What is an AML Compliance Officer?

April 8, 2020

Compliance officers are the guardians of financial institutions and one of the last gateways for identifying financial crimes like money laundering and fraud.

The role of a compliance officer in the anti-money laundering battle cannot be understated.

A strong compliance program begins with senior management setting the standards for the rest of the organization. Compliance officers will follow the tone set by corporate leaders.

That means compliance officers must thoroughly understand their institution and be aware of areas where possible regulatory breaches may occur. The compliance officer must also effectively communicate the company’s key principles and compliance regulations.

Compliance officers are responsible for enforcing the program, which needs to be clearly articulated to every employee. That culture of compliance will help encourage all employees to engage in good conduct in order to achieve their objectives.

The chief compliance officer (CCO) is usually the head of a firm’s compliance department. Under that position come various levels of managers and compliance officers, depending on the size of the company and its corporate structure.

 

Internal policies and procedures, external regulations

 

A compliance officer ensures a company follows regulatory and legal requirements as well as internal policies and procedures.

They also work with managers and staff to ensure the institution is properly managing its regulatory risk. Each institution will set what is known as its risk appetite – whether it will be low risk or whether they are willing to take more risk with clients.

The compliance officers support the business by ensuring all actions fall under the appropriate laws and regulations and internal procedures. The senior compliance officers may be lawyers or senior accountants, but this is not always the case.

In the event of a regulatory breach, it is important for the compliance officer to report breaches as required by their policies, regulations or laws. They must also ensure measures are in place to avoid similar occurrences in the future.

 

Importance of following regulations

 

Compliance officers generally have a strong working knowledge of international, federal and state or provincial regulatory guidelines and standards. It is important to ensure those guidelines are followed  as regulators have prosecuted individuals for breaching the rules.

Recently, the Treasury Department’s financial crimes division fined a former risk officer at a regional bank in Minneapolis for failing to prevent corporate violations of anti-money laundering laws.

The former chief operational risk officer at U.S. Bank was fined $450,000 for what the Financial Crimes Enforcement Network (FinCEN) described as a failure to prevent violations of the Bank Secrecy Act.

That is not the only time an individual has been singled out. In the last few years, several compliance officers have been fined for lapses.

In 2016, a broker was fined $17 million and a former compliance officer was personally fined $250,000 and suspended for three months for widespread failures to maintain anti-money laundering programs.

In 2017, the former Chief Compliance Officer of an institution reached a settlement with FinCEN and the justice department after he was held personally responsible for his company’s anti-money laundering failures.

He paid a $250,000 penalty and was barred from working as a compliance officer for any money transmitter for three years.

In 2018, the SEC instituted cease and desist proceedings against an AML officer and issued a $20,000 fine for allowing major lapses and ignoring repeated alerts in their AML program.

 

Avoiding penalties

 

Keep in mind that regulators would prefer not to have these cases end up in fines, but they do so to show they are serious about compliance.

Guidance from the U.S. Foreign Corrupt Practices Act says “In appropriate circumstances, (regulators) may decline to pursue charges against a company based on the company’s effective compliance program, or may otherwise seek to reward a company for its program, even when that program did not prevent the particular underlying FCPA violation that gave rise to the investigation.”

Clearly, monitoring accounting and regulatory guidelines is important, as these positions require excellent analytical, project management, communication and organizational skills.

Compliance officers should possess knowledge of compliance standards and policies, audit techniques, regulatory issues, operations and procedures.

Often, candidates for senior positions require a minimum of three to five years experience directly related to compliance.

A bachelor’s degree in accounting, business, finance or a related field is usually required, and a master’s degree in business administration (MBA) or certification such as certified public accountant (CPA) is preferred for senior positions such as a CCO or chief anti-money laundering officer (CAMLO).

