AML Audit Function - Key compliance requirement under IFSCA (AML, CFT, & KYC) Guidelines, 2022

IFSCA (AML, CFT, and KYC) Guidelines, 2022, mandate the regulated entities operating in or from IFSC to implement an independent AML audit function as part of its AML framework. The AML audit function must be adequately resourced and staffed to periodically test and review the entity’s AML/CFT framework and measures implemented.

As part of an AML Audit, the auditor is required to adopt necessary measures and checks around the following:

1. Checking the adequacy of internal AML/CFT policies, procedures, and controls deployed by the entity.
2. Evaluate whether the entity has adopted a Risk-Based Approach, focusing on optimal utilization of the resources for identifying and managing the ML/FT risks.
3. Test the adequacy of the business risk assessment – whether the methodology followed for assessing the risk and the finally assessed ML/FT exposure is aligned with the nature and size of the business.
4. Review the appropriateness of the AML Training, whether the training content is adequate, and the frequency at which the AML training is conducted is suitable to the nature of the business and the assessed business risk.
5. Not restricted to the quality of the AML program, the audit must include a review of its implementation – whether necessary procedures and controls are implemented across the business and whether the employees are adhering to the entity’s AML/CFT framework.
6. Testing of the internal and external reporting of the identified suspicions must be covered in the audit. This should primarily focus on the quality of the reports filed, accuracy and completeness of the data furnished and timeliness of reporting.

Here is an infographic discussing the AML aspects to be reviewed or tested in the course of periodic AML audits.

AML India is an AML consultancy service provider assisting you with end-to-end AML support, including independent AML audits. Let’s foster the quality of the AML function with periodic AML audits.