Money Laundering Risk Assessment Guidance

What is an AML Risk Assessment?

Businesses with anti money laundering obligations are required to carry out a risk assessment. Most importantly, the aim of this is to identify, assess and mitigate risks associated with financial crime. The FCA and HMRC are two of the bodies acting as supervisory authorities for the MLR. For instance, both have rules and guidance on the risk assessment process.

The Joint Money Laundering Steering Group also provide a wealth of information for assessing financial crime risks. In addition, in this article we provide a few of the requirements and give advice on completing an AML risk assessment.

Completing a Money Laundering Risk Assessment

How a business carries out and records an AML risk assessment may differ from sector to sector. However, the basic process is the same for all industries. As an example, the HMRC and FCA suggest: –

  • Identifying the money laundering risks that are relevant to the business
  • Carrying out a detailed risk assessment of the business (including delivery channels, products and locations.)
  • Completing a risk assessment of all customers (including types, transactions, customer behaviour)
  • Developing and implementing controls to manage and reduce the impact of the identified risks
  • Monitoring the controls and improving their efficiency
  • Maintaining adequate records of all risk assessments and controls
  • Assessing risks associated with the development of new products; the taking-on of new customers; the firm’s processes and systems and changes in the business profile, products or activities.

AML Risk Assessment Example

Here are a few ideas of how to get started with your risk assessment. Firstly, you can start by identifying any financial crime risks associated with your business. Most importantly, try to focus on areas such as your location and industry. You can also look at your products and services; customers; delivery channels and transactions.

AML Risk Assessment ExampleSecondly, assess each of the identified risks. This can be done with a risk assessment template or your existing risk procedures. This should then enable you to rate each risk in terms of impact and probability. Thus giving you the ability to prioritise the highest risks first.

In summary, an AML risk assessment should be business-wide and encompass all aspects of the company. It should also be proportionate to the size, scope and nature of the business. Most importantly, due diligence policies and procedures are an essential part of managing and mitigating financial crime risks.

AML Risk Assessment Template & AML Policy Template

The supervisory authorities advise that once a firm has completed their money laundering risk assessment, they will then need to: –

  • Put in place policies, controls and procedures to reduce any risks of money laundering as identified.
  • Monitor the business on an ongoing basis to make sure the controls are effective.
  • Identify and report any suspicious transactions or activities to the appropriate body.

Our anti-money laundering (AML) template bundles can help with all the money laundering regulation aspects. Moreover, they are fully customisable and easy to edit. Therefore, AML templates enable firms to complete an AML risk assessment; customise the AML policy and prepare due diligence documents.

Many of the MLR supervisory authorities also expect appropriate: –

  • training to be delivered to employees in relation to money laundering;
  • due diligence policies and tools for gathering and verifying information;
  • documentation of any risk management policies in relation to money laundering.

Our complete Anti Money Laundering (AML) Template & Training Toolkit covers all of the above policy templates. You can purchase the template toolkit alone or bundles with our in-house AML training workshop.

FCA Risk Assessment Templates | Risk Assessment Examples | HMRC Risk Assessments | AML Policy Template