If you want to strengthen your AML compliance framework in UAE, you should know about the three lines of defense. It will help your business minimize the gap in its AML risk management. Not only that, it can save your company from facing heavy penalties and reputation damage due to AML compliance failure.
Understanding The Three Lines of Defense
- First Line: The Line of Business
It includes the customer-facing employees to gather the information your company will require to meet its due diligence obligations. Moreover, it can also contain operations, risk, and control teams supporting the company. It involves establishing procedures for screening personnel and providing proper training on AML policies.
- Second Line: The AML Officer
The Money Laundering Reporting Officer (MLRO) develops the second line of defense for AML compliance. From the ongoing monitoring of all the AML obligations to being the contact point of all the external and internal authorized, MLRO is responsible for all of them. Furthermore, it is vital to avoid any sort of conflicts of interests to ensure the AML obligations objectivity.
- Third Line: The Internal Audit
Normally, the audit committee of the board of directors forms the third line of defense focusing on the internal audit. It can help your company determine itsrisk management controls. The internal audit reviews can include both strong and weak points of the AML function and a set of readily applicable recommendations. Similarly, for conducting any additional research, make sure the reports contain the signature of the senior management.
Wrapping it Up
To ensure the effectiveness of AML compliance and mitigate the risk of money laundering, reinforce the three lines of defense. Put attention to these matters otherwise, you can face heavy penalties causing huge financial damage. In addition to that, it can also harm your business reputation as well. Hence, take appropriate action and save your organization from a possible compliance failure.
