The role that feedback loops play in AML and CFT

The ability to adjust and respond to changing hazards is just as important to the success of anti-money laundering (AML) and countering the financing of terrorism (CFT) initiatives as the original design.

Tyree Schoen

March 27, 2024

1Min Read

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Wealth

Arctic Intelligence, a RegTech business that aids businesses in enhancing their risk assessments, claims this. The business recently examined how feedback loops improve AML/CFT and sanctions compliance initiatives.

It was mentioned that having strong governance structures, responsive listening techniques, and efficient feedback loops inside the compliance framework can create a compliance program that is capable of preventing money laundering and terrorist funding.

A methodical procedure for gathering, evaluating, and applying data regarding the effectiveness and results of the compliance program to pinpoint areas in need of improvement is known as an AML/CFT feedback loop. A crucial component of the procedure is ongoing efficacy evaluation and monitoring.

The supervision and accountability procedures required to guarantee that feedback loops are not only installed but also functional and significant are provided by an efficient governance framework. According to the statement, compliance committees and boards are essential in determining the overall course of the compliance program, making deft choices based on input, and distributing funds to close gaps or strengthen areas that are found.

In a similar vein, feedback loop success is ensured by attentive listening both within the organization and in interactions with external stakeholders and regulatory agencies. Companies may guarantee that employees at all levels will be keeping an eye out for compliance problems or possible improvements by fostering an environment of open communication and feedback.

A successful feedback loop should have defined procedures for gathering input, analyze it for useful information, incorporate it into the compliance program, explain changes and their justification, and track the effects of changes that have been put into place.

Financial institutions can complete risk assessments more effectively and efficiently with the help of Arctic Intelligence. Its technology facilitates continuous risk monitoring, promotes regulatory compliance, and streamlines procedures.