AML Compliance Officers: What They Do and Why They’re Crucial

AML compliance is a crucial aspect of risk management and fraud prevention, and such compliance could never happen without AML compliance officers.

This article looks at what these AML compliance persons are, what they do, and how they benefit the organizations they work for.

What Is an AML Compliance Officer?

An AML compliance officer is a professional dedicated to ensuring that organizations are following anti-money laundering (AML) regulations and have sufficient preventative and combative measures in place to minimize organizational money laundering.

To achieve this, an AML compliance person may be responsible for the following activities and more:

• implementing applicable policies designed to curb money laundering
• optimizing operations that reduce AML (often through staff training)
• conducting audits
• assisting the authorities in escalated money laundering investigations

What Does an AML Compliance Officer Do?

An AML compliance officer manages, supervises, and enforces the anti-money laundering operations of the organization(s) they work for. One of the crucial ways that they do this is by combating AML fraud.

AML compliance persons either implement or are given their organization’s AML procedures – collectively called the business’s AML compliance program – and must ensure that the precautions are followed based on the information they’re provided.

AML compliance officers aim to inhibit organizational money laundering (taking preventive action) while also preparing themselves and their coworkers for when it does occur (which would be reactive action).

Examples of Preventive and Reactive Action in AML Compliance

Examples of the preventive and reactive actions that AML compliance officers take include:

• Research, assess, and implement AML resources and AML staff training on both the compliance of the organization and the anti-money laundering laws of the country where the organization is based. This is purely preventive action.
• Liaise with their organization’s senior management about the business’s AML best practices and inform them of any potential money-laundering vulnerabilities when applicable. This involves both preventive and reactive action.
• They carry out compliance audits and/or enforce crisis plans in the event of a confirmed money-laundering violation. This is a purely reactive action.

Responsibilities of an AML Compliance Officer

The chief responsibilities of an AML compliance officer are to oversee, manage, and administer their hiring organization’s anti-money laundering resources. AML compliance persons must be analytical and proactive. They must also maintain and act on their knowledge of AML laws and regulations in addition to their employer’s specific AML policies.

In cases where the signs of organizational financial crime should be escalated, AML compliance officers may also be tasked with working with law enforcement officials and/or financial institutions.

With all these requirements in mind, the crucial responsibilities of an AML compliance officer are as follows:

• to maintain and utilize their anti-money laundering credentials
• to maintain their authority and objectivity in anti-money laundering
• to maintain their willingness to assist law enforcement – regardless of the relationship they have with the individual(s) under investigation and their organization’s attitudes towards whistleblowing

EU AML Compliance Officer Guidelines

The European Union has its own guidelines for anti-money laundering and counter-terrorism funding (CTF), which is a major part of AML.

The EU AML compliance officer guidelines cover many topics, such as the duties, organizational frameworks, and communications involved in AML compliance.

These EU-specific guidelines were issued by the independent EU agency, the EBA (European Banking Authority), which responded to various concerns surrounding AML and CTF policies.

EBA’s Guidance for AML/CTF Compliance

The EBA issued its guidance on March 1st, 2021, to address concerns relating to the organization’s limited understanding, communication, and delegation of EU-specific AML compliance duties.

Let’s take a closer look at the previous problems in AML compliance attitudes and how the EBA has sought to tackle them:

AML Compliance Problem	EBA’s Solutions
poor communication and/or delegation of duties between AML compliance persons and the senior management of their organization	a list of recommended duties of senior managers in the context of organizational AML/CTF procedures
the public’s limited understanding of how AML and CTF compliance is implemented throughout the EU	a list of recommended duties of the AML/CTF compliance officers
the public’s limited understanding of the AML and CTF processes themselves	a list of recommended approaches for business-wide AML/CTF compliance, and an emphasis on the importance of basing those approaches on the size and organizational structure of the given business

By acting on these pitfalls, the EBA ultimately issued a set of guidelines that advised AML/CTF compliance officers and all relevant staff about how to implement an EU-specific approach to both AML and CTF.

