Four steps to a risk-based approach to AML in auditing and accounting
Updated 2024-07-22
Published 2024-02-09
Updated 2024-07-22
Published 2024-02-09
The EU's Anti-Money Laundering Directives (AMLDs) require auditors and accountants to use a risk-based approach against money laundering and terrorist financing.
This approach entails adopting compliance measures according to the specific risks encountered. It is a flexible and structured approach to managing the risks of money laundering and terrorist financing.
A risk-based approach requires a high level of preparation, which can present some challenges.
To effectively implement a risk-based approach, you must consider the following four steps:
The first step is identifying the scope of the business's audit and accounting services and their potential risks, such as being involved in or facilitating money laundering.
The scope should look at internal and external factors, such as:
The second step towards adopting a risk-based approach to anti-money laundering is to assess the level and nature of the risks.
This involves risk assessments measuring the likelihood and impact of each risk relating to processes, activities or assets. The risk assessments should be documented and based on a consistent and transparent methodology.
The risk assessments should then be approved by management and other stakeholders.
The third step is to implement a risk-based programme that includes:
The fourth step is to continuously review the risks and effectiveness of the implemented measures.
You should also keep up-to-date with the changes in financial crime risks and adapt your compliance processes and practices accordingly.
To successfully put in place a risk-based approach, you need to adopt continuous improvement practices, such as: