Anti-money laundering program requirements for loan or finance companies
- Aug 1, 2023
- 2 min read
Every loan or finance company must set up an anti-money laundering program. The idea behind this program is to stop the company from being a channel for money laundering or funding terrorist activities. The company's senior management has to approve this program. If asked, the company needs to provide a copy of its anti-money laundering program to the Financial Crimes Enforcement Network.
The program needs to have certain features:
It should contain rules, processes, and internal checks based on the company's evaluation of the risks of money laundering and terrorism financing linked to its products and services. This program should comply with the relevant laws and regulations and involve the company's agents and brokers. It should also gather all the necessary customer information for a successful anti-money laundering effort.
The company must assign a compliance officer. This person's job is to make sure that:
The anti-money laundering program is implemented properly. This includes making sure that the company's agents and brokers are following the program.
The program is updated as required.
The right people are trained according to point 3 below.
The company should regularly train the relevant people about their duties under the program. The company can either conduct this training themselves or confirm that these people have been trained by a knowledgeable third party about the company's products and services.
The company should run independent tests to ensure the program is up to the mark. This includes checking whether the company's agents and brokers are fulfilling their responsibilities under the program. The frequency and scope of these tests should align with the risks related to the company's products and services. Anyone in the company can conduct these tests, except for the person chosen as the compliance officer.
If a company doesn't comply with these rules, the Financial Crimes Enforcement Network will examine the situation under the Bank Secrecy Act. Failing to meet these requirements can be a violation of this Act.
By August 13, 2012, every loan or finance company should have developed an anti-money laundering program that follows these rules.
Code of Federal Regulation
Fincen
Finra
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