recommendations - The global standard against which all national AML regimes are assessed.
  • UK: MLR 2017, POCA 2002, FCA Handbook, JMLSG Guidance - The primary UK regime.
  • EU: AMLD6 - The Sixth Anti-Money Laundering Directive, applicable across EU member states.
  • US: BSA, FinCEN, OFAC - The US federal AML framework.
  • Saudi Arabia: SAMA AML Law - Applies to firms supervised by SAMA.
  • Mexico: LFPIORPI, CNBV - The Mexican AML regime for financial entities.

Want to Know More?

RateYourCyber's Financial Crime Compliance (FCC) module handles the governance and evidence work that AML compliance officers do by hand: business-wide risk assessment, obligations register, risk appetite management, tabletop exercises, and Board and regulator reporting.

Read: Financial Crime Compliance Is Now Live on RateYourCyber