Simplify Your AML Processes by Turning them Into Questions

When we conduct Customer Due Diligence (CDD) as part of the Anti-Money Laundering (AML) program, the reality is that sometimes things become complex as we try to obtain a holistic picture of each customer. At the end of the day, each AML process is designed to answer some critical questions about our clients.

What if we could replace each AML process with a question?

Let me explain how I help my clients simplify each AML process by reframing it as a question. I hope it helps you too!

1. Customer Identification

   
   

   • Question: Who is my customer?

   • Purpose: This question helps you understand who your customer is, what professional activity generates their wealth or income, and ensures you know who you’re doing business with from the start and throughout the business relationship.

2. Customer Verification

   
   

   • Question: Is my customer who they claim to be?

   • Purpose: Here, it’s about confirming that the person or entity is legitimate and that the customer is indeed the person (natural or legal) they claim to be. Verification checks are necessary to confirm the authenticity of the information provided, reducing the risk of imposters or bad actors abusing our products or services.

   
   

3. Identification and Verification of Beneficial Owners

   
   

   • Question: Who is controlling the company?

   • Purpose: Especially in the case of businesses, it’s essential to identify the true decision-makers. In some cases, these individuals are hidden behind complex ownership structures. This step ensures that the real people in control are identified and verified (steps 1 and 2 above), preventing misuse of corporate structures for illicit purposes.

   
   

4. Risk Assessment

   
   

   • Question: What is the likelihood of this customer’s involvement in financial crime?

   • Purpose: This step assesses the risk of financial crime associated with each customer. For example, customers from high-risk regions, those in certain industries, or individuals with complex financial activities may be more likely to engage in or be exploited for money laundering or fraud. By identifying these higher-risk customers, compliance teams can decide how closely each customer should be monitored to protect the institution effectively.

   
   

5. Screening

   
   

   • Question: What hidden risks might arise if I engage in a business relationship with this customer?

   • Purpose: Screening helps identify red flags—such as sanctions, politically exposed persons (PEPs), or negative media—before entering a business relationship, protecting your institution from potential regulatory issues down the road.

   
   

6. Ongoing Customer Review

   
   

   • Question: Are the circumstances of my customer the same as at onboarding?

   • Purpose: Customer circumstances change over time, and so do risks. Regular reviews allow you to spot shifts—such as a customer moving to a high-risk area or becoming a PEP—that could impact their risk profile.

   
   

7. Transaction Monitoring

   
   

   • Question: Does my customer’s activity align with their profile and expected behavior?

   • Purpose: Monitoring transactions is crucial for spotting suspicious activity. This question keeps you focused on whether a customer’s financial behavior is consistent with what you know about them, helping detect anomalies in real time.

Using a question-based approach simplifies AML work by keeping each process anchored in its main purpose. It’s a practical way to stay focused and ensure your compliance efforts are meaningful and effective.