How to prepare the AMLCO Annual Report in 2024

1. Executive Summary

The executive summary provides a condensed yet comprehensive overview of the entire report. It summarizes the key findings/weaknesses and recommendations in a concise manner, allowing senior management and regulatory authorities to grasp the essence of the report quickly.

According to the CySEC’s Circular C186, the Executive Summary shall not exceed the limit of two to three pages and shall be read as an independent part of the Report. At the end of the Executive Summary, and after the above sections are presented, the AMLCO signs the Report.

2. Legislation

A crucial section within the Annual AMLCO Report is dedicated to referencing the applicable regulatory framework.

Firstly, it delves into primary legislation, including national AML/CFT laws and European AML Directives. This entails providing brief descriptions of any legislative alterations that have been announced or are anticipated. For instance, amendments to existing laws or the introduction of new directives may produce the need for adjustments in day-to-day operations.

Moreover, secondary legislation, such as directives issued by regulatory bodies regarding AML/CFT, calls for attention. These directives often provide much needed guidance on compliance requirements, which directly influence the Company’s operations. Analyzing these directives allows for the understanding of any additional regulatory obligations imposed on the Company.

Furthermore, referencing data and reports from international organizations like the Financial Action Task Force (FATF) or the European Commission are essential. The said organizations play a pivotal role in shaping global AML/CFT standards and their reports often highlight areas of concern. For example, within the Report the AMLCO shall refer to the FATF public statements on high-risk jurisdictions, and state whether the Company’s clientele has any links to the jurisdictions stated within the FATF’s statement.

Additionally, circulars published by regulatory authorities, offering further guidance on law implementation and regulatory developments, must be addressed. To this end, the AMLCO shall underline the actions taken by the Company in relation to each of the published Circulars.

3. Organizational Structure, AML Manual and Suspicion Reporting

Within the Annual AMLCO report, the organizational structure of the entity, the Company’s AML manual, and suspicion reporting are crucial areas examined demonstrating the entity’s commitment to regulatory compliance.

The organizational structure of the Company’s AML Department outlines the allocation of duties and responsibilities between employees. It also serves as a mechanism for transparency and accountability, demonstrating to the Regulator the Company’s commitment to effective governance. More specifically, each regulated entity is obliged to designate – except of course for the AMLCO – a member of the Board of Directors responsible for the oversight and implementation of the AML/CFT framework, called the AML Director. Additionally, the company shall appoint an Alternate AMLCO, responsible for replacing the AMLCO and perform his/her duties in case of absence. The duties and responsibilities of the AMLCO, the AML Director and the Alternate AMLCO shall be documented in detail within each Company’s AML Manual.

The Company’s AML Manual serves as a comprehensive document stating the entity’s policies, procedures, and controls set with ultimate goal the AML/CFT compliance. It showcases the regulatory obligations relevant to the organization’s operations and provides clear directions on how to adhere to these requirements. Moreover, the AML Manual serves as a reference point for employees, ensuring consistency in compliance practices throughout the entity.

Suspicion reporting is a critical component of the AML/CFT framework, facilitating the identification and reporting of potentially illicit activities. Within the Report, the AMLCO shall refer to the procedure followed by the Company when a suspicious activity is detected. The process includes both the internal reporting, between the Company’s employees and the AMLCO and the external reporting between the AMLCO and MOKAS. After the reporting procedure is laid down, the number of Internal Suspicious Reports received by the AMLCO shall be presented, along with the number of the cases received that were disseminated to MOKAS.

4. Findings and Recommendations

An extensive description is expected regarding the areas examined by the AMLCO throughout the year, referring both to findings identified and recommendations to be applied. The AMLCO is tasked with providing detailed insights into the deficiencies of each area inspected along with the rectification actions – if those are necessary.

The AMLCO shall outline the types of information and documentation received during the review. This could include records related to customer due diligence, transaction monitoring, suspicious activity reporting, and internal policies and procedures.

Overall, the findings and recommendations presented by the AMLCO constitute a crucial component of the report. They offer a comprehensive view of the company’s level of compliance with AML/CFT regulations and detail the actions recommended to address deficiencies and mitigate potential threats.

Final Thoughts

In conclusion, the process of preparing the Annual AMLCO Report in 2024 demands strong attention to detail and adherence to regulatory guidelines, as outlined within this analysis. From the concise Executive Summary to the detailed examination of Legislation, each section is vital in demonstrating the entity’s commitment to suppressing and preventing money laundering and financing of terrorism.

For professionals such as AMLCOs in Cyprus Investment Firms (CIF), Crypto-Asset Services Providers (CASP), and Payment Services firms, the knowledge on how to prepare a complete AMLCO Report could only be described as imperative. Equally important is the awareness among Board members of the essential information and data required for regulatory review and approval.

In response to this demand, SALVUS Funds, in collaboration with the Institute for Professional Excellence (IforPE), presents a self-study course titled “How to Prepare the AMLCO Annual Report in 2024”. Drawing from the extensive expertise of our Regulatory Compliance team, this course offers valuable insights into the intricacies of report preparation. By undertaking this course, professionals will acquire the knowledge and skills necessary to prepare a sound AMLCO Annual Report that meets regulatory standards.

The SALVUS Regulatory Compliance team can support CIF, CASP and other CySEC and CBC regulated entities, to fulfil their AML/CFT regulatory and reporting obligations, and prepare your Annual AMLCO Report through our Anti-Money Laundering Consulting service.

Contact us at info@salvusfunds.com or call us at +357 7000 7898 if you require further guidance on the preparation of your Company’s AMLCO Report or if you have enquiries about our AMLCO Annual Report course with IforPE.

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• AML Compliance Culture for CySEC Regulated Entities

The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.