Specialized Solutions for Financial Advisors’ AML/CFT Compliance Management

We offer a comprehensive set of anti-money laundering (AML), counter-terrorist financing (CTF), and fraud prevention solutions tailored to US based financial advisors’ anti-money laundering compliance, and aligned with the requirements of the Bank Secrecy Act (BSA), USA Patriot Act, Anti-Money Laundering Act (AMLA) of 2020, U.S. Securities and Exchange Commission (SEC) guidance, including sector-specific red flags and indicators for this sector, to help your business meet applicable obligations that financial consultants’ money laundering and terrorist financing risk mitigation, fraud prevention, the detection and handling of other types of financial crime.

We have designed our AML solutions to help you navigate the complexities of the BSA/AML requirements for financial advisors in a commercially oriented and goal-focused manner, providing effective AML/CTF support for all aspects of financial advisors’ AML/CFT compliance, including but not limited to:

• Business Profile and Strategic Factors:
• Your commercial objectives
• Your products
• The size and structure of your business
• Your available AML/CTF compliance technology and resourcing
• Your risk appetite for AML/CTF-related risks
• Your governance framework and reporting lines
• Your client demographics
•  Your countries of operation

 

• Applicable Regulatory and Fraud Prevention Obligations:
• AML/CTF regulations for financial advisors
• Any financial advisors’ fraud prevention obligations or expectations your business may be subject to
• Any related compliance obligations, including, but not limited to, financial advisors’ obligations under:

• Privacy laws
• Financial market laws
• Fair trading laws
• Financial licensing requirements
• Other relevant regulatory frameworks

• Operational AML/CTF Compliance Requirements:

• Money laundering and terrorist financing (ML/TF) risk assessment
• AML risk management
• Customer due diligence (CDD) and Know Your Customer (KYC) obligations for financial advisors
• Enhanced customer due diligence
• Ongoing customer due diligence and transaction monitoring
• PEP identification and sanctions compliance
• Staff vetting and AML/CTF training
• Ad-hoc and periodic reporting
• Other obligations relating to financial advisors’ anti-money laundering, counter-terrorist financing and sanctions compliance, as well as financial crimes prevention

 

What Jurisdictions Do Our Financial Advisors’ AML Solutions Cover?

This page is about our sector-specific Financial Advisors' AML solutions in the United States. Beyond the United States, we also offer AML/CFT solutions for financial advisors that operate in the following jurisdictions:

• Financial Advisors' AML Solutions in Australia: Financial advisors' AML requirements in Australia are outlined under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, with supervision by the Australian Transaction Reports and Analysis Centre (AUSTRAC).
• Financial Advisors' AML Solutions in the United Kingdom: Financial advisors' anti-money laundering requirements in the United Kingdom are specified under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, last amended in 2020, with oversight by the Financial Conduct Authority (FCA).
• Financial Advisors' AML Solutions in Singapore: Financial advisors' AML requirements in Singapore are outlined under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, the Terrorism (Suppression of Financing) Act, and guidelines issued by the Monetary Authority of Singapore (MAS).
• Financial Advisors' AML Solutions in the European Union: Financial advisors' AML compliance across the European Union follows the Sixth Anti-Money Laundering Directive (AMLD6) and national laws transposing the Directive, with oversight by the European Banking Authority (EBA) and National Competent Authorities (NCAs).
• Financial Advisors' AML Solutions in New Zealand: Financial advisors' AML obligations in New Zealand are governed by the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, supervised by the Financial Markets Authority (FMA).
• Financial Advisors' AML Solutions in Popular Financial Centers, including offshore tax havens and low tax jurisdictions.
• Further Information: For AML/CFT services for this industry in other jurisdictions, you can visit our Specialised AML/CFT Compliance Management Page for Financial Advisers.

 

Which Types of Financial Advisors Do Your AML/CFT Services Cover?

Focusing on financial advisors’ money laundering (ML), terrorism financing mitigation (TF), and fraud prevention, our Financial Advisors' AML solutions cover the following types of financial advisory service providers and institutions that are deemed to be AML/CTF reporting entities (aka BSA/AML reporting entities):

• Independent Financial Advisors
• Wealth Management Advisors
• Retirement Planning Consultants
• Estate Planning Specialists
• Investment Advisory Firms
• Financial Planners
• Other financial advisors that are subject to BSA/AML requirements for financial advisors

 

Which Types of Financial Advisors Do Your AML Solutions Cover?

