Whilst a visit from the regulators might seem like a painful exercise you’d rather do without, it’s going to happen at some point. Accepting the inevitable and putting in some careful preparation will help ease the regulator pain and set you on the road to success.
If you’ve been following a robust compliance programme it shouldn’t be too onerous, on the other hand if you’ve been skipping the basics, you’ll feel the heat on regulator day. Whichever side of the coin you fall, there are a few things you can prioritise to help get through your next regulator visit.
Tips from a former regulator
So, the regulators have been in touch, you’ve agreed on a date for the visit, and you’ve received formal notification, what next? Well, at a broad level regulators will be looking to see that both you and any members of your team can demonstrate sufficient knowledge and expertise to fulfil your AML obligations. They also want to see that appropriate training has occurred, and that processes and procedures are being carried out in the same consistent way by relevant staff.
Regulators are also going to be asking to review information and will want to have interviews with key staff. To be prepared:
Make sure you’ve done a recent review of your risk assessment and compliance programme.
Ensure all customer due diligence (CDD) documents are up to date.
Ensure people that may need to be spoken to are available.
Have your list of customers and training registers available.
Make sure you know your way around your online portal if using one.
Remember, this isn’t an exam though, you can refer to documents. Have your risk assessment programme and other key documents easily accessible to refer to when you need. You don’t need to know them ‘off by heart’.
The regulator will however, expect you to show all records for a customer on request. Having that information readily to hand ideally in one central location will make your life much easier for the onsite visit.
What to expect on the big day
Once the regulators have arrived at your door and introduced themselves, they’ll outline the agenda and without doubt will want to interview your compliance officer and other staff dealing with your AML obligations.
First up in the chair is likely to be the compliance officer, so be prepared as it can take a few hours. Make sure you know your obligations under the AML/CFT Act and the procedures you have in place to support this.
Interviewing is a key part of the onsite visit as it will help verify whether or not processes are understood, that your AML programme is well known to staff, and whether there is a consistency of knowledge displayed of your processes. Any disparities in knowledge among the team will quickly be highlighted and, if exists, will need to be addressed.
Customer due diligence is likely to be the second biggest focus of the day as it will be critical for regulators to understand whether or not CDD is being done correctly.
If you’re following a risk-based regime and recording all relevant information on your customers correctly this shouldn’t be a problem. You should also be able to provide CDD onboarding forms and associated documentation.
Whilst interviewing and CDD’s are likely to be the biggest focus of the day, be prepared for anything, as it will all be up for grabs.
Risk assessments, compliance programmes are both critical elements of AML requirements and will want to be viewed (if not updated since last viewed), as well as items such as your SAR and PEP registers.
So be prepared, make sure you have all the essential documentation available and can easily access it. If you’re scrabbling around trying to find something, or can’t find it at all, some conclusions could be drawn on how well you do or don’t know your processes and your expertise with them.
What is the real estate sector getting pulled up on?
One of the biggest AML issues in real estate found by regulators is a lack of consistency of approach. This has at times been be blamed on lack of ‘know how’ with technology but this will not be an adequate excuse for the regulator.
Ensuring everyone is doing things the same way, regardless of how bad they may be with technology is critical to your AML programme. No matter what the job title of somebody is, whether they’re an administrator, a compliance officer, an executive assistant, or a real estate agent, if they’re dealing with AML obligations, they all need to be conducting procedures in the same way. It has to be consistent and you have to ensure that the right information, training and documentation is provided so everybody gets it right.
Nurture your relationship with regulators
Regulators aren’t the enemy, so if they if they want to discuss your programme, be transparent. If you get contacted and are asked for information, give them what they need. If told to fix something then do it, and keep them advised of your progress. If you need more time just let them know but don’t miss deadlines with unexplained silence. The more communication you have and the more you share with regulators, the easier it will be to get through the inspection process and to remediate anything they advise.
Recently published guidelines by the FATF for the real estate sector have made it clear that the FATF are keen to see increased understanding of ML/TF risk across the sector, so it will pay to take note and ensure key concerns are addressed before your next regulator visit. This will include ensuring:
You have the right level of detail included in your risk assessments.
The standard of your AML/CFT programme is commensurate with identified risks.
You have the right quality of expertise in your team and everybody knows how to carry out their duties correctly.
There is a positive attitude towards compliance in the team and throughout the business.
Key onsite visit takeaways
Onsite visits can turn into a gruelling day particularly for compliance officers, so be prepared and expect to spend a few hours in interviews as well as time sharing your records for customer and compliance processes.
You can make it easier on yourself though, embrace the day and make the most of it by using it as a positive learning process.
The key things are:
To show all the things you need to show.
To show you are able to access all you need to access.
To know how your compliance programme needs to work.
To understand why real estate needs to be captured by the Act.
To ensure training has been done and recorded, and you have regular discussions on AML with your team which is recorded in a training register.
Get these basics right and you’ll be off to a really good start.
Still not looking forward to your big day?
You don’t have to go it alone on your big day. If you’re a client of tic company we can help gear you up for your onsite inspection, show you how to access what you need, and prepare you for what’s to come. Our online portal will help make this easy.
Even if you’re not a client, we can help prepare you for your big day with quality assurance checks on CDD records, training, staff vetting, PEP and sanctions. Or if the worst happens and things don’t go to plan on the day, we can help with any remediation requirements and get you back on track to compliance. Just get in touch with our team if you’d like some help.
Find out how leading real estate agent, Ray White found an end-to-end AML compliance solution with tic company.
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