Anti Money Laundering Program

Anti Money Laundering Program


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Full video transcript available below:

Hello and thank you for joining today's webinar Best Practices to Master an SEC Exam. Our presenters today join us from Northpoint Compliance, Victoria Hogan and Colleen Montemarano.

Anti-money laundering. Again, not new but so important, of course. The nature of the anti-money laundering program is very much dependent on your client base. If you have just a small number of clients or a low number of investors in a private fund, for example, and they're friends and family, your anti-laundering program is [inaudible 00:48:54] so quite different than a fund or a client adviser with thousands of clients and perhaps clients that are foreign, where the money is coming from foreign companies, which raise a higher risk. Your AML policies and procedures are going to be more robust for those folks.


Then, you want to make sure that you have client identification procedures, and you want to make sure that if you have something in writing, that's a procedure that you're following. So, if you say that you get the licenses or passports of each and every individual or client, that that's something actually you are doing. So, as the CCO, it's your responsibility or the responsibility of somebody that you've delegated to make sure that you truly are and do test checks, make sure ... Pick a client, say, "Hey, where's our documentation and file of that?" "We know who they are. We have their license. We know the source of funds," so on and so forth.


Another thing that the SEC topic the SEC calls out was monitoring for suspicious activity, and reminding folks that this is a requirement. If you see any strange movements of money, think about whether you're required to file a SAR, so one thing they need to do is you can take a time period ... This is another test ... and look at moneys given out. Pretty large transactions or any transactions that would be not expected, ask the portfolio manager, "hey, you know, "why did this client take the money out?" Perhaps they were purchasing a home or anything, fine and expected, but it could also be something else. It could be, maybe this client [inaudible 00:50:48] was breached and somebody got hold of their money and it's now moving it out. Perhaps it's elder abuse, where an elderly client is now being taken advantage of, and I'll use Colleen's terminology, to [inaudible 00:51:03] so now  now there is money being taken out of the account that wasn't planned for.


So the test that you could in this area, and remember too that as the SEC did remind us or OCEI reminded us in the 2018 Exam Priorities, that as your responsibility to fill out these activity reports.


Also, now independent testing of the AML is not required for the investment advisers, specifically. It was required for [inaudible 00:51:34] investment companies. They did mention that they will be looking to see if you have any kind of independent testing of your AML program. If your testing isn't going to be independent, there should be testing done, and it should be done on a pretty frequent basis, at least annually, depending on the risk [inaudible 00:51:56] of your firm. Again, you want to make sure, if you're saying in your compliance manual that you are, let's say, looking at the fact list for all new clients initially and in an ongoing basis, you want to make sure you do that also that you're documenting it out there.


If you're not checking the [inaudible 00:52:16] fact list right now, this is what's happening. This is what advisers are doing. They have been doing it. It's also a low cost service providers. You can do an internet search. You'll find that there are software programs where you can just input your client list and it will run it through to see if anybody appears.



This webinar was co-hosted with Victoria Hogan and Colleen Montemarano of

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