Focusing on financial consultants’ money laundering (ML), terrorism financing mitigation (TF), and fraud prevention, our AML solutions for financial advisors cover the following types of financial advisory service providers and institutions that are deemed to be AML/CTF reporting entities (aka “designated service providers” or “obliged entities”):

• Independent Financial Advisors
• Wealth Management Advisors
• Retirement Planning Consultants
• Estate Planning Specialists
• Investment Advisory Firms
• Financial Planners
• Estate Planning Specialists
• Certified Financial Planners (CFP)
• Tax Advisors
• Insurance Advisors
• Mortgage Advisors
• Investment Strategists
• Robo-Advisors
• Other financial advisors that are subject to financial advisors' AML requirements

 

Financial Advisors’ AML Advisory and Support

Our AML/CFT advisory services for financial advisors include, but are not limited to, the following:

• Detailed AML/CTF compliance advice: Tailored to the BSA/AML requirements for financial advisors for different processes, including but not limited to customer due diligence (CDD), transaction risk scoring, transaction monitoring, customer onboarding and know-your-customer (KYC) analysis, and other AML processes. Also tailored to the specific money laundering and terrorist financing (ML/TF) risks involved in these processes, helping you with effective ML/TF risk management.
• Financial advisors' fraud risk management advice: Advising on measures, controls, and processes for detecting, preventing, and responding to different types of fraud, scams, and other types of financial crime relevant to financial advisors. Also, tailored to financial advisors’ fraud environment, risk management practices, and stakeholders' expectations and obligations (banks, regulators, insurers, shareholders, etc.).
• Banking relationships advice: Advising financial advice providers on AML/CTF issues related to maintaining and expanding their banking relationships, complying with banks' AML/CTF risk appetite standards, recall procedures and expectations, and other operational requirements.
• Operational AML/CTF advice: Advising support and KYC teams on day-to-day onboarding, support queue management processes, allocating AML/CFT resources effectively, and making operational improvements to enhance overall customer experience and AML compliance efficiency.
• Specific matter advice (difficult clients, high ML/TF risk matters, customer due diligence for high-net-worth clients, complex transactions and more): Advising on handling specific AML/CTF issues related to clients and complex and unusual transactions, including assessing the adequacy of Sources of Wealth (SOW) or Source of Funds (SOF) information and documentation for specific enhanced due diligence (EDD) cases.
• Peer benchmarking and best practices: Helping financial advisors compare their AML/CFT practices with industry standards, AML/CTF supervisor guidance, and internationally recognised best practices set up by international organisations like the Financial Action Task Force (FATF) for complying with financial advisors' AML/CFT obligations.
• Government agencies liaison advice: Advising senior management and compliance teams on handling relationships with external bodies, including AML/CTF supervisors and law enforcement agencies, such as the FIU or its local equivalents.
• AML/CFT audit advice: Advising senior management and compliance teams on matters related to the statutory AML/CFT audits, including auditors' guidelines, requirements, AML/CFT audit process, and obligations related to the audit's outcome, tailored to both generic financial advisors’ anti-money laundering compliance obligations and your specific situation.
• AML/CFT remediation advice: We help financial advisors to effectively navigate situations involving an AML/CFT breach, warning, or investigation. The cost of non-compliance can result in significant regulatory fines and penalties, as well as irreparable reputational damage. Therefore, when you are on your supervisor's radar, it’s essential to have AML/CFT advisors who know how to set things right and effectively engage with AML/CFT supervisors and other stakeholders. For more details, please visit our Remediation Solutions page.
• Further information: You can visit our AML advisory page for an extensive list of AML/CFT advisory services we offer to support financial advisors' anti-money laundering compliance, as well as AML/CFT compliance for other types of financial institutions and businesses subject to the AML/CFT regime.

 

AMLCFT Training and Capacity Building

We offer the following set of AML/CFT training and education solutions tailored to the financial advisors' AML/CFT compliance requirements:

• Customised AML/CFT Training Solutions: Specialised AML training sessions for various teams, including management, compliance, operations, sales, and customer relations, focusing on the financial advisors' AML requirements, AML/CFT awareness, best practices, and ML/TF red flags.
• Up-to-date Regulatory AML Updates: Keeping your compliance officers, managers, and teams updated with changes in the financial advisors' AML requirements, AML regulations and guidance.
• Workshops on Emerging Trends and Red Flags: Advising on new AML trends, red flags, and typologies relevant to financial consultants’ money laundering, terrorist financing, fraud, and other types of financial crime.
• Practical Workshops: Interactive workshops for effective and goal-oriented AML/CTF compliance, capacity planning, and resource allocation, covering:

