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Anti Money Laundering Framework

Anti Money Laundering Capability Model and Application Architecture in Banking

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Anti Money Laundering Framework

  1. 1. Anti Money Laundering Framework Nikat Malik April 2014 All Rights Reserved
  2. 2. The AML Business Context AML Framework Policy Driver Procedures Controls Audit Customers Impact Employees RegulatorMarket Unlawful Payments Event Fraudulent Transactions Cross Border Reg. Breech Tax Evasion Conduct & Market Abuse Screening Capability Transaction Monitoring Payment Filtering On Boarding Remediation Analytics & Intelligence Result Risk Management Operational / Regulatory / Data / Security / Reputation
  3. 3. AML Capability Model AML Framework Governance Ownership Responsibility Communication Risk Organisation Risk Based Approach Client On Boarding Transaction Monitoring On Going Management Client Risk Profiling Client Screening Client Due Diligence Client Acceptance Identify & Track Suspicious Transactions On Going Client Due Diligence Investigation of Alerts Product Due Diligence Monitoring Versus Expected Activity On Going Screening Enhanced Due Diligence Training Succession PlanningInformation Resource Skills & Knowledge MLRO Report Suspicious Activity & Alert Management Compliance Reporting Management Information Case Management Payment Filtering Behaviour Profiling Continuous Innovation Client Profiling Methods Monitoring & Detection Methods Operational Risk Review Methods Best Practice Methods Life Cycle Client Experience Analytics Methods
  4. 4. AML Direction & Target State AML Framework Risk Organisation Risk Based Approach Client On Boarding Transaction Monitoring On Going Management Skills & Knowledge Management Information Continuous Innovation Capability Current State Target State Insufficient business oversight of AML risk and inadequate engagement with AML stakeholders Effective and consistent AML processes and automated workflow driven by risk category Defined applicable scenarios, complete coverage, analytics measured with expected behaviour In-depth, consistent, periodic and involved reviews with formal governance & technology On-going appropriate training, and customised tools and specialist support made available Applied rule based, data driven fit-for-purpose information on a timely basis Inconsistent AML processes, and manual workflow Inconsistent review process, limited reviews, insufficient front office input Basic AML training, inadequate awareness, no specialist support or advanced tools available Inefficient MLRO reporting, management information not fit-for-purpose No programme of continuous innovation or enhancement Limited coverage, inconsistent application and ambiguous direction Full business engagement and accountability of AML risk including formal AML governance Consistent application, defined direction, structure and categorisation On-going enhancement of AML practice, adoption of best practice principle Complex scenarios, inadequate coverage & segmentation, ad-hoc alert management
  5. 5. AML Investigative Methodology AML Framework Determine Need Investigative Analytics Collect Data Investigative Process Assessment Action Plan Examine and evaluate data for reliability, completeness, validity and relevance; integrate data for analysis; determine additional required research; assess events and impact Examine investigative results; utilize analytics to determine completeness and currency to proceed with investigation including modification of process as required Define data to be collected and methods; case reviews, investigation of suspicious activity; audit reports and external regulatory reviews including adverse media; results of periodic and ad-hoc investigations Ascertain need and determine investigative priorities at all applicable levels including involvement of required personnel; define scope and obtain acceptance Discuss results with stakeholders; evaluate driving factors; review alerts and suspicious activity triggers; agree investigation results; table evolving trends and patterns of activity & investigations Confirm actionable items; affix responsibility and timeline to implement actions; redefine requirements of stakeholders; agree review plan TRIGGERS Business Risk Assessment EDD Referrals Audits / QA Regulation / Law Enforcement Suspicious Activity Cases Adverse Media
  6. 6. Integrated Target Architecture AML Framework • KPI • Summarised Reports • Detailed Drill Down Reports • Case Management • Breech and Open Issues • User Customised View  Board  Group / Division / BU  Regulator • Query Handling • Alerts • Handbook / Training • Risk Based Profiling  Customer  Transaction  Business Unit Dashboard & Presentation Layer Generates • Predictive / Pre Event Analysis • Post Event Analysis • Behaviour Profiling • Detection Methodology • Materiality Based Mining • Payment Filtering • On-Boarding / On-Going Matching ForensicTool Analytics & Intelligence Mining • Target KPI • Specific Reports • Exception Reporting • Remediation • Cases / Issues Business Services Operations Risk Compliance Regulator • Report Reconciliation Engine • Integrated Report Structure • Slice & Dice Capability Report Generation Engine Data Screening Tool Business Rules Data Rules • Finance & Compliance Reconciled Common data for all Regulator AND Management Reporting • Data Management Structure – Sourcing Peculiarities / Reconciliation Procedure • Data Gaps / Sources / Cleansing / De-duplication / Profiling – Data Set Management Tools • KYC and Event Data Data Layer
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Anti Money Laundering Capability Model and Application Architecture in Banking


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