A Guide To AML Regulations in 2024
by Rory Traynor
Compliance managers play a vital role in mitigating risks by establishing robust policies, conducting audits, and providing training to employees.
They help maintain the integrity of business operations, build trust with stakeholders, and safeguard the company's reputation.
Despite this, compliance managers are faced with endless obstacles that can inhibit the work they can achieve.
Why is Compliance Important?
Any business in a regulated industry has to adhere to laws and regulations across its operations.
For compliance managers, this means maintaining a clear audit trail. However, despite the cost associated with the required processes, the importance of compliance fuels businesses’ efforts to master these processes to reach the standards set.
This motivation is also powered by the threat of large fines, expensive lawsuits, and even criminal prosecution. When compliance requirements are not followed, these penalties can quickly destabilise a business’s solvency, leaving it vulnerable to potential bankruptcy and loss of revenue.
Beyond the regulatory pressures, compliance regulations can help to establish internal processes for safeguarding sensitive information. This can improve business continuity and ethical practices by ensuring accurate and consistent data management, minimising downtime and the damage this can bring.
The depth of requirements across different industries underscores the importance of compliance, as many have specific regulations tailored to their operations (e.g., HIPAA for healthcare).
For compliance managers, it is essential to identify and adhere to industry-specific compliance standards relevant to the organisation. The complexity behind different business operations reveals many pitfalls for companies to fall into, further emphasising how vital compliance measures are.
Throughout this process, continuous improvement is expected of businesses, as regular reviews and updates keep compliance managers one step ahead of evolving regulations. This is especially important as criminals become more sophisticated, using new tactics to remain undetected.
Take a look at our article that dives deep into the importance of compliance for the full picture.
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Compliance Manager Requirements
A compliance manager is governed by a strict set of rules formulated by regulatory bodies, shaping their working day.
Throughout their career, they will have to create and enforce compliance policies and procedures to ensure adherence to the relevant regulations, alongside regular reviewing of these operations to identify compliance risks.
They are also often expected to provide training sessions to employees on compliance-related matters, promoting understanding and awareness of the established standards.
Beyond this, compliance managers are required to conduct risk assessments to identify potential areas of non-compliance and develop strategies to mitigate this risk. This is especially important when investigating compliance breaches and implementing corrective actions to prevent a recurrence.
Across their career, compliance managers will also have to maintain accurate records of compliance activities and prepare reports for regulatory authorities as required, keeping up to date with relevant laws and regulations and advising management on necessary adjustments in response.
Compliance is not just about following rules but also about supporting a positive customer experience whilst maintaining clear and accurate audit trails. But, this is often easier said, than done.
Obstacles for Compliance Managers
Keeping up with constantly evolving regulations and compliance requirements across various jurisdictions is a challenge for any compliance manager. However, internal limitations can cause the most friction across their work.
Often businesses have resource constraints, limiting the budget and manpower needed to effectively manage compliance initiatives. Overcoming resistance or lack of buy-in from employees and stakeholders towards compliance measures can take time, however, the potential consequences of non-compliance will likely cost businesses more in the long run.
Providing ongoing training and education to reinforce their understanding can effectively communicate compliance requirements and expectations across departments.
There are also additional pressures of preparing for internal audits and safeguarding sensitive information.
However, many compliance managers would agree that referrals are incredibly frustrating.
Whenever an AML check is conducted on a new client, customer, or supplier, compliance managers must handle any referrals.
A 'referred' result, or a ‘referral’, is the term used to describe the process in which the total amount of successful IDs and addresses returned by the system is less than required to pass the AML check.
This immediately creates a problem, as additional time and resources must be allocated to the case, leading to higher compliance costs for businesses.
This frustration is also passed onto the customer, as referrals require additional investigation, delaying the onboarding process, and creating a worse customer experience. This leads to customer dissatisfaction and potential revenue loss, even deterring customers who seek swift and convenient services.
How RFA Reduces Referral Rates for Compliance Managers
Managing referrals adds complexity to compliance processes, increasing the operational burden on staff and potentially impacting productivity.
Over time, prolonged or repeated referrals may give the impression that the business is inefficient or incapable of managing compliance effectively, harming its reputation.
This can quickly bleed over to regulatory authorities, who may begin to question the effectiveness of a business's AML program if referrals are frequent, leading to increased regulatory scrutiny and potential penalties.
With Red Flag Alert, compliance managers can immediately reduce the number of referrals their AML checks result in. In just a few clicks, AML checks can be completed and confirmed, stored securely to ensure a clear and compliant audit trail is available.
By leveraging technology to reduce human error and risk, Red Flag Alert users can immediately reduce the amount of time spent on AML compliance, creating faster processes and smoother onboarding.
Not only are these straightforward checks easy for the business, but the customer benefits too. There’s no need to send sensitive documents through email or other less secure methods, instead, Red Flag Alert’s industry-leading AML solutions allow the customer to quickly scan and upload securely.
Once the information has been inputted, our machine-learning program will use multi-bureau analysis to cross-reference the information and return a 98% accurate result.
Avoid the Pitfalls of Human Error with Red Flag Alert
By the end of 2023, it was reported by the IGI that businesses in the UK lost an estimated £98.6 billion annually due to human error.
With Red Flag Alert, you can immediately minimise human error thanks to our complete suite of digital tools, designed to automate AML processes and improve efficiency across the board.
Don’t fall victim to human error - get in touch with our team today to discuss how your business can benefit from our support, and calculate how much your business can save with our AML ROI calculator.
