A well trained staff is vital to ensuring an effective AML program

By Paul Hamilton | 28 January 2016

The financial services industry worldwide is challenged to respond to an ever changing AML regulatory landscape. AML as a standalone entity under compliance, to a complex and much broader function cutting across many entities and lines of businesses.

In such regions as Asia, Africa and the Middle East, financial institutions rely much more heavily on their workforce as a first line of defense against money laundering.

However, not only is the Landscape diverse and fragmented in many countries, but also the approach to training of non-AML staff. Regional differences in the provision of AML training reflect the very high level nature of regulatory training provisions. The closest example to a globally set of regulatory requirements stands within the Financial Action Task Force (FATF), which specify that firms should provide AML training in line with their national government requirements.

In Africa for example, this can be a daunting task since the country has three FATF-style regional bodies (FSRBs) coordinating efforts on AML/CFT in Africa. These are:

• Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
• Middle East and North Africa Financial Action Task Force (MENAFATF)
• Inter Governmental Action Group against Money Laundering in West Africa (GIABA)

Nobody will deny that front office staff are at a greater exposure to money laundering and corruption but the degree and frequency to which they receive training vary significantly between regions.

“Online training continues to enjoy increasing support in Africa, Asia and the Middle East along side face-to-face training which is still the most common method of training used by banks”, said Leslie Foster, Managing Director of Governance People

According to a survey (KPMG Global AML survey) in 2014, 70% of survey respondents from Asia Pacific specified that AML training was provided to middle office functions, compared to 90 percent of respondents in North America. 58 percent of respondents from Asia Pacific stated that the internal audit team receives AML training compared to 100 percent of respondents in Central and South America.

The Central Bank of the UAE and The Monetary Authority of Singapore’s has required banks in their jurisdiction to institute a training program to teach employees how to maintain appropriate records and identify, detect and report suspicious transactions in order to prevent money laundering. This makes a lot sense, since 74% of the banks rely on a diligent workforce as an important line of defense against money laundering.

Atsu Agbemabiase, Partner at A&A Consulting Limited, mentioned that “the AML effort in Ghana and in Africa is mainly reliant on human personnel or staff of banks and financial institutions rather than technology. This is seen as the most effective way to combat the menace”.

One significant concern regarding AML/CFT in Africa, Asia and the Middle East are the costs arising from AML/CFT training measures. These are especially hard to bear for those institutions serving the lower income parts of the population, including microfinance institutions, cooperatives and rural/agricultural banks, and may hence hamper financial sector development.

Leslie continued to mention that “comprehensive employee training program is a vital key to the success of an AML program and a clear regulatory expectation in most regions. An e-learning approach ensures that everyone has the same level of training across the enterprise and you get the assurance that people have an understanding of the material via the end of course test.”

Online training (or e-learning) is a very cost effective approach to rolling out a training program for all members of staff across an entire organization. E-learning providers should be able to offer tailored online courses to fit the AML policy and procedures of an organization and the regulatory requirements of the countries in which they operate. Coupled with the automatic issue of certificates and detailed reporting, it provides a robust way to present evidence of training to auditors and regulators.

As European banks continue to outsource vital parts of their AML value chain or insource important tasks such  as KYC and sanctions checks to non bank employees, there is a lesson to learn from those banks who emphasize a well trained staff as their first and most important line of defense.

By Paul Hamilton, Group Moderator and Founder, AML Knowledge Centre.

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