AML risk management vs. the compliance program: how to establish an effective synergy

What it is about

Francisco González, of KPMG Dominicana, explained at the Second Annual Risk Conference (September 26, 2024) how risk management and the anti-money laundering (AML) program can complement each other instead of working separately.

The 17 slides define both approaches and the basic elements of an AML program, explain what the synergy consists of and why it matters, its benefits and challenges, how to measure its success and which strategies to apply, with examples of good practice (Banco Santander) and failure (the 2012 fine on HSBC).

Objectives

• Explain what the synergy between the risk function and the anti-money laundering program consists of.
• Identify its benefits and the usual challenges in achieving it.
• Provide strategies and indicators to build it and measure its success.

Key takeaways

1. The AML program helps prevent fraud, corruption and other financial crimes, and its basic elements include policies, a compliance officer, training, monitoring and reporting, internal controls, risk self-assessment and independent review.
2. The synergy rests on a risk-based approach, integrated systems and communication between both teams, with common objectives such as risk assessment of new products, processes and segments.
3. Its benefits include improved risk detection, lower costs by avoiding duplication and a stronger corporate culture.
4. The most common challenges are lack of internal coordination, resistance to change, regulatory complexity, technology limitations and insufficient resources.
5. The HSBC case, fined US$1.9 billion in 2012 for failing to implement adequate controls, is cited as an example of lack of integration between compliance and risk management.