In today's globalized financial landscape, effective Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) measures are crucial for maintaining the integrity of financial institutions and preventing illicit activities. A well-structured AML Manual is the cornerstone of any company's compliance framework, ensuring that all employees understand and follow the necessary procedures to mitigate risks.
With this blog post, Despoina Charalampous, an expert instructor at the institute, explains the critical components of an effective AML Manual, including policy development, risk assessment and customer due diligence. Additionally, a comprehensive online self-study course is offered through the IforPE platform, titled “Complete Guide to Prepare a Compliant AML Manual in 2024”.
Towards the end of this blog post, you will find detailed information about the valuable skills and competencies acquired upon course completion and how they contribute to ensuring the complete understanding of latest regulatory updates and best practices, ensuring that participants can create a manual that meets current compliance standards and regulatory expectations.
Critical components of an AML Manual
The primary objective of an Anti-Money Laundering (AML) Manual is to establish a comprehensive framework of internal practices, procedures, and controls that guide employees in adhering to AML protocols and ensure compliance with both national and international regulations. The AML Manual of a company is applicable to all departments, and all employees of the Company are responsible for applying AML practices.
The responsible person for developing and updating the Manual is the AML Compliance officer (AMLCO), he must ensure that the Manual is aligned with AML laws and regulations and communicate the Manual to all employees. The Board of Directors (BoD) sets the general principles and approves any amendments. For the approval of each version documented meeting minutes must be in place. Additionally, the AMLCO must create a register that logs each version of the AML Manual, including the:
- Version number,
- Date of release,
- Summary of changes, and
- Name of the person responsible for the updates.
This version control register ensures transparency and allows for easy tracking of the manual's evolution over time.
Applicable Legislation
The AML Manual must reference all relevant AML and Combating the Financing of Terrorism (CFT) laws and regulations applicable to the Company’s operations and activities. It is essential that the manual be updated regularly to reflect any new or upcoming changes to these laws and regulations. In Cyprus, the main national Legislation applicable is the Prevention and Suppression of Money Laundering and Terrorist Financing Laws of 2007-2023 with further amendments in Dec 2010 by Law L. 141(I)/2024. Which sets out the basic rules that all obliged entities in Cyprus must follow to prevent and suppress ML and TF. Additionally, secondary legislation includes key directives and regulations, such as the:
- CySEC Directive 2020,
- Register of Crypto Asset Service Providers 2021-2023, and
- Register of Beneficial Owners of Express Trusts and Similar Legal Arrangements 2021-2023.
In addition to national regulations, European Union (EU) Directives also apply to obliged entities. These directives are legal acts of the EU that set specific goals for Member States to achieve, with the aim of harmonizing legislation across the EU. The applicable EU Directives are the:
- 4th AML Directive EU 2015/849,
- 5th AML Directive (EU) 2018/843,
- 6th AML Directive (EU) 2024/1640 (will repeal 4th and 5th AML Directive in July 2027), and
- Directive (EU) 2028/1673.
Risk Assessment and Customer Due Diligence
The Risk-Based Approach (RBA) involves the process of identifying, assessing and understanding the risks of ML and TF. This approach is critical because it ensures that resources are concentrated on higher-risk areas, enabling effective risk mitigation. The AML Manual must outline standard cases where high-risk situations are identified, following the European Banking Authority’s (EBA) Guidelines on ML/TF Risk Factors, which include:
1. Customer Risk,
2. Geographic Risk,
3. Product, Service and Transaction Risk, and
4. Delivery Channel Risk.
Clients must be categorised according to their risk level, which typically includes three categories: high risk, medium risk, and low risk.
For a more in-depth RBA analysis, check out our course titled “
An AML Guide in 2024: Assessing Risks, KYC, CDD, Duties & Responsibilities”.
The purpose of Customer Due Diligence (CDD) is to establish and verify the identity of clients while assessing associated risks to prevent ML/TF. Obliged entities must follow specific procedures and requirements to ensure compliance with relevant AML/CFT laws and regulations. CDD helps safeguard the integrity of operations, protect the company from financial crimes, and ensure ongoing adherence to AML/CFT regulations. The AML Manual must include clear provisions for the following CDD measures:
- Collection of additional information,
- Independent verification,
- In-depth review of transactions,
- Verification of source of funds,
- Continuous monitoring,
- Enhanced reporting,
- Senior management Approval, and
- Staff training.
These measures ensure that the company implements a robust framework for client risk assessment and ongoing compliance with AML and CFT regulations.
What is the “Complete Guide to Prepare a Compliant AML Manual in 2024” course and what does it include?
The “Complete Guide to Prepare a Compliant AML Manual in 2024” course has been developed by SALVUS Funds to provide professionals with the essential knowledge needed to create and maintain a compliant Anti-Money Laundering (AML) Manual in 2024.
This course is designed to guide participants through the intricacies of developing a robust AML Manual, including policy creation, risk assessment, customer due diligence, and ongoing monitoring procedures.
The course is suited and recommended for the annual Continuous Professional Development (CPD) requirements of Anti-Money Laundering Compliance Officers, Compliance Officers and Assistants, as well as professionals working at Cyprus Investment Firms (CIF) and other CySEC regulated entities.
- Scope of the Manual
- Version control and documentation
- Terms and Definitions
- Company information
- Contents
- Money Laundering (ML) and Terrorist Financing (TF)
- What is Money Laundering (ML)?
- The phases/stages of Money Laundering (ML) and examples
- What is Terrorist Financing (TF)?
- Differences between ML and TF
- Similarities between ML and TF
- Supervisory Authority
- Powers of the Supervisory Authority
- National Legislation
- European Legislation
- Sanctions
- High-risk jurisdictions
- Anti-Money Laundering (AML) Function
- Responsibilities
- Effectiveness, permanence & independence
- Organizational requirements
- Board of Directors
- Monitoring obligations
- AML Function – Q&As
- AML Manual; Risk Based Approach (RBA) & Customer Due Diligence (CDD)
- Risk Based Approach (RBA)
- Customer identification and due diligence
- Clients’ economic profile
- AML Manual; KYC policy and documentation
- Policies & Procedures – Compliance tips
- Client Acceptance Policy
- KYC Policy
- KYC process
- KYC documentation
- AML Manual; Procedures and Reporting
- Ongoing monitoring
- Record keeping
- Suspicious transactions
- Reliance on third parties
- Cash deposits
- Rejected – terminated accounts
- Branches & Subsidiaries
- Regulatory Reporting
- Staff education and training
- Appendices
The “Complete Guide to Prepare a Compliant AML Manual in 2024” course offers materials in both PDF slides and online video recordings, allowing for flexible, self-paced learning. Enrolled learners can study anytime and anywhere at their convenience.
After completing the course, participants can assess their understanding of the material through a set of knowledge-based questions.
The Complete Guide to Prepare a Compliant AML Manual in 2024 is a self-study course designed to provide comprehensive knowledge and practical insights into drafting and maintaining a compliant AML Manual.
The completion of this course counts toward Continuous Professional Development (CPD) annual requirements.
