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Who is required to have an AML program?

April 15, 2024

6 minutes read

As crime rates increase, money laundering cases also increase!

Money laundering works as an escape gateway for criminals!

And because of this, money laundering has become a persistent issue affecting global economies.

It has been reported that the amount of money laundered per year is approximately between 2-5% of the world GDP, or $800 billion.

To deal with this rising rate of money laundering crime, laws, rules, and regulations are being introduced by authorities all over the world promptly. These anti-money laundering (AML) regulations have been made to stop criminals from passing off money gained unlawfully as legitimate revenue.

Financial organisations such as banks, NBFCs, AMCs, and fintech companies are mandatorily required to establish an AML compliance program. These organisations need to form a dedicated AML department that looks after chalking out an AML policy – the foundation stone of an effective AML compliance programme.

AML policy basically outlines the organisation’s AML program requirements and procedures in a comprehensive manner.

What is an AML Compliance Program?

An AML compliance program comprises a set of rules and procedures which are required to be strictly followed by organisations.


To avoid financial crimes/money scams.

An AML compliance program helps companies, including traditional banking organisations and such entities as defined in the regulations – like money changers and insurance providers — in uncovering suspicious transactions linked to criminal activities, such as money laundering and terrorist financing (ML/TF).

Though financial institutions fall under a common sector yet every financial institution has a different landscape and different kinds of challenges when it comes to preventing money laundering.

When establishing an AML compliance program, an organisation should take into account few considerations such as nature of its clients, international, national, and local rules, and geographical characteristics.

Hence, financial institutions need to implement and maintain a detailed AML Compliance Program according to their specific risks. Policies, practices, and internal controls should all form a part of this program to identify and stop money laundering and funding of terrorism.

Therefore, an AML compliance program is not a one-size-fits-all approach. It needs to be specifically designed to meet the requirements of the organisation and the area in which it works. The program must provide a procedure for detailed reporting and due diligence while customer verification is ongoing. The compliance officer is typically in charge of creating the AML compliance program and is also in charge of testing and updating it on regular basis.

Effective AML compliance programs

Federal Financial Institutions Examination Council (FFIEC) states that the following points must be incorporated into a BSA/AML compliance program:

  •       Existence of a  robust internal control framework to ensure continued compliance
  •       Continuous training for staff members
  •       Performance of independent testing for compliance by bank personnel or by an outside party
  •       Designation of a BSA compliance officer tasked with managing daily compliance
  •       A risk-based customer identification program (CIP) that allows an institution to establish the identity of its customers
  •       A risk-based approach for performing customer due diligence (CDD) frequently and adhering to beneficial ownership requirements as mentioned in Financial Crimes Enforcement Network (FinCEN) regulations.

Formulating a strategy-based anti-money laundering program requires:

Firstly, a focused compliance department.

Then, strong AML automation tools.

It is quite important to stay legally compliant and perform frequent audits and assessments.

Keeping a check on AML compliance costs and associated risks can be ascertained by documenting policies and effective procedures for risk assessment and mitigation strategies.

What Makes an Effective AML Compliance Program?

AML process usually involves various steps as mentioned below –

  • Know Your Customer (KYC): Organisations are required to verify the identity of their clients and the supporting documents provided by them.


To make sure that the client or business is who they say they are and is not engaged in any criminal activities.

KYC policies must be regularly updated to take into consideration any amendments in the regulations and alterations in client info to help with AML efforts.

  • Risk-Based AML Policies: Organisations must implement and follow AML policies according to exposed risks.

AML policies include what?

CDD, transaction monitoring, and unusual activity reporting.

Why are these important?

These policies assist the organisation in identifying suspicious activities and taking suitable measures.

  • Risk Assessment and Ongoing Monitoring: Organisations must continuously monitor their clients and dealings to find any clues for any unusual behaviour.


To assist organisations in real-time identification of any possible money laundering activity

and take the necessary action in due time.

Without Transaction monitoring software solutions, organisations leave themselves open to financial crimes and their adverse outcomes.

  • AML Compliance Training: Organisations need to make sure that their employees are informed and well-trained on AML compliance.


By updating training materials on a regular basis to reflect the amendments in rules, guidelines, and best practices concerning money laundering operations.

By appointing an internal compliance officer in senior management who will enforce these policies.  

  • Internal Controls and Audits: AML compliance should be routinely checked and inspected to make sure that all AML regulations are being followed.


To assist in identifying any suspicious behaviour or any abnormalities that could have gone unnoticed throughout the monitoring procedure.

Organisations need to keep their AML compliance standards up to date.

Are all companies required to adhere to AML compliance?

AML procedures are now required by law for all firms, organisations, and institutions for their operations to be permitted. This has been the result of extensive global legislation in recent years. Adherence to AML regulations is mandatory by law, particularly for financial, FinTech, and banking establishments.

AML regulations are responsible for directing the regulated sectors on how to operate and proceed online. It is the responsibility of the compliance and legal departments of the companies to ensure that all business operations adhere to the specifications set out by the AML rules of every state and nation.

How Signzy can help global businesses?

We at Signzy provide a wide range of services, products and APIs for AML screening solutions that are beneficial for your business endeavours. APIs are not just confined to automating AML and regulatory processes. They improvise them.

There are several merits of using APIs for AML and verification processes, for example,

Ø  Lesser TAT – leading to faster processing and improved customer experience

Ø  Almost zero human error

Ø  Easier to integrate business operations

Ø  In the long run, inexpensive

Ø  Removes the need for any storage space because all documents will be digitally stored

Ø  Enhanced user interface

Top-notch quality can be expected from us. Our quiver of APIs and related solutions are incredibly customizable. Organisations have the flexibility to choose which specific APIs fulfil their requirement and then we help them integrate such APIs into their workflows.

We offer more than 240 microservice APIs alone. All of our products are legally compliant, without compromising user experience.

We at Signzy facilitate easy customer journeys while enabling the progress and aspirations of financial institutions and companies.

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