• KYC procedures for financial advisors
• KYB analysis and ML/TF risk assessment application to specific clients, transactions and situations
• The financial consultants’ money laundering risks, common money laundering schemes and terrorist financing methods
• Improvements in clients' onboarding and transaction monitoring procedures
• Reg-tech for AML compliance
• Internal and external AML/CTF reporting
• Related risk and compliance issues, including financial crime prevention
• Application of the risk-based approach to financial consultants’ money laundering, fraud risks, and terrorism financing
• Suspicious matter reporting guidelines
• The implementation of customer identification programs and KYC procedures
• Strategic and operational ML/TF risk management
• AML/CTF specifics of cross-border financial advice
• Other obligations related to the BSA/AML requirements for financial advisors

• Practical Compliance Applications: Ensuring the practical application of training, focusing on real-world financial consultants’ money laundering, terrorist financing, and common financial advisors’ fraud scenarios, as well as specific challenges related to the financial advisors’ AML/CTF compliance that your business is likely to face.
• Further information: You can visit our AML training solutions page for an extensive list of AML/CFT training solutions we offer to financial advisors and other businesses subject to AML/CFT regulations.

 

Comprehensive AML/CFT Managed Solution for Financial Advisors

Our financial advisors' AML/CFT compliance management solutions include, but are not limited to:

• AML/CFT Compliance Leadership: We act as your dedicated AML/CFT compliance officers (aka “Money Laundering Reporting Officers” or (MLROs)) and as compliance managers, fully managing AML/CFT compliance and handling the financial advisors’ anti-money laundering obligations for your business.
• Financial Advisors' Anti-Money Laundering Risk Management: Conducting detailed assessments to identify ML/TF risks, assess their inherent impact and likelihood of occurrence for your business, evaluate the effectiveness of mitigations and controls in place, and formulate residual risk ratings.
• Managing Client Onboarding process and Customer Due Diligence: Implementing robust Know Your Customer (KYC), Know Your Business (KYB), customer due diligence (CDD), and enhanced due diligence (EDD) processes, for all types of clients, including higher ML/TF risk clients.
• PEP and Sanctions Screening: Managing thorough compliance with AML surveillance requirements by screening against global sanctions and politically exposed persons (PEPs) lists. This covers both initial and ongoing screening, as well as escalation processes for true positives.
• UBO verification streamlining: Verification of beneficial ownership in line with the BSA/AML requirements, identifying and assessing individuals who hold ultimate control over assets. This includes initial and ongoing checks, with procedures to address discrepancies and high-risk cases as they arise.
• AML Transaction Monitoring: Developing and implementing a set of business-specific ML/TF alerts and red flags to detect and report suspicious transactions, helping you comply with the BSA/AML requirements in a commercially efficient manner without making AML/CFT compliance a business hindering factor.
• Transaction Monitoring and Financial Advisors’ Fraud Prevention Solution: Related to the above, we also help with the implementation of fraud alerts and red flags to detect, prevent, and respond to fraudulent transactions and activities.
• AML/CFT Tech Handling: Leading the alignment of AML/CFT technology implementation with your business processes and AML/CFT objectives. This also includes reviewing AML/CFT technology against the BSA/AML requirements and your core policies and procedures.
• AML/CTF and Data Sharing: Handling information requests from law enforcement agencies, AML/CTF supervisors, and other relevant AML/CTF-designated entities—such as your banking partners, FX platforms, liquidity providers, finance providers, etc.—to help you manage your AML/CTF compliance-related communications.
• Internal AML/CFT Reporting Solutions: Facilitating structured reporting workflows for your board and its delegate committees, with a specific focus on AML/CFT compliance. This includes:

• preparing and presenting comprehensive AML/CFT performance metrics
• providing insights into AML/CFT compliance effectiveness
• reporting on the effectiveness of internal controls and mitigations for your general AML/CFT obligations and the sector-specific financial consultants’ money laundering risks
• identifying areas for improvement

Our AML/CFT compliance reports cover:

• your ongoing compliance status in relation to the BSA/AML requirements
• ongoing progress against your organization-wide AML/CFT compliance calendar
• alignment of your business's AML/CFT performance with specific project goals and relevant KPIs
• other factors to ensure that the management function is well-informed and aligned with AML/CFT compliance requirements for US-based financial advisors.

