AML Compliance Program
Produces a comprehensive, board-ready AML compliance program tailored to a financial institution's risk profile, satisfying BSA, FinCEN, and federal/state requirements.
Checkpoint A: Pre-Draft Intake (Mandatory)
Before drafting, collect from the user:
- Existing policies — current AML program, risk assessments, exam reports, regulatory correspondence
- Institutional profile — org chart, business lines, products, customer demographics, geographic footprint
- Risk data — prior assessments, audit findings, enforcement actions, consent orders
- Applicable regulations — confirm institution type (bank, MSB, broker-dealer) to determine which CFR parts, FinCEN guidance, and agency bulletins apply
Do not proceed until items 1–2 are addressed. Items 3–4 may be developed during drafting if unavailable.
Quick Start
Draft a numbered policy document covering all sections below. Calibrate depth to the institution's size, complexity, and risk profile.
Step 1: Program Foundation
| Element |
Requirement |
| Board endorsement |
Explicit board/senior management approval and oversight |
| Scope |
All business lines, customer relationships, geographies, transaction types |
| Risk-based approach |
Controls calibrated to risk assessment findings |
| Resource commitment |
Adequate personnel, technology, budget |
Step 2: AML Compliance Officer
| Element |
Requirement |
| Qualifications |
CAMS or equivalent; demonstrated BSA/AML expertise |
| Reporting line |
Direct to senior management; regular board access |
| Independence |
Evaluation tied to compliance effectiveness, not production |
| Authority |
Unrestricted access to all records, systems, personnel |
Core duties: Regulatory contact (FinCEN, regulators, law enforcement) · SAR/CTR/BSA filing oversight · risk assessment coordination · training management · independent testing oversight · program design and updates.
Step 3: Customer Identification Program (CIP)
Per 31 CFR § 1020.220:
| Data Point |
Individual |
Legal Entity |
| Full legal name |
Required |
Required |
| Date of birth |
Required |
N/A |
| Address |
Residential/business street |
Principal place of business |
| ID number |
SSN/TIN or passport + country |
EIN or equivalent |
Verification: Documentary (government ID / incorporation docs) · Non-documentary (consumer reporting, public databases) · Non-face-to-face (additional measures for remote channels).
Retention: 5 years after account closure.
Step 4: Customer Due Diligence (CDD)
Per 31 CFR § 1010.230:
- Identify beneficial owners: each individual ≥25% equity + one with significant management control
- Collect via certification form; verify per CIP standards
- Update ownership on risk-based schedule and upon known changes
- Document relationship purpose, business activities, anticipated activity, source of funds
- Build expected transaction profiles (type, industry, geography, history)
- Ongoing monitoring: automated systems, periodic reviews, exception reporting
Step 5: Enhanced Due Diligence (EDD)
Mandatory EDD triggers:
| Category |
Examples |
| PEPs |
Per FinCEN guidance |
| High-risk geographies |
FATF high-risk/monitored jurisdictions |
| Complex ownership |
Opaque structures obscuring beneficial ownership |
| High-risk businesses |
MSBs, virtual currency exchanges, cash-intensive |
| Elevated risk rating |
Multiple risk factors per internal methodology |
Requirements: Background investigation · senior management approval · enhanced monitoring (lower thresholds, more frequent reviews) · documented risk rating methodology (customer × geography × product × activity).
Step 6: Suspicious Activity Reporting (SAR)
Per 31 CFR § 1020.320:
- Threshold: ≥ $5,000 where institution knows/suspects illegal activity, BSA evasion, no business purpose, or criminal facilitation
- Deadlines: 30 days (suspect identified) · 60 days (no suspect identified)
- Key indicators: Structuring · activity inconsistent with profile · large currency transactions · wire transfers lacking rationale or involving high-risk jurisdictions · recordkeeping/CIP avoidance · shell company transactions
- Confidentiality: Federal law prohibits disclosure to subjects; civil/criminal penalties for violation; records retained 5 years; need-to-know access only
- Escalation: Immediate report to Compliance Officer; good-faith reporters protected
Step 7: Currency Transaction Reporting (CTR)
Per 31 CFR §§ 1010.310, 1020.310:
| Element |
Requirement |
| Threshold |
Currency transactions > $10,000 per person per business day |
| Aggregation |
Multiple transactions by/on behalf of same person in one day |
| Filing deadline |
15 calendar days via BSA E-Filing |
| Currency |
Coin and paper money only (excludes cashier's checks, money orders) |
Exemptions (31 CFR § 1020.315): Banks, government entities, listed public companies, qualifying businesses. Require documentation, approval, biennial renewal, annual review.
