Key Anti-Money Laundering Phases



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Let's be honest, AML can sound like a whole different language sometimes. You hear these phrases in presentations or articles, and you're thinking, "What does that even mean?" But it feels awkward to ask. We totally get it! So, we've created a friendly guide explaining those frequently used AML terms that everyone seems to assume you know.


Please bookmark this page as we will be adding new phrase to it and it is also a handle resource for you.
 Phrase Meaning
Emerging Risk An Emerging Risk is a new risk or a familiar risk  in a new or unfamiliar context. Emerging risk are not always understood but are regarded as significant. National Risk assessments and sectoral risk assessment may refer to emerging risks
 Red Flags Sometime also called Risk Indicators.  This is a warning signal, some thing that you should lead you to make more inquiries. You should document observed Red Flags, and consider what action you wish to take as a result. 
 Risk Appetite Your AML risk appetite defines how much money laundering risk your firm is willing to take on to meet its business objectives. It's the line in the sand for what level of risk is acceptable.

Setting a clear AML risk appetite is key for making good decisions and establishing your firm's stance on managing these risks. It requires carefully considering how much risk you can tolerate while still meeting all the legal requirements.

 Risk Identification 

Risk assessment in AML is about pinpointing and sorting the potential dangers to your business. Typically, there are five key areas to consider:

  • Clients: Understanding who your customers are, how they became clients, their characteristics, and their potential risk level.
  • Products/Services: Assessing if what you offer could be more susceptible to money laundering risks. For example, certain sectors like legal services are flagged as higher risk in national assessments, and sector-specific reports can offer more detail.
  • Geography: Looking at where you operate, your base of operations, and any geographical risks you might face.
  • Transactions: Evaluating if the transactions themselves carry a risk of money laundering, terrorist financing, or other illegal activities.
  • Delivery Channels: Considering how you provide your services to clients and the inherent risks in those methods.
  
Categories -
AML
Tags -
AML Sanctions Legal Regulation Best Practice Guidance Due Diligence Identification Verification LSAG Red Flags