Anti-money laundering – a health check for your business

High demands on AML compliance

With increasing globalization, the risk of businesses being misused for money laundering and terrorist financing has risen dramatically. Contrary to popular belief, businesses of any size can be affected. "Dirty money" doesn't only come from predicate offenses such as drug trafficking, human trafficking and prostitution. Assets derived from classic white-collar crimes such as bribery, tax evasion or fraud are also included.

AML compliance requires legally "obliged" businesses to create, implement and adhere to statutory guidelines. In meeting and implementing these primarily internal compliance requirements, businesses often lose their internal customer focus and shift the internal work (the necessary evil, so to speak) onto their customers through an even bigger flood of emails and PDFs.

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Customer focus gets lost in the jungle of legal requirements

The German Anti-Money Laundering Act (GwG) and the "application and interpretation guidance" derived from it by nearly 300 German supervisory authorities for the 16 segments of obliged entities set out a multitude of requirements and guidelines. However, they lack concrete recommendations and implementation guidelines that ensure not only compliance with legal requirements but also efficient, customer-friendly processing. Customer focus gets lost in the jungle of legal requirements, as does the concept of "digitalization". The word "digitalization" does not appear in any of the 59 sections and 2 annexes of the Anti-Money Laundering Act. Supervisory requirements relevant to implementation remain soft, elastic and open to interpretation.

Yet the Financial Action Task Force (FATF) – the global watchdog for money laundering and terrorist financing – calls for harnessing the potential of digitalization to make the fight against money laundering and terrorist financing faster, cheaper and more efficient.

With complexity growing ever faster, it becomes all the more important to find answers to the question of how to break the vicious circle between rising compliance requirements and efficient collaboration with customers.

Anti-money laundering health check – guidelines for compliance, efficiency and customer focus

For this reason, we have developed an anti-money laundering health check that, in addition to the primary goal of legal compliance, also puts efficiency and customer integration front and center.

The BetterCo health check helps GwG-obliged businesses, in a clear and concrete way, to

• understand their compliance gaps within the framework of current legal requirements,
• classify these requirements in order to close the identified gaps, and
• derive pragmatic guidelines for implementing an efficient, customer-centric anti-money laundering process

The GwG prescribes only a very simple structure, based on the concepts of risk management, internal safeguards and customer due diligence obligations for onboarding customers and monitoring customers and their transactions. We expand this structure somewhat.

Our guidelines are based on a unified business model approach in which we embed the GwG structure: good governance is the basis for deriving well-designed processes, which are implemented by a well-trained and motivated organization with modern systems, in order to also achieve a high level of customer focus.

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Combining the GwG structure with the business model approach (see figure) results in 7 categories, which we use to carry out the "anti-money laundering health check":

• Governance to derive measures for strategy and quality assurance,
• Customer onboarding processes to identify customers and verify their identity
• Risk management processes to classify, assess and mitigate risks
• Monitoring processes to track status changes caused by customers or transactions
• Organization for employee screening and training, as well as
• Systems that ensure the ability to provide information to supervisory authorities, documentation and audit-proof storage of all data, and more
• Customer collaboration – to ensure that internal requirements are not passed on to customers.

What are the "maturity levels" of our health check?

The BetterCo health check is a so-called maturity model that shows a business's strengths and weaknesses compared to a defined standard. We have aligned this standard with the Financial Maturity Model for Anti-Money-Laundering. For each of the seven categories, it distinguishes five "maturity levels":

• Not compliant – the current status does not meet any compliance requirements
• Partially compliant – the current status meets compliance requirements only partially
• Compliant – the current status meets compliance requirements but is largely email- and paper-based
• Compliant & efficient – the current status meets compliance requirements and efficiency requirements covered by systems
• Compliant & integrated – the current status meets compliance requirements and the integration requirements needed to involve customers meaningfully

Maturity models generally take a cooperative approach. By contrast, compliance audits usually produce binary results – "compliant" or "non-compliant" – and are therefore much more confrontational. While compliance audits also aim to uncover risks and possible violations of AML legislation and regulations, maturity assessments aim to guide process improvements, facilitate the embedding of cultural change and develop the organization's compliance capability.

Getting started with the health check

The BetterCo anti-money laundering health check offers an entry point at 3 levels

• Use our health check infographic to get an initial overview and assess your "maturity level" across the 7 categories defined above. Download the infographic here ->> Health check infographic

• Use our health check questionnaire to answer about 30 questions across the 7 categories. We then summarize the results of your answers in a report and provide it to you in a clear format. Start here ->>
• We are also happy to offer our consulting and support for a company-specific risk assessment, which we also carry out digitally. Contact us ->> Send a message now

Health check infographic – an assessment in just a few minutes

We provide our health check infographic so you can get an overview of our maturity model. Across the seven categories and five maturity levels, you can make an initial assessment of your "status".

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Health check questionnaire – a substantive guide in 30 minutes

To deepen your first impression, complete our health check questionnaire. It contains about 30 questions across the seven categories and takes about 15–30 minutes to complete. Using criteria provided by the questionnaire, you rate your compliance status on a scale from "1 – no alignment" to "5 – high alignment".

You can record comments on the questions and complete the questionnaire in several sessions (as long as you don't ask us to delete your data). As a result, you receive a report with the questions, your answers and comments, plus an overview of your status in the form of a radar chart (often also called a polar or spider chart – see example below)

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Health check audit – a comprehensive risk assessment in a few days

We are also happy to offer our consulting and support for a company-specific risk assessment, which, like the questionnaire, we also carry out digitally. For this, we work with certified Anti-Money Laundering Officers.

Through expert interviews and analysis of company documents, we work with you to analyze the business, its field of activity, employee reliability and customer structure. Based on more than 100 questions, we determine to what extent anti-money laundering rules apply.

As a result, the internal structures needed to fulfill GwG obligations are put in place. Together with you, we develop company-specific typologies. The results are documented and assessed in a risk report.

Together, we ensure that the business cannot be misused for money laundering and terrorist financing. Personal liability risks are highlighted.

Compliance audit To meet due diligence obligations and KYC requirements, comprehensive compliance reviews are necessary. A solid compliance review process ensures that your business is fully compliant and adheres to all GwG regulations.

Conclusion

The anti-money laundering health check is an important tool for complying with anti-money laundering legislation. It provides an overview of the law's requirements and obligations and gives a clear picture of the current situation. This enables businesses to take action to improve their compliance and minimize their risks.

Our broader view of AML compliance, which targets EFFICIENCY AND CUSTOMER FOCUS in addition to COMPLIANCE, naturally places further requirements on a system platform. You need a platform that lets you do your work end to end across the entire customer journey – smoothly, audit-proof and ready for inspection. In addition, such a platform should offer users a user-friendly experience that makes it easy to find the information they need quickly, efficiently and in a focused way.

With such a platform, you can take steps to improve your compliance position by working with your customers, automating processes and tracking data across different systems – customizable, open and collaborative.

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Interested in getting to know BetterCo better?

Feel free to book a free product demo and find out how BetterCo delivers a clear, shared and unified vision for regulated businesses and everyone involved – while measurably reducing effort, time and costs.

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