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AML compliance improves, despite three warnings

Advisers are better understanding their AML/CFT obligations, the Financial Markets Authority says.

Wednesday, February 17th 2016, 6:00AM

by Susan Edmunds

It has released its latest monitoring report for July 1, 2014, to June 30, 2015.

The FMA supervises 800 firms and individuals for AML compliance, of whom two-thirds define themselves as financial advisers.

The report said those reporting entities had made efforts to ensure they were complying with the AML/CFT Act.

But it said its team were still seeing a lack of senior management oversight, irregular AML/CFT reporting to senior management, not enough clear AML/CFT controls in procedures, insufficient ongoing customer due diligence (CDD) and monitoring and insufficient or unclear information on the nature and the purpose of the business relationship with some customers.

Liam Mason, director of regulation at the FMA said the sort of controls firms should consider adopting included a written programme of staff training, a regular internal review of new customer files to ensure CDD requirements were met, regular reviews of transactions, regular reporting to enssure management of AML/CFT matters and regular review and testing of the AML/CFT programme.

“The AML/CFT programme compliance is not a separate activity to the business; it is an essential element of day-to-day business operations and must always be followed."

Three formal warnings were issued during the year for significant breaches of the Act. They included not meeting key obligations in a risk assessment or compliance programme and failing to provide and independent audit report.

It said its future monitoring it would focus on senior management and board oversight of AMl/CFT policies, firms’ ongoing CDD and unusual transactions.

Mason said advisers’ understanding of what they needed to do was improving.  “Awareness of the AML/CFT Act and advisers’ obligations has certainly grown since our original monitoring report last year. Firms and individuals better understand our expectations and have improved their systems and processes to ensure compliance with the Act."

Compliance specialist Gavin Austin, of ABC, helps firms meet their AML requirements and conducts audits.

He said there was nothing very surprising in the report.

“We had found that there was often lack of clear AML/CFT controls.  Other findings were very similar [to ours] with regard to reviewing the risk Assessments and programmes and we had also noticed that after the initial training of staff there were no clear plans to provide refresher training. 

“The increase in the number of politically exposed persons (PEP) was surprising to us as no one we audited indicated they had anyone in that category, but we also noticed that if they did then they didn’t have a process to follow or they just didn’t know what to do next.”

Tags: FMA

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