Five Steps for AML Compliance in the United Kingdom

Anti-Money Laundering (AML) compliance is mandatory in the United Kingdom for organizations at risk. The UK has been taking effective steps from the past to combat financial crime. In addition, AML laws and AML regulations make the fight against financial crimes effective.


AML Laws and Regulations in the UK


The Proceeds of Crime Act (POCA) is the UK's main Anti-Money Laundering law. With POCA, which came into force in 2002, effective steps have been taken to combat financial crime in the UK. Money laundering crime has been identified with the Proceeds of Crime Act. Again with this law, the AML obligations of banks and financial institutions are regulated. Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations were published in 2017 after the POCA. Along with this legislation, the United Kingdom has determined the obligations required by financial institutions to comply with the 5AMLD enacted by the European Union.


The Financial Conduct Authority is the regulatory body for financial services in the United Kingdom. The Financial Conduct Authority's duties and objectives include ensuring and maintaining the integrity and security of the financial system. The regulator was established in 2013 after “the Financial Services Act” came into force. FCA has regulatory, investigative and prohibition powers on financial systems. There are 59,000 financial service companies that FCA has regulatory authority in the UK. An important focus of the FCA is Anti-Money Laundering. The Financial Conduct Authority supervises whether banks and other financial institutions meet their AML obligations.


So, what are the anti money laundering obligations in the UK? And, which companies have to meet AML obligations? In this article, we will explain how businesses that are responsible for AML regulations in the UK can ensure AML compliance.

AML Program


The AML program covers every step that businesses take against money laundering and terrorist financing. That's why businesses need the AML program to effectively combat financial crime. The main components of an AML program are Customer Due Diligence (CDD) procedures, Know Your Customer (KYC) policy, monitoring and reporting suspicious transactions.


AML Compliance Officer


The AML compliance officer is the person responsible for implementing the controls in the businesses' AML program. Therefore, businesses are required to employ an AML compliance officer. An AML compliance officer must have the necessary knowledge and skills to combat financial crime. The AML compliance officer also acts as a bridge between regulators and the business. The AML compliance officer of the business is responsible for "reporting suspicious activities".


Risk-Based Approach in Anti-Money Laundering


The basis of an effective AML program is based on a risk-based approach. The purpose of the risk-based approach is to implement a control program in line with the risk levels of customers. Financial institutions have a wide customer portfolio. As such, implementing the same controls to each customer will face failure in the AML program. Businesses that implementing a risk-based approach can create a more efficient AML control program by reducing workloads.


CDD and KYC Procedures in the United Kingdom


In the UK, banks and financial institutions have to implement "know your customer and customer due diligence" procedures in customer account opening processes. The first and most critical step of the customer onboarding process is to verify customer identity. If the customer identity is not verified, then no control to be implemented later will have no function. Because, criminal organizations have attempted to carry out criminal activities with false identities since the past.


The second step of the customer onboarding process is risk assessment. Businesses determine the current risk level of the customer by implementing CDD procedures. One of the most used methods in risk assessment is the implementation of sanction, PEP and adverse media screening. People in this data are high-risk customer profiles for businesses. Our AML Screening Software is a sanction, PEP and adverse media screening service. With our AML Screening Software, businesses can meet their KYC and CDD obligations in customer onboarding processes within seconds.


Detecting and Reporting Suspicious Activities


Financial institutions are obliged to report their customers' suspicious transactions that carry financial crime risk. The suspicious transaction reported is investigated by the supervisory body. So how do financial institutions detect suspicious transactions?


Doubtless, determining the risk level of the customer is of great importance in determining suspicious transactions. Businesses can detect unusual transactions faster by categorizing their customers according to their risk levels. Our product, AML Transaction Monitoring Software, automates the transaction monitoring processes of financial institutions. With AML Transaction Monitoring Software, companies create rules and scenarios according to themselves, and all transactions performed by customers are controlled according to these rules and scenarios. The software generates an alarm when high-risk transactions occur. Thus, companies only control the alarmed financial transactions and reduce the workload.


Anti-Money Laundering Solutions for the United Kingdom


As Sanction Scanner, we provide end-to-end AML solutions to meet the AML obligations of businesses operating in the UK. AML audits and penalties have been increasing in recent years. Protect your business from regulatory penalties with our AML solutions.

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