• Financial Advisors’ AML and Externally Reportable Matters: Implementing effective external reporting procedures to help you comply with financial advisors’ anti-money laundering requirements for reporting captured activities and transactions. This includes managing externally reportable matters covered by the following report types: Suspicious Activity Reports (SARs), Suspicious Matter Reports (SMRs), Suspicious Transaction Reports (STRs), Prescribed Transaction Reports (PTRs), Threshold Transaction Reports (TTRs), and their equivalents.
• Periodic AML/CFT Reporting: Organising and overseeing the preparation, data storage, and effective submission of required periodic reports to your AML/CTF supervisors, helping you comply with BSA/AML requirements for statutory reporting.
• Financial Advisors’ Fraud Prevention Management: Implementing targeted fraud prevention measures, enhancing internal controls, and helping you comply with internal policies and external regulations. We work to mitigate fraud risks without disrupting business processes, aligning fraud prevention efforts with your broader compliance objectives.

 

 

KYB Solutions for Financial Advisors’ Anti-Money Laundering Compliance

We offer a range of KYB solutions to help you effectively comply with financial advisors' AML requirements. These include:

• Establishing ML/TF risk scoring models and parameters for different risk categories: We establish criteria to assess the ML/TF risk levels of your client base by identifying key risk factors based on their business nature, activities, jurisdictions, and other relevant characteristics and develop a risk scoring model to classify clients into different ML/TF risk categories such as low, medium, and high risk.
• Implementing a Customised KYB Process: We can help you roll out the KYB process across all departments to help your teams become sufficiently trained and equipped to handle clients' ML/TF risk effectively when it comes to verification, monitoring, ongoing due diligence, and other processes.
• KYB Technology and Automation: We select and evaluate technologies that can automate various parts of the KYB process, such as data collection, risk scoring, sanctions screening solutions, and ongoing monitoring.
• KYB-Related Escalation Process: We can develop and implement a clear escalation procedure for handling high-risk clients or irregularities, including the triggers for escalation, the actions required at each step, and the responsibilities for resolving these issues.

Core Policies and Procedures for Financial Advisors’ AML/CFT Compliance

We develop, enhance, and implement a set of core policies, manuals, frameworks, and procedures for effective financial advisors' AML/CFT compliance management, including the following:

• Financial advisors' AML/CFT Framework Development: Covering specific BSA/AML requirements for financial advisors and obligations under national AML/CTF laws and regulations, any applicable AML/CFT guidance, your risk appetite, your existing human and technology resources, your business structure, your history of AML/CFT compliance, and your current and future business goals.
• AML/CTF Risk Assessments: Focused on the BSA/AML requirements for financial advisors for risk management as they relate to specific ML/TF risks faced by your business in terms of its size, products, client types, jurisdictions of operation, delivery channels, and the financial institutions it interacts with when delivering its services. Also covering the assessment of the effectiveness of existing controls and mitigations in place to determine the residual risk rating for both general ML/TF risks relevant to the most designated service providers/AML/CFT reporting entities and industry-specific ML/TF risks faced by financial advisors, as these apply to your business operations. Visit our AML/CTF Risk Assessment page for more information.
• Comprehensive AML/CTF Programs (aka "AML/CFT Programme" in some jurisdictions): When it comes to financial advisors’ anti-money laundering compliance, your AML/CFT program is a core document that details how your business complies with various compulsory AML/CFT obligations, covering:

• the initial and ongoing CDD and EDD processes
• verification methods and requirements for identity, address, and source of funds
• internal and external reporting
• ongoing due diligence
• transaction monitoring
• employee vetting and training
• PEP and sanctions screening, and more

Our financial advisors’ AML solution is about grounding your AML/CTF program in reality and developing it based on your circumstances, including:

• your AML/CFT Risk Assessment
• your available ML/TF systems and controls
• your available resources
• your compliance budget
• your AML/CTF compliance team's experience and size
• your stakeholders' interests
• your available AML technology and other relevant factors
• Further Information: Visit our AML/CTF Programs page for more information.

