Seven quick wins for financial crime compliance
Ahead of our 2024 financial crime examination feedback, we have identified seven common areas of non-compliance that should be relatively easy to address. These areas often involve measures and controls that have been implemented but are missing essential components. By reviewing and addressing these seven areas, you can enhance the effectiveness of your systems and controls to prevent money laundering, terrorist financing, and proliferation financing.
Suspicious activity report - date information
Area of non-compliance
When submitting suspicious activity reports (SARs), the employee needs to record the date the information or matter came to the employee’s attention. We see examples of SARs without this required date recorded.
Solution
Ensure this date is captured by making it a required field in your internal SAR forms and SAR register.
Suspicious activity report - reporter information
Area of non-compliance
In your SAR register, you need to record the capacity in which an individual has externalised a SAR, i.e. as money laundering reporting officer or deputy money laundering reporting officer. We see examples of SAR registers without a record of the individual who filed the SAR.
Solution
Check your SAR register records the name of the individual making an external SAR and the capacity in which they are doing so.
Inadequate screening records
Area of non-compliance
Keep adequate records of adverse media and open-source search results, including politically exposed persons (PEP) and sanctions searches. We see many examples where searches have been conducted but the entity did not document the outcome.
Solution
You can demonstrate your screening is effective by annotating search results to confirm:
- that no hits were identified
- that potential hits had been reviewed and confirmed as false positives
- the rationale for discounting hits
Inadequate screening policies and procedures
Area of non-compliance
Maintain adequate policies and procedures for adverse media and open-source searches, including politically exposed persons (PEP) and sanctions searches.
Solution
Clear policies and procedures assist employees in knowing when and how to conduct adverse media and open source searches, increasing the likelihood that your screening is effective.
Politically Exposed Persons (PEPs) - incorrect definition
Area of non-compliance
Definitions of domestic and foreign PEPs, prominent persons, prominent public functions, immediate family members and close associates need to be correct. We see examples where the definitions of PEPs in policies and procedures do not reflect those in the Money Laundering (Jersey) Order 2008.
Solution
Periodically check that your PEP-related definitions align with those in Article 15A.
Exemptions from customer due diligence requirements
Area of non-compliance
Exemptions can only be applied in certain circumstances.
Solution
Before using an exemption under Articles 17 or 18 of the Money Laundering (Jersey) Order 2008, you should ensure that none of the circumstances in Article 17A apply. It is a requirement to document the rationale for applying the exemption.
Conflicts of interest not recorded
Area of non-compliance
Conflicts of interest registers need to be kept up to date. We sometimes see incomplete registers.
Solution
Periodically review your conflicts and ensure your registers are up to date, including mitigating measures. Remember, recording a potential conflict on a register does not in itself mitigate the risk.