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AML/CFT Outsourcing

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What is AML/CFT outsourcing?

Outsourcing of AML/CFT functions refers to the transfer of part or all AML/CFT responsibilities to an external company. This involves entering into a contract with an external service provider that undertakes tasks related to the prevention of money laundering and terrorist financing. Outsourcing can be beneficial for companies that lack sufficient resources or expertise to perform these functions internally.

Who benefits from AML/CFT outsourcing?

AML/CFT outsourcing is beneficial for two types of companies:
  1. Companies that do not have sufficient resources: For companies facing limitations in finances, personnel, or technological infrastructure, AML/CFT outsourcing is a cost-effective solution. Instead of hiring additional employees, investing in training, and implementing expensive monitoring systems, such companies can transfer these functions to a specialized external provider. This allows them to focus internal resources on core business processes while ensuring AML/CFT compliance without excessive investments.
  2. Companies that do not have expert knowledge: For businesses lacking sufficient knowledge in AML/CFT, outsourcing is an efficient solution due to the high cost of hiring experts in-house. Recruiting qualified professionals often involves significant financial expenses for salaries, training, and employee retention. Additionally, developing in-house expertise is a long-term process, requiring not only training but also continuous updates to maintain knowledge levels. Outsourcing provides immediate access to experts with the necessary knowledge and experience without the need for large investments in internal training and development.

What can be outsourced?

Entities can outsource certain functions, but they must still comply with requirements regarding responsibility and control. Key functions that can be outsourced include:
  1. Customer Identification, Verification, and Research: Third-party providers may carry out procedures to collect, verify, and validate customer information, but the final decision remains with the company.
  2. Customer and Transaction Risk Assessment: Outsourcing companies can assist with the analysis and assessment of risks related to customers and transactions, including the use of specialized monitoring software solutions.
  3. Transaction Monitoring: External organizations can automate and monitor financial transactions, detect and report suspicious transactions, but the primary financial monitoring entity must ensure proper control and final decision-making.
  4. Staff Training: Organizations can outsource the training and advanced training of their employees, including training on current legislative changes and AML/CFT procedures.
  5. Development and Implementation of AML/CFT Policies and Procedures: Outsourcing can be used to develop internal policies, risk assessment programs, and procedures tailored to the company’s specific needs.

What types of outsourcing exist?

Partial: With partial outsourcing, the company outsources only certain functions, such as customer identification or transaction monitoring. This allows you to free up operational potential from complex, resource-intensive processes, leaving more resources for business development. The advantage of this approach is flexibility, as the company can independently manage processes that are profitable to control internally while receiving external support for more complex or time-consuming tasks.

Full: This type of outsourcing involves transferring all AML/CFT functions that are permitted by law to an external provider. In this case, the external company takes full responsibility for procedures such as customer identification, risk assessment, transaction monitoring, and reporting suspicious transactions. The benefit of this approach is that the client company can fully concentrate on its core business processes.

Man-hours: This type of outsourcing involves an external provider supplying the company with employees for a certain period or specific tasks. These employees perform AML/CFT functions under a “lease” arrangement, working directly for the customer while remaining employees of the provider. The benefit of this approach is flexibility and time-saving in finding and selecting personnel. A company can quickly access qualified personnel for temporary projects or peak workloads without needing to hire them on a permanent basis.

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