 

Responsibilities of chief compliance officer

 

Generally, the Chief Compliance Officer (CCO) reports to the Chief Executive Officer and is one of the most senior members of the management team. Some institutions call this position the Chief Anti-Money Laundering Officer (CAMLO). The duties of a CCO/CAMLO may include:

 

Policies and Procedures: 

  • Develop and oversee control systems to prevent or deal with legal issues, violations and internal policies
  • Evaluate and continuously revise control systems
  • Revise procedures periodically as risks become apparent
  • Prepare and implement company policies
  • Develop annual compliance work plan
  • Periodically revise the compliance plan
  • Develop whistleblower policies and programs

 

Internal Operations:

  • Work with legal team, compliance and other departments to monitor enforcement of standards and regulations
  • Identify possible compliance risks
  • Review the work of colleagues when necessary to identify compliance issues
  • Provide advice or training
  • Guide compliance teams in a productive, professional way
  • Provide guidance, advice, and/or training and educational programs
  • Provide strategic direction to the management team on compliance
  • Prepare and present clear and concise compliance reports to C-suite
  • Coordinate internal compliance review and monitoring activities
  • Independently investigate and act on matters related to compliance
  • Prepare and implement company policies
  • Evaluate and continuously revise control systems
  • Revise procedures periodically as risks become apparent
  • Provide advice or training

 

External Obligations:

  • Develop and oversee control systems to prevent or deal with legal issues, violations and internal policies
  • Work with legal team, compliance and other departments to monitor enforcement of standards and regulations
  • Identify possible compliance risks
  • Review the work of colleagues when necessary to identify compliance issues
  • Keep abreast of regulatory developments and best practices in compliance
  • Cooperate with regulators on examinations, inquiries and enforcement
  • Prepare reports for senior management and external regulatory bodies as appropriate

 

Responsibilities of compliance officer

 

The Compliance Officer reports to the CCO/CAMLO or a senior member of the management team. Their duties include:

 

Policies and Procedures:

  • Implement and review the company’s compliance program
  • Create internal controls and monitor compliance
  • Draft and revise company policies as needed
  • Educate and train employees on regulations and industry practices
  • Address concerns or questions on legal compliance
  • Keep abreast of internal standards and business requirements
  • Evaluate policies/procedures and ensure they are in line with all regulations
  • Conduct research on established banking laws to ensure non-violation of federal laws
  • Review and revise organization internal policies to prevent illegal conduct
  • Implement and adjust to new regulations passed by government bodies

 

Internal Operations:

  • Maintain knowledge of legal requirements and Anti-Money Laundering (AML) controls
  • Audit processes, practices and documents
  • Evaluate business activities to assess compliance risk
  • Ensure plans are in place for a crisis or compliance violation
  • Give compliance advice to the risk management unit of an organization
  • Liaise with the CCO to ensure proper implementation of policies
  • Oversee training of newly recruited personnel and staff
  • Conduct audits to identify areas of non-compliance and initiate solutions
  • Ensure clients carry out banking activities within acceptable legal boundaries
  • Manage compliance resources to ensure efficient operations
  • Monitor institution activities to ensure staff and management follow policies

 

External Obligations:

  • Assist and support internal and external auditors
  • Collaborate with external auditors when needed
  • Report illegal financial activities to proper authorities

 

Qualifications of compliance leadership

 

Although it can vary from jurisdiction to jurisdiction, to work in this field generally requires a Bachelor’s degree in accounting, economics, law, or in any other business discipline. Experience and industry certifications are also helpful for those seeking a position.

Some of the qualities required for success on the job include accounting, communication, and IT skills.

  • Education and Training: Bachelor’s degree in accounting, finance, law, economics, or a related business discipline.
  • Compliance certifications: This could include Certified Regulatory Compliance Manager (CRCM), Certified Regulatory and Compliance Professional (CRCP) or Certified Anti-Money Laundering Specialist (CAMS)
  • Prior experience: Experience in investment banking or financial management is often required
  • Accounting: compliance officers are able to analyze financial records to identify inconsistencies in accounts
  • Communications: Must be able to interact with bank staff to communicate compliance requirements
  • IT: Knowledge and proficiency in the use of risk management and compliance tools and systems to comply with internal policies and procedures and external regulations.

 

Essential Technology for compliance officers