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Demystifying the AML Audit Discovery Phase—Preparing for the Pre‐Visit


Welcome to the ACAMS Web Seminar

AML Audit (Part I): Demystifying the AML Audit Discovery Phase—Preparing for the

Pre‐VisitApril 18, 2012

12:00 Noon– 2:00 PM EDT

A sound check will be performed 5 minutes before the start time.

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Welcome to the ACAMS Web Seminar

AML Audit (Part I): Demystifying the AML Audit Discovery Phase—Preparing

for the Pre‐Visit

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Speakers:Bill Badinelli, CAMS, CIAAudit Partner, Senior Vice President, AML/Regulatory Risk

RBS Americas‐ GIA

Laura Goldzung, CAMS, CFEPresident & Principal Examiner

AML Audit Services, LLC



Effective Audit Program

• Appropriate for the organization’s risk profile• Covers all applicable regulations and guidance• Effective discovery, scoping and planning• Proper testing and sample size• Program covers all appropriate areas• Work is properly documented• Conclusions are well supported



Effective Audit Program, cont.

• Issues are communicated effectively

• Violations are identified and risks explained

• Includes appropriate corrective actions

• Findings and actions are tracked

• Results are communicated to board/senior management

• Document resolution of exceptions not in report Demystifying the AML Audit Discovery Phase—Preparing for the Pre‐Visit


Audit Discovery External vs. Internal

• Internal Audit Team – Understands the organization

• External Audit Team – Self‐educates and performs discovery to understand the organization



Discovery Phase for External AuditUnderstanding the Business of the FI

Performing discovery sets the stage for understanding the business and to develop the scope of the review



Audit Discovery – External AuditReview and Analyze

• AML Compliance Program document approved by Senior Management

• Risk Assessment – BSA/AML & OFAC• Regulatory exam reports, exceptions, responses• Previous independent reviews, exceptions, responses• AMLCO Bio & Experience• Comprehensiveness of AML Training Program• Understanding of supervisory structure, business lines



Audit Discovery – External AuditReview and Analyze

• Clearing relationships, affiliates, where applicable• Customer base − Domestic / International• Changes in business focus and infrastructure (controls)• AML system controls and data integrity• Suspicious Activity Program• AML issues brought before Board/audit committee• Strategy, business plans, i.e. new customer segments • Flow of AML controls in FI – departments, people,

systemsDemystifying the AML Audit Discovery Phase—Preparing for the Pre‐Visit


Audit Discovery

• Amount of information needed to plan the audit may vary

• Document understanding of the BSA risk profile

• Identify high risk products, services, clients and geographies

• Consider new products since prior audit



Audit Discovery, cont.

• Identify new regulations and guidance

• Review most recent audits and regulatory exams,

• Consider results of assurance reviews and/or business line self testing

• Identify open issues and resolutions of past issues and recommendations



Audit Discovery, cont.

• Consider changes since prior audit, including • Institution’s risk profile• Compliance function• IT programs• Monitoring systems and/or thresholds• Key compliance staff• Key operations and support staff• Outsourcing



Key Steps in Audit Planning• Understand the objective, timing and

planned approach for the audit• Notify the Audit Sponsor of the audit’s high

level scope and approximate timeline• Hold preliminary business meetings• Create exceptions for all concerns resulting

from planning activity



Key Steps in Audit Planning, cont.• Hold planning session involving all key

members of the audit and CAATs teams and relevant SMEs to discuss and agree key information

• Discuss and agree milestones• Begin to populate the audit scoping

document and high level process maps



Key Steps in Audit Planning, cont.• Identify key risks and key controls to the high

level process maps• Populate the audit file with specific risks and

associated key controls discussed during the planning meeting

• Organize team, provide background information on audit

• Finalize scope and record evidence of Audit Sponsor’s acknowledgement



Developing the Scope• The Audit Sponsor and business contacts are

crucial sources of information• Clearly explain what is both in scope and out

of scope• Must be clear link between information

obtained and the final scope• All relevant information should be available• Consider mapping to FFIEC Manual



Developing the Scope, cont.• Scope must take account of any concerns

raised by the planning work to date• Consider the likelihood of a specific risk

materializing and the impact if it does• Risk analysis must include those risks which

feature in the business high level risk profile• Rank each specific inherent risk as high,

medium or lowDemystifying the AML Audit Discovery Phase—Preparing for the Pre‐Visit


Scoping and Resourcing• Ensure that adequate resources and skills are available

to complete the audit based on the planned scope and deliverables

• When the work is expected to complete• Right skills available at the right time• Are there any skills without which the audit could not

be performed• Team member roles, responsibilities, objectives and

reporting lines need to be agreed and communicated to the team



Raising Exceptions• Any concern or control gap that is identified

during planning should be raised as soon as it is identified

• This may not be a formal issue, raising it now will save time later in the audit if it does become an issue

• The concern or gap should be discussed with the business to confirm that the auditor’s understanding is factually accurate



If you have suggestions for future web seminarsor

additional questions for today’s experts, please send them to:

[email protected]

Thank you for joining us today!

25Demystifying the AML Audit Discovery Phase—Preparing for the Pre‐Visit


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Web Seminar Certificate of AttendanceTo request a certificate of attendance, please fill out the request form, found in your reference materials, and email the form to [email protected] along with your payment information. First certificate is included in cost of seminars. There is a $40 administrative fee for each additional certificate.

You may also call +1 305.373.0020 to process payment over the phone.



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Next Web Seminar:

Customer Due Diligence (CDD) Changes: Are You Answering or Asking The Right Questions?

April 25, 2012 – Noon to 1:00 PM EDT


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