AML/CFT Process Simplified: AML/CFT Training.(Part 6-Final)

You must know that regulatory bodies take punitive action against any organization that does not provide training to employees regarding AML/CFT. But do you know that regulatory bodies also take remedial measures against the organization that does not provide training to the employees that are not effective? So this article focus on how do you make training effective in your organization.

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Why Training is so Important?

A human being is considered the weakest link in any security chain. Even though the organization has implemented complex technology, comprehensive policies, procedures, checklist, forms, but, if employees don’t follow them, everything goes down to the drain. Employees are considered the first, last, and best control. Therefore, if you want to implement AML/CFT policies, procedures effectively, you need to train your employees rigorously.

What does the regulator or Auditor focus on the training program of the organization:

1. How much emphasis is put by directors and senior management on training their employees i.e tone from the top?
2. Does the training focus on all AML/CFT risky areas in the organization?
3. Does the training cover all the employees in the organization?
4. What is the frequency of the training?
5. Does training materials cover bank policies, procedures, government rules, and regulation?
6. Does it cover recent examples showing new trends, techniques relating to money laundering?
7. Does training cover penalties for noncompliance with internal policies and regulatory requirements?

Consequences for not providing training:

1. Failing to comply with the Organization AML/CFT policies and manuals.
2. STRs filing was not adequate and of poor quality.
3. TTR and STR were not reported timely.

All these lapses will attract regulatory penalties to the organization and its staff.

Therefore, the following factors are to be considered while designing effective training:

1. Whom to Train

This is the first stage in designing your training program that is to identify your target audience. Organizations’ risk assessment results can help to identify prioritized areas for training. Also, it is always better to train employees on the basis of their roles and responsibilities as well as on what type of AML/CFT risks they may face at the time of performing their jobs. For e.g., Front Desk Staff should be adequately trained on identifying customers and collecting all KYC documents while Credit Staff should be trained on validating whether the source of income of the customer is legitimate or not. Similarly, Board members should understand different AML/CFT report so that they could put more focus on high-risk areas.

2. What to Train.

There may be various areas on which different staffs can be trained, but generally, it may include the following:

• General Introduction: Here one may educate employees regarding the history of money laundering/terrorism financing, what are the key concepts, how these offenses are being done. This may include real-life examples.
• Legal framework and Organization policies: Provide information regarding different AML/CFT Acts, laws that are applicable to the organization including provisions mentioned in policies and manuals that should be followed by every staff in the organization.
• Penalties: What are penalties in case of breach of policy or manual as well as legal penalties to the employees and the organization in case of defiance with AML/CFT laws and actions.
• Suspicious Transaction: Employees should be trained on identifying different suspicious transaction red flags and escalating them to the concerned authority.
• Real-life money laundering schemes: Employees should be informed about the money laundering events that happened in the organization or similar institutions, including how the first pattern was detected and its resolution.

Well-planned training should fulfill legal, regulatory, and policy requirement and should help staff to understand their jobs and responsibilities

3. How to provide training:

1. In House Training:

The major advantage of this training is that trainer is a staff of the organization and much of the learning can be done through the sharing of experience. The major drawback is that it takes a long time and effort to create training materials, participants may not feel comfortable interacting as trainers are usually superiors.

2. Web/online Based Training:

This training may include sharing training videos to employees, giving real-time training through Skype or video conference. The main advantage is that it is cost-efficient since there is no need for brick and mortar location as well staff may learn at self-pace. The biggest disadvantage is infrastructure or technical problems like losing network or electricity, or other hardware issues, also, there is no way to sure the staff has watched all the training videos.

3. External Vendor Laid Training:

External trainers bring new insights, since, they are professional, their training materials are well laid out. Cons are cost as well as training materials may not be customized as per the organization’s needs.

4. When to train:

The best practice is to train employees regarding AML/CFT at least once a year. However, the following situations can mandate training for the staff:

1. Specific Issue: There may the situation arise where certain events, issues have to communicate to staff immediately. This can be a new regulation, revision of policy. This can be done via memo or e-mail without formal training.
2. Serious findings from audit or regulator bodies: If the Audit or regulatory bodies may have shown some serious concern in AML/CFT matter, then it may be wise to communicate this to all staff by conducting immediate training sessions.
3. Individual Knowledge Assessment: If it is observed that some staff may lack serious knowledge regarding AML/CFT while carrying their transaction, then such staff may be selected to provide immediate training.

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Besides this, new hires should be given training at once. The board of directors and senior management should be trained concerning changes and new developments in the AML/CFT scenario,

It is compulsory to take personal attendance at AML training. If any person misses that training. then, a make-up session may be arranged. In any case, the unexcused absence should be taken up for disciplinary action.

Training Assessment:

Every staff should be evaluated after each training session to gauge their level of understanding. The best technique is to conduct an eLearning exam. The eLearning exam should have the following features.

1. The questions should be set as per the different job responsibilities of the staff.
2. Each question should be time-bound, say 75 sec or 90 sec to answer each question. So that staff could not consult with other staff for answering the question.
3. Those staff who have not attempted the eLearning exams with a certain period should send reminders every 2-3 days.

Such a learning exam helps to track down the staff who have not completed the exam, or who failed the exam in multiple attempts(if allowed). Those staff who have not completed the exam should be asked for justification and any unreasonable excuse should not be tolerated.

In this way, training can be properly designed which would help the organization in the long run.

We have come to the end of this 6 article series of simplifying the AML/CFT process in your organization.

Thank you for reading, I hope you have found this article helpful. Please don’t forget to share and like.