• Financial Advisors' AML/CTF Procedures for Effective AML Compliance: Effective procedures are another core pillar of financial advisors’ AML/CTF compliance. This is why our solutions cover the development and enhancement of a detailed set of AML/CTF procedures and protocols to meet the distinct needs of your business, with a focus on effective AML risk management across various business processes and BSA/AML requirements for financial advisors as they apply to each step of your customer journey.
• AML Manuals and Guidelines: These are more detailed, practical resources that support the procedures by providing step-by-step instructions, specific reference points, and standards. Depending on your business size and complexity, we develop and enhance internal manuals and guidelines necessary for effective and efficient AML/CTF compliance. These include AML Operating Manuals, guiding materials, and guidelines that outline what to do for each process, step, or decision within your procedures.
• ML/TF Controls Mapping: Implementing controls based on your documented risks is another cornerstone of financial advisors' anti-money laundering compliance. We help you develop, map, and assess your internal ML/TF controls and improve their effectiveness to ensure compliance with financial advisors' AML requirements, address specific financial crime, money laundering, and terrorist financing trends, and respond to any findings from internal and external AML/CFT auditors and supervisors.
• AML Red Flag Identification and Response Protocols: This is another area where a well-written AML policy or program must face the reality of operational speed, the workload across different teams, available tools, client base size, and other factors. That is why another part of our financial advisors’ AML/CFT solution focuses on developing clear guidelines for identifying and responding to red flags indicative of fraud, money laundering, or terrorist financing activities, enabling you to take timely and appropriate action in different circumstances.
• AML/CTF Policy Update: Assisting with the review and enhancement of your core AML/CTF documents and operational procedures to reflect changes in your AML policies, including those caused by:

• updates in the AML/CTF laws, financial advisors’ AML regulations or AML supervisors’ sector guidance
• internal changes in your business structure, size, and resources
• the launch of new products or expansion to new jurisdictions
• changes in your risk appetite
• changes in related obligations, such as privacy laws, information sharing, financial advisors’ fraud prevention requirements, and more
• AML/CFT issues identified during internal or external reviews or audits
• other relevant factors

 

AML/CFT Technology Integration Support

Streamlining AML Compliance: Our financial advisors' AML solutions include needs assessment and assistance in selecting and integrating appropriate AML technologies for efficient financial advisors' anti-money laundering compliance management. This includes AML compliance technologies and tools that cover:

• Customer Due Diligence Automation
• E-KYC and Online Identity Verification
• Customer Onboarding Streamlining
• PEP and Sanctions Screening
• Ultimate Beneficial Owner (UBO) identification,
• KYB Solutions and AML/CFT Risk Management
• AML Alert Management
• Ongoing Due Diligence Obligations Management
• Internal AML/CFT reporting
• Financial Advisors’ Fraud Prevention
• AML/CFT Incident Management
• Exception Escalation and Management
• AML/CFT Management Automation: Including automated response workflows and AI technology
• Customisable AML/CFT measures specific to onboarding and monitoring of your high ML/TF risk clients
• Financial Advisors’ AML/CFT Obligations for External Reporting
• Financial Advisors’ AML/CFT Obligations for Record-Keeping
• Transaction Monitoring and Surveillance: Including transaction monitoring tools to automate detection and response to financial consultants’ money laundering and terrorist financing red flags
• Effective CRM for handling BSA/AML requirements for financial advisors

 

Financial Advisors’ AML/CFT Audit Solutions

Having over ten years of AML/CFT compliance experience, ranging from AML/CFT framework and controls development and testing to successful AML/CFT management and issues resolution for various reporting entities, gives us the necessary expertise and qualifications to be your AML/CFT auditors.

We offer two comprehensive AML/CFT audit options to review your compliance with financial advisors’ anti-money laundering obligations. These options are:

Statutory AML/CTF Audit Option: A comprehensive review of your existing AML/CTF framework to assess whether your business complies with AML/CTF standards and applicable obligations. We independently test your compliance with both U.S. AML/BSA obligations and specific financial advisors' AML requirements. These often include but are not limited to:

• adherence to your AML/CTF risk assessment and operational AML/CFT procedures, including the existence of controls and mitigations to address money laundering and terrorist financing risks identified in your risk assessment
• compliance with your core AML/CFT documents, including sample testing
• your CDD requirements
• your staff vetting requirements
• your AML/CFT management processes
• your client onboarding and offboarding processes
• your EDD requirements, including source of wealth (SOW) and source of funds (SOF) requirements and application of the risk-based approach to different ML/TF risk levels
• your transaction monitoring process, covering large, complex, and unusual transactions and patterns
• your ODD processes
• your record-keeping process
• your suspicious matter reporting process (also known as "suspicious activity" or "suspicious transaction" reporting in some jurisdictions)
• your other reportable transactions process (typically covering cash and cross-border transactions)
• the way you detect and address material changes in client relationships
• your initial and ongoing screening process
• and other obligations for financial advisors’ AML/CFT compliance

Assurance Levels: Our statutory AML/CFT audit options are available as both:

• A limited assurance audit
• A reasonable assurance audit

Further Information: Please visit our AML/CFT Audit page for more information.

