A quick sense-check before your next supervisory review
The following issues are commonly identified during AML/CFT supervisory reviews. If several apply to your firm, it may be worth reviewing your framework.
1. Risk Assessment Exists but Has Not Been Updated
Your risk assessment still reflects the firm as it operated several years ago and has not been updated to reflect current clients, services, or guidance.
2. Compliance Programme Does Not Reflect Practice
Procedures described in the programme do not match what staff actually do when onboarding clients or handling trust account funds.
3. Risk Ratings Are Applied but Not Revisited
Clients are risk-rated at onboarding but there is no process to reconsider risk when a new matter arises or circumstances change.
4. Source of Funds or Source of Wealth Is Not Consistently Considered
CDD is completed, but there is limited documentation explaining where funds originate, particularly in higher-risk matters.
5. Beneficial Ownership Is Not Fully Mapped
Trusts, companies, or other entities are recorded, but the individuals who ultimately own or control them are not clearly identified.
6. Monitoring Focuses Only on Onboarding
CDD is completed at the start of the relationship but there is limited monitoring of transactions or activity during the course of the matter.
7. High-Risk Clients Are Not Actively Managed
Clients assessed as higher risk remain on the same monitoring level as lower-risk clients.
8. Independent Audit Findings Have Not Been Fully Addressed
An audit has been completed but recommendations have not been fully implemented or documented.
9. Staff Are Uncertain About Suspicious Activity Reporting
Lawyers and staff may recognise unusual activity but are unsure when and how to escalate concerns internally.
10. AML Documentation Is Difficult to Produce Quickly
If asked by a supervisor, the firm would struggle to quickly provide its current risk assessment, compliance programme, monitoring records, and training documentation.
A Practical Question
If a supervisory review were to occur tomorrow, could your firm demonstrate that its AML/CFT framework is current, implemented, and operating in practice?
Elaine Ramsay
AML / CFT Consultant
The AML Space
Christchurch, New Zealand
Supporting law firms with practical AML/CFT reviews, risk assessments, compliance programmes, and audit preparation.
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