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How mutual integrity enhances AML independent testing

Ralph D. Wright, Sarah Harmon
8/22/2022
How mutual integrity enhances AML independent testing

Improve the AML independent testing process by confirming the elements required for smooth, productive collaboration are in place.

A Bank Secrecy Act (BSA) and anti-money laundering (AML) independent testing process operates under a singular purpose. The mission is to help the organization’s AML program comply with regulations and aid leadership in enhancing and running a program that’s robust, resilient, and sustainable.

AML independent testing is, for all intents and purposes, an internal audit of the bank’s AML program. As every internal auditor knows, a meaningful, value-added internal audit process requires many collaborative elements. And sometimes, even though everyone is working toward the same goal, those collaborative pieces don’t quite fall into alignment.

So, why do team alignment issues occasionally arise during an internal audit process such as AML independent testing – and what can AML independent testers and second-line compliance specialists do about it?

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What’s standing in the way of great AML and financial crime testing relationships?

What’s standing in the way of great AML and financial crime testing relationships? - AML independent testing is the last line of defense.

Often, challenges during an AML independent testing process arise because of one or more of the following factors:

  • Testing results. AML independent testing findings help an AML program improve and evolve, but findings and remediation efforts can lead to additional short-term obligations and resource requirements for the program and the AML professionals who run it.
  • Time. Day-to-day work doesn’t disappear when an internal auditor arrives. Auditees might worry they don’t have enough time to support internal auditor requests for documentation and meetings on top of daily activities.
  • Communication. If the internal auditor hasn’t had enough time to review AML program documentation and learn the workings of the program, the auditee might perceive that the audit conversation lacks depth. Meanwhile, if the internal auditor doesn’t receive accurate, timely, and necessary information from the auditee, then the auditor might lack the context to generate comprehensive and insightful internal audit reports.

When these challenges affect the internal audit process and prevent internal auditors from gathering vital information, it’s important to remember what’s at stake. Like any type of internal audit, AML independent testing is a third-line function, and it’s the organization’s last line of defense. If third-line testing fails to uncover a critical issue because testers lacked the necessary information, the issue could lead to a regulatory action or an unfavorable headline in the news.

Meaningful and productive AML independent testing relationships require commitment from all parties

Meaningful and productive AML independent testing relationships require commitment from all parties

To overcome the potential pitfalls in an AML independent testing process, both third-line testers and second-line AML professionals must recognize that all parties are working toward the same purpose. Everyone involved – from the organization’s BSA/AML compliance officer to an analyst or tester – wants to strengthen the company’s AML program and meet regulatory expectations.

With that mutual understanding in mind, testers and AML professionals need to assess their individual responsibilities within the AML independent testing process. Then, all parties must commit to approaching compliance testing with openness, conscientiousness, and mutual respect.

For AML professionals, that means dedication to self-disclosure, honesty, availability, and promptness. For third-line testers, it means coming prepared to hold insightful, probing discussions and follow-up conversations based on a thorough understanding of the organization’s AML program. And for leaders in the organization, it means making sure that both second- and third-line professionals have the time and resources to participate fully in the AML independent testing process.

Outsourced AML expertise can strengthen relationships and build organizational confidence

Outsourced AML expertise can strengthen relationships and build organizational confidence - Start every internal audit from a place of confidence.

AML programs are highly complex, as are the regulations that govern them. And the world of AML is constantly evolving. Changes in customer behavior, new types of risks, and increasingly sophisticated criminal activity all contribute to the need for frequent tuning of AML scenarios and models.

All this complexity can make it hard for an organization’s internal audit teams, who must audit many areas of the bank, to keep up with the unique needs of an AML compliance program. It takes dedicated expertise to design an AML independent test plan and build testing activities that can root out potential issues or inefficiencies in the AML program. Additionally, new regulations or a regulatory enforcement action can increase the pressure on an organization’s internal AML independent testing team to unsustainable levels.

See how Crowe can help. 
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Dedicated, experienced specialists from a proven outsourced provider of AML independent testing can help organizations:

  • Augment AML independent testing resources and transfer knowledge
  • Collaborate efficiently with AML professionals to develop better, more comprehensive test plans and techniques
  • Provide perspective about the latest developments in AML and suggest ways AML teams can respond
  • Implement data analytics that improve sampling, increase the efficiency of the audit process, and deliver enhanced reporting with visual insights
  • Create confidence regarding the AML program’s ability to meet regulatory expectations and identify suspicious activity

When all stakeholders feel confident about the strength and trajectory of your organization’s AML program, third-line testers and AML professionals can start every internal audit process and conversation from a place of mutual confidence. From there, fostering great relationships between AML independent testers and compliance specialists becomes easier than ever.

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Crowe specialists provide precise, tailored, efficient AML and sanctions independent testing that aligns with regulatory expectations and creates stakeholder confidence. Contact one of our specialists today, and let’s explore what we can do for your program.
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Ralph D. Wright
Principal, Financial Services Consulting
+1 630 586 5203
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Sarah Harmon
Sarah Harmon
Financial Services Consulting
+1 404 495 7141