Internal AML/CFT Audit Option: Apart from an independent statutory audit, we also offer an internal AML audit option to prepare financial advisors for an external audit by an independent auditor, an AML/CTF supervisor's review, or a review by another significant business stakeholder, such as a banking partner or an equity purchaser. This option is also suitable for significant business events like reorganisation or expansion.

Here, we go beyond merely meeting BSA/AML requirements for financial advisors and focus on evaluating the effectiveness of your AML/CFT controls and ML/TF risk management processes for alignment with:

• the ML/TF risks faced by your business, including your Know Your Business (KYB) analysis
• financial advisors’ anti-money laundering compliance obligations
• your current and future goals
• your business model
• your current and prospective client inflow
• the specific AML/CFT compliance areas or requirements (this process can be tailored to address particular AML issues or compliance areas, ensuring a targeted approach to financial advisors’ anti-money laundering compliance)

We help you not only identify any gaps and weaknesses but also provide insights on how to enhance your controls and respond to these in a commercially oriented manner for smarter AML/CFT compliance. Please visit our  Internal AML/CFT Review Solution page for more information.

AML/CFT audit-related solutions:

• Post-Audit Remediation Support: We assist with the implementation of post-audit remediation actions, addressing and resolving any identified AML/CFT issues.
• AML/CFT Attestation Support: Our financial advisors’ AML solutions include helping you prepare the required attestations for your AML/CFT supervisor and other stakeholders. This involves confirming that all necessary remedial actions have been completed and that adequate AML/CFT compliance measures have been put in place.
• Post-Audit Stakeholders' Liaison: We manage your communications with national AML/CTF supervisors, banks, auditors, insurers, and other stakeholders, ensuring smooth progress in reporting on the status and completion of your post-audit action plan.

 

 

Financial Advisors’ Fraud Prevention Solutions

The financial advisors' anti-money laundering control environment is closely related to prevention of financial crime in general, and fraud prevention in particular. Financial advisors' fraud prevention controls and ML/TF controls can form a unified compliance management framework tailored to the specific ML/TF and fraud risks your business is facing or is likely to face. Our Financial Advisors’ Fraud Prevention Solutions include:

• Fraud Risk Assessment and Analysis: Conducting assessments to identify and prioritise fraud risks across your operations, allowing you to allocate resources effectively.

• Incident Response and Investigation: Creating response plans to manage fraud incidents, including guidelines for investigating, documenting, and applying corrective actions to minimise potential damage.

• Implementing Preventive Measures: Setting up checks, alerts, and controls to tackle fraud risks in the financial advice sector, as well as drafting a set of procedures and guidelines to address fraud scenarios that you are likely to face or have faced.
• Data Analytics for Fraud Detection: Leveraging data analytics to identify focus points for your fraud prevention efforts and areas for improvement.
• Fraud Detection Technology Implementation: Choosing and helping you implement appropriate technology for real-time fraud detection.
• Fraud Awareness Training: Educating staff about fraud risks, including identity theft and impersonation.
• Further information: Please visit our Fraud Management Solutions page for more information.

Financial Advisors' Fraud Response Requirements: In the current risk and compliance environment, implementing fraud prevention measures is either already mandated by law in some jurisdictions or, at minimum, expected by government agencies, financial market participants, and other stakeholders.

 

Broader Risk & Compliance Solutions for Financial Advisors

Your AML/CFT compliance is generally more effective when the right hand knows what the left hand is doing, and at the very least, they do not interfere with each other. Incorporating your controls and procedures for compliance with the BSA/AML requirements for financial advisors into an overall risk and compliance management framework efficiently can increase your overall risk compliance effectiveness. This is where our experience can help you. Apart from AML/CFT compliance solutions for financial advisors, we include the following risk and compliance solutions:

• Compliance Advisory and Management: A comprehensive set of solutions for second-line compliance management, including both compliance advisory and compliance management options. Visit our Compliance Solutions page for Financial Advisors for more information.
• Third-line Compliance Assurance: A range of third-line compliance defence solutions covering compliance assurance program development and implementation, internal controls design, and controls testing solutions
• ISO Standards Compliance: A range of solutions for compliance with the International Organization for Standardization (ISO) standards, helping you prepare for ISO certification.
• FATCA and