AML compliance refers to the laws, regulations, and procedures aimed at detecting and preventing money laundering and terrorist financing. AML compliance programs are required for financial institutions, including traditional financial institutions and other entities identified in government regulations. The Bank Secrecy Act (BSA) established AML compliance program requirements, including the adoption of policies and procedures to detect suspicious activity and notify the government via the submission of Suspicious Activity Reports (SARs) . The USA PATRIOT Act expanded the definition of an entity required to perform suspicious activity reporting.

AML compliance programs must include the following elements according to the Federal Financial Institutions Examination Council’s (FFIEC): the existence of a system of internal controls to assure ongoing compliance, risk-based techniques for conducting ongoing customer due diligence (CDD), and complying with beneficial ownership requirements as detailed in regulations issued by Financial Crimes Enforcement Network (FinCEN) .

Firms must develop and implement a written AML compliance program that is approved in writing by a member of senior management and reasonably designed to achieve and monitor the members ongoing compliance with the requirements of the Bank Secrecy Act and the implementing regulations promulgated thereunder.

Effective AML compliance programs help businesses uncover suspicious activity associated with criminal acts, including fraud, bribery, corruption, tax evasion, and organized crime. AML compliance is a fundamental requirement for regulated entities, such as banks, financial and money service businesses, and using effective AML policies and procedures, training, and technologies helps the organization meet compliance requirements and instills confidence in its operations.

To measure success regarding AML compliance, firms must prevent laundered money from entering into their financial system and meet the minimum requirements. However, it is essential to implement resilient, efficient, and cost-effective systems to evolve the current AML compliance processes without creating inter-departmental wars or breaking the bank.