Step 8: OFAC Compliance
| Trigger |
Timing |
| Account opening |
Before relationship established |
| Existing customers |
Minimum annually; risk-based frequency |
| Transactions (wires, ACH) |
Real-time or near real-time |
Lists: SDN, Consolidated Sanctions, country-based programs.
Actions:
- Blocking — mandatory for sanctioned persons' property; interest-bearing account; report to OFAC within 10 business days
- Rejection — prohibited transactions not requiring blocking; notify originator; document decision
Retention: All screening records ≥ 5 years.
Step 9: Risk Assessment
| Dimension |
Factors |
| Products/services |
Velocity, geographic reach, anonymity, abuse susceptibility |
| Customers |
Type, occupation, geography, relationship characteristics |
| Entities |
Ownership structure, business purpose, formation jurisdiction |
| Geography |
Physical presence, customer concentrations, FATF/State Dept. flags |
Assess inherent (pre-controls) and residual (post-controls) risk. Conduct annually minimum or upon significant changes. Findings drive CDD intensity, monitoring sensitivity, and resource allocation.
Step 10: Training
| Audience |
Timing |
| All employees/officers/directors |
Annual minimum |
| New hires |
Within 30 days or before customer-facing duties |
| High-risk positions |
Role-specific schedule with specialized content |
Core curriculum: Institution AML policies · BSA/PATRIOT Act/FinCEN/OFAC · ML/TF typologies · red flags · CIP/CDD procedures · reporting obligations.
Documentation: Attendance records, completion certificates, comprehension assessments.
Step 11: Independent Testing
| Element |
Standard |
| Independence |
Personnel independent of AML function |
| Frequency |
12–18 months; higher-risk more frequent |
| Reporting |
Findings to Compliance Officer, management, board |
Scope: Regulatory compliance · policy adequacy · risk assessment methodology · transaction monitoring effectiveness · training adequacy · SAR/CTR timeliness · CIP/CDD compliance · OFAC procedures.
Remediation: Management response required; action plans with timelines; follow-up verification.
Step 12: Governance
Board duties: Approve program and updates · review risk assessment · receive quarterly compliance reports · review testing results · allocate resources.
Quarterly metrics: SAR/CTR activity, OFAC screening, CDD/EDD activities, training completion, testing findings, regulatory developments.
Change management: Document rationale → compliance + legal review → management/board approval → communicate to personnel → maintain version history.
Step 13: Recordkeeping
| Record Type |
Retention |
| SARs + supporting docs |
5 years from filing |
| CTRs + supporting docs |
5 years from filing |
| CIP/CDD/beneficial ownership |
5 years after account closure |
| OFAC screening/blocking |
5 years minimum |
| Risk assessments, testing, training |
5 years minimum |
Organized for prompt retrieval upon regulatory request. Security controls and audit trails for SAR-related records.
Checkpoint B: Post-Draft Review (Mandatory)
After delivering the draft, ask the user:
- Does the program scope match your institution's business lines and risk profile?
- Are the CIP/CDD/EDD thresholds appropriate for your customer base?
- Do the governance and reporting structures align with your board/committee framework?
- Any enforcement history, consent orders, or MRAs that require specific program provisions?
