The Ultimate AML Compliance Checklist for Board of Directors

Although the board of directors essentially oversees all aspects of governing an organization, a compliance manager may be appointed to directly manage the day-to-day implementation of AML policies. In addition to implementing policies, they may also perform internal audits, conduct training sessions, and work closely with a compliance committee. 

Utilizing a compliance committee agenda and checklist allows the compliance manager and board of directors to ensure all necessary steps are consistently followed and reduces the risk of overlooking critical tasks and documentation.

Keep in mind that the Bank Secrecy Act (BSA) is a U.S. law requiring financial institutions to maintain records and report specific transactions, such as large deposits or suspicious activities, to help detect financial crimes. Similarly, the Basel Committee on Banking Supervision (BCBS) sets global banking regulations to strengthen the financial system.

Failing to manage AML compliance properly can result in severe financial penalties. Read on for a detailed checklist boards can use to maintain AML compliance and fulfill their due diligence responsibilities.

1. Governance and Oversight

• Has the board established a clear AML compliance framework? 
• Are there written AML policies and procedures in place? 
• Does the board regularly review the AML compliance program?
• Has the board “set a tone” for AML compliance? 

2. Risk Management and Due Diligence

• Has the board conducted a risk assessment of money laundering threats?  
• Are high-risk customers and transactions properly identified and reviewed?
• Does the institution apply a risk-based approach to customer due diligence?
• Are there procedures for enhanced due diligence on politically exposed persons and high-risk jurisdictions?

3. Transaction Monitoring and Reporting

• Does the organization have automated transaction monitoring to detect suspicious activities?
• Does the organization have clear escalation procedures for suspicious behavior?
• Is the organization compliant with sanctions screening (e.g., OFAC, EU, UN lists)?

4. Training and Internal Controls

• Does the board ensure regular AML training for employees, management, and directors?
• Are employees encouraged to report suspicious activity?
• Are AML policies regularly updated to comply with new regulations and emerging risks?
• Has the board conducted independent AML audits or third-party reviews?

5. Accountability and Legal Compliance

• Has the board reviewed AML regulatory requirements (e.g. BSA, USA PATRIOT Act, FATF, EU, AML Directives)?
• Are there penalty prevention measures in place to avoid fines and legal actions?
• Are there board-level discussions and reports on AML compliance happening at least annually?