Independent Review of Anti-Money Laundering Programs for Financial Institutions

The Financial Crimes Enforcement Network (FinCEN) requires money services businesses to establish robust anti-money laundering (AML) programs that include an independent review function. This article outlines the key points and guidelines for conducting such reviews.

Key Requirements

Independent Review Requirement

• Money services businesses must establish AML programs with an independent audit function to test programs.
• The scope and frequency of the review should be commensurate with the risk of the financial services provided by the money services business.

Conducting the Review

• The review can be conducted by an officer or employee of the money services business, as long as the reviewer is not the person designated in paragraph (d)(2) of this section.
• The primary purpose of the independent review is to monitor the adequacy of the AML program and determine whether the business is operating in compliance with the requirements of the Bank Secrecy Act and its own policies and procedures.

Documentation Requirements

• The person or persons responsible for conducting the review should document:
  • The scope of the review
  • Procedures performed
  • Transaction testing completed (if any)
  • Findings of the review
  • Recommendations to management for corrective actions (if any)

Tracking Deficiencies and Corrective Actions

• After the review, the reviewer or the designated compliance officer should track deficiencies and weaknesses discovered during the review and document corrective actions taken by the money services business.

Purpose of Independent Review

The primary purpose of an independent review is to ensure that financial institutions have adequate AML programs in place to prevent and detect financial crimes. By following these guidelines, financial institutions can maintain a strong compliance posture and mitigate the risk of financial crime.