Quality Checks
Guidelines
- Mark uncertain CFR citations with [VERIFY] — regulations change; confirm at drafting date
- OFAC obligations are strict liability — err on the side of caution in all screening procedures
- SAR confidentiality violations carry serious penalties — embed protections in every relevant procedure and training module
- Program must be reviewed regularly for regulatory changes, emerging risks, and implementation lessons
- Consult legal counsel for interpretation questions
1---2name: aml-compliance-program3description: Drafts board-ready Anti-Money Laundering compliance programs for U.S. financial institutions under BSA/FinCEN requirements. Covers CIP, CDD, EDD, SAR/CTR reporting, OFAC screening, risk assessment, training, independent testing, and governance structures. Use when creating or updating AML policies, BSA compliance programs, or financial institution regulatory documentation. Trigger keywords: AML, BSA, FinCEN, Bank Secrecy Act, anti-money laundering, SAR, CTR, OFAC, CIP, CDD, KYC, compliance program.4---56# AML Compliance Program78Produces a comprehensive, board-ready AML compliance program tailored to a financial institution's risk profile, satisfying BSA, FinCEN, and federal/state requirements.910## Checkpoint A: Pre-Draft Intake (Mandatory)1112Before drafting, collect from the user:13141. **Existing policies** — current AML program, risk assessments, exam reports, regulatory correspondence152. **Institutional profile** — org chart, business lines, products, customer demographics, geographic footprint163. **Risk data** — prior assessments, audit findings, enforcement actions, consent orders174. **Applicable regulations** — confirm institution type (bank, MSB, broker-dealer) to determine which CFR parts, FinCEN guidance, and agency bulletins apply1819Do not proceed until items 1–2 are addressed. Items 3–4 may be developed during drafting if unavailable.2021## Quick Start2223Draft a numbered policy document covering all sections below. Calibrate depth to the institution's size, complexity, and risk profile.2425---2627## Step 1: Program Foundation2829| Element | Requirement |30|---|---|31| Board endorsement | Explicit board/senior management approval and oversight |32| Scope | All business lines, customer relationships, geographies, transaction types |33| Risk-based approach | Controls calibrated to risk assessment findings |34| Resource commitment | Adequate personnel, technology, budget |3536## Step 2: AML Compliance Officer3738| Element | Requirement |39|---|---|40| Qualifications | CAMS or equivalent; demonstrated BSA/AML expertise |41| Reporting line | Direct to senior management; regular board access |42| Independence | Evaluation tied to compliance effectiveness, not production |43| Authority | Unrestricted access to all records, systems, personnel |4445**Core duties:** Regulatory contact (FinCEN, regulators, law enforcement) · SAR/CTR/BSA filing oversight · risk assessment coordination · training management · independent testing oversight · program design and updates.4647## Step 3: Customer Identification Program (CIP)4849Per 31 CFR § 1020.220:5051| Data Point | Individual | Legal Entity |52|---|---|---|53| Full legal name | Required | Required |54| Date of birth | Required | N/A |55| Address | Residential/business street | Principal place of business |56| ID number | SSN/TIN or passport + country | EIN or equivalent |5758**Verification:** Documentary (government ID / incorporation docs) · Non-documentary (consumer reporting, public databases) · Non-face-to-face (additional measures for remote channels).5960**Retention:** 5 years after account closure.6162## Step 4: Customer Due Diligence (CDD)6364Per 31 CFR § 1010.230:6566- Identify beneficial owners: each individual ≥25% equity + one with significant management control67- Collect via certification form; verify per CIP standards68- Update ownership on risk-based schedule and upon known changes69- Document relationship purpose, business activities, anticipated activity, source of funds70- Build expected transaction profiles (type, industry, geography, history)71- Ongoing monitoring: automated systems, periodic reviews, exception reporting7273## Step 5: Enhanced Due Diligence (EDD)7475**Mandatory EDD triggers:**7677| Category | Examples |78|---|---|79| PEPs | Per FinCEN guidance |80| High-risk geographies | FATF high-risk/monitored jurisdictions |81| Complex ownership | Opaque structures obscuring beneficial ownership |82| High-risk businesses | MSBs, virtual currency exchanges, cash-intensive |83| Elevated risk rating | Multiple risk factors per internal methodology |8485**Requirements:** Background investigation · senior management approval · enhanced monitoring (lower thresholds, more frequent reviews) · documented risk rating methodology (customer × geography × product × activity).8687## Step 6: Suspicious Activity Reporting (SAR)8889Per 31 CFR § 1020.320:9091- **Threshold:** ≥ $5,000 where institution knows/suspects illegal activity, BSA evasion, no business purpose, or criminal facilitation92- **Deadlines:** 30 days (suspect identified) · 60 days (no suspect identified)93- **Key indicators:** Structuring · activity inconsistent with profile · large currency transactions · wire transfers lacking rationale or involving high-risk jurisdictions · recordkeeping/CIP avoidance · shell company transactions94- **Confidentiality:** Federal law prohibits disclosure to subjects; civil/criminal penalties for violation; records retained 5 years; need-to-know access