Transaction testing:
How it is conducted ➡ Reviewing a sample of transactions to identify potential instances of money laundering or terrorist financing.
Purpose 👉 To identify weaknesses in the AML program and provide an opportunity to address them.
Customer testing:
How it is conducted ➡ Reviewing a sample of customer files to ensure that customer due diligence and enhanced due diligence measures have been properly performed.
Purpose 👉 To identify gaps in the customer onboarding process and ensure that the AML program is effectively identifying high-risk customers.
Scenario-based testing:
How it is conducted ➡ Testing the AML program’s response to hypothetical scenarios, such as a suspicious transaction or a customer with high-risk characteristics.
Purpose 👉 To identify gaps in the AML program’s detection and reporting capabilities.
System testing:
How it is conducted ➡ Testing the effectiveness of the AML system in place, including transaction monitoring systems and customer risk assessment tools.
Purpose 👉 To identify weaknesses in the technology infrastructure and provide an opportunity to improve system effectiveness.
Independent audits:
How it is conducted ➡ Often conducted by third-party auditors to assess the effectiveness of the AML program.
Purpose 👉 The auditor will review the program’s policies, procedures, and controls to identify gaps and provide recommendations for improvement.
By performing these types of testing, you can identify areas where your AML program may be falling short and take steps to improve its effectiveness.
It’s essential to perform regular testing to ensure that the AML program remains effective and compliant with regulatory requirements.
What other activities do you perform to test the effectiveness of your AML program?