Designation of an AML Compliance Person

The designation of one or more AML compliance persons is essential in many organizations and industries, especially those relating to AML in banking, due to the frequent money laundering attempts related to banks.

An AML compliance person ought to be authoritative, objective, and knowledgeable of financial laws, anti-fraud systems, and many other areas of AML compliance.

The areas of an organization that an AML compliance person is assigned to vary from post to post and industry to industry, but the following job roles show some core duties that an AML compliance person is designated to perform:

• attending senior management meetings about AML compliance
• leading staff training meetings about AML compliance
• gathering, preparing, and announcing organizational resources about AML compliance

What Is the Level of Seniority of an AML Compliance Officer?

AML compliance officers have vast experience and are designated to senior roles within an organization.

However, it is rare (and most often not permitted) for an AML compliance person to discipline and/or penalize any member of an organization who they believe may be guilty of money laundering. Instead, AML compliance persons are designated to consultative, senior roles within organizations, but they do not act in senior managerial capacities.

Instead, they act as authoritative advisors to senior management and more junior staff members, who may take such action themselves where required.

General Requirements of an AML Compliance Officer

The general requirements of an AML compliance officer are wide-reaching: They are legal, regulatory, and organizational in nature.

Specifically, the general requirements of an AML compliance officer are that their designation, qualifications, and performance adhere to both their government’s laws and regulations as well as the policies of their organization(s).

With this in mind, with the term general requirements we are referring to the bare minimum skills and expectations for an AML compliance officer and their appointment within their organization. These requirements involve the officer’s level of professional experience and authority:

A Minimum Level of Professional Experience

The minimum level of professional experience for an AML compliance officer involves a successful educational history (usually at the graduate level) alongside a minimum number of years of employment within a similar role.

While it may sound obvious, it’s worth reiterating that AML compliance persons are, and must always be, senior experts in anti-money laundering.

After all, no governmental laws and regulations will accommodate AML professionals at the entry-level (in fact, not even lenient organizational policies will do so), so educational and work qualifications are a must in the AML compliance industry.

A Minimum Level of Professional Authority

An AML compliance officer must have a level of professional authority that will, at the very least, see the officer guide the organization into preventing and counteracting money laundering.

Again, each and every organization has a different set of standards that determine the basic minimum qualifications and professional performance of an AML compliance officer.

These organizational needs and expectations should correlate with how much demand it has for AML measures, inclusive of the authorities’ expectations from the organization. For example, as a frequent target of money laundering attempts, a fintech company should have especially stringent requirements.

How SEON Can Help Organizational AML Compliance

AML compliance is best enforced when organizations work proactively to stop insider threats before they can even enter the business premises – as well as suspicious customers before they successfully onboard. SEON conducts and augments background checks by providing data from AML watchlists searches, email address lookups, phone lookups, and more.

Be they a customer or new hire, an AML compliance team or person can better assess whether the individual they are reviewing is suspicious or not thanks to SEON’s alternative data from data enrichment, as well as scans of crime watchlists, sanctions lists, PEP lists and more sources of AML-related data.

In addition, SEON’s fraud fighting capabilities can identify and address common AML risks and red flags, such as transaction monitoring thresholds, synthetic identities, account takeovers, etc.

For example, suppose SEON concludes that a new customer’s name appears on a PEP list. This means they are deemed to pose a high level of AML/CFT risk. This is likely to trigger a process of enhanced due diligence (EDD), where you verify the person’s identity with more scrutiny, and – if deemed safe enough – they are allowed to transact but are monitored more closely than the average customer.

With SEON, you can detect and thwart AML liabilities as well as fraudsters before they ever get the chance to threaten the organization’s compliance.

FAQ

Sources

• EBA: EBA consults on new Guidelines on the role of AML/CFT compliance officers
• Comply Advantage: What is an AML Compliance Officer?
• Garrigues: Internal control bodies: EBA publishes new guidelines on role and responsibilities of the compliance officer