only95- **Escalation:** Immediate report to Compliance Officer; good-faith reporters protected9697## Step 7: Currency Transaction Reporting (CTR)9899Per 31 CFR §§ 1010.310, 1020.310:100101| Element | Requirement |102|---|---|103| Threshold | Currency transactions > $10,000 per person per business day |104| Aggregation | Multiple transactions by/on behalf of same person in one day |105| Filing deadline | 15 calendar days via BSA E-Filing |106| Currency | Coin and paper money only (excludes cashier's checks, money orders) |107108**Exemptions (31 CFR § 1020.315):** Banks, government entities, listed public companies, qualifying businesses. Require documentation, approval, biennial renewal, annual review.109110## Step 8: OFAC Compliance111112| Trigger | Timing |113|---|---|114| Account opening | Before relationship established |115| Existing customers | Minimum annually; risk-based frequency |116| Transactions (wires, ACH) | Real-time or near real-time |117118**Lists:** SDN, Consolidated Sanctions, country-based programs.119120**Actions:**121- **Blocking** — mandatory for sanctioned persons' property; interest-bearing account; report to OFAC within 10 business days122- **Rejection** — prohibited transactions not requiring blocking; notify originator; document decision123124**Retention:** All screening records ≥ 5 years.125126## Step 9: Risk Assessment127128| Dimension | Factors |129|---|---|130| Products/services | Velocity, geographic reach, anonymity, abuse susceptibility |131| Customers | Type, occupation, geography, relationship characteristics |132| Entities | Ownership structure, business purpose, formation jurisdiction |133| Geography | Physical presence, customer concentrations, FATF/State Dept. flags |134135Assess **inherent** (pre-controls) and **residual** (post-controls) risk. Conduct annually minimum or upon significant changes. Findings drive CDD intensity, monitoring sensitivity, and resource allocation.136137## Step 10: Training138139| Audience | Timing |140|---|---|141| All employees/officers/directors | Annual minimum |142| New hires | Within 30 days or before customer-facing duties |143| High-risk positions | Role-specific schedule with specialized content |144145**Core curriculum:** Institution AML policies · BSA/PATRIOT Act/FinCEN/OFAC · ML/TF typologies · red flags · CIP/CDD procedures · reporting obligations.146147**Documentation:** Attendance records, completion certificates, comprehension assessments.148149## Step 11: Independent Testing150151| Element | Standard |152|---|---|153| Independence | Personnel independent of AML function |154| Frequency | 12–18 months; higher-risk more frequent |155| Reporting | Findings to Compliance Officer, management, board |156157**Scope:** Regulatory compliance · policy adequacy · risk assessment methodology · transaction monitoring effectiveness · training adequacy · SAR/CTR timeliness · CIP/CDD compliance · OFAC procedures.158159**Remediation:** Management response required; action plans with timelines; follow-up verification.160161## Step 12: Governance162163**Board duties:** Approve program and updates · review risk assessment · receive quarterly compliance reports · review testing results · allocate resources.164165**Quarterly metrics:** SAR/CTR activity, OFAC screening, CDD/EDD activities, training completion, testing findings, regulatory developments.166167**Change management:** Document rationale → compliance + legal review → management/board approval → communicate to personnel → maintain version history.168169## Step 13: Recordkeeping170171| Record Type | Retention |172|---|---|173| SARs + supporting docs | 5 years from filing |174| CTRs + supporting docs | 5 years from filing |175| CIP/CDD/beneficial ownership | 5 years after account closure |176| OFAC screening/blocking | 5 years minimum |177| Risk assessments, testing, training | 5 years minimum |178179Organized for prompt retrieval upon regulatory request. Security controls and audit trails for SAR-related records.180181---182183## Checkpoint B: Post-Draft Review (Mandatory)184185After delivering the draft, ask the user:1861871. Does the program scope match your institution's business lines and risk profile?1882. Are the CIP/CDD/EDD thresholds appropriate for your customer base?1893. Do the governance and reporting structures align with your board/committee framework?1904. Any enforcement history, consent orders, or MRAs that require specific program provisions?191192## Quality Checks193194- [ ] All 13 sections addressed with institution-specific detail195- [ ] CFR citations verified — uncertain citations marked [VERIFY]196- [ ] Risk-based approach: controls scaled to institution size and complexity197- [ ] SAR confidentiality protections embedded in relevant sections198- [ ] OFAC strict-liability posture reflected throughout199- [ ] Retention periods consistent across sections200- [ ] Disclaimer included: framework requires qualified legal counsel review and institution-specific tailoring201202## Guidelines203204- Mark uncertain CFR citations with [VERIFY] — regulations change; confirm at drafting date205- OFAC obligations are strict liability — err on the side of caution in all screening procedures206- SAR confidentiality violations carry serious penalties — embed protections in every relevant procedure and training module207- Program must be reviewed regularly for regulatory changes, emerging risks, and implementation lessons208- Consult legal counsel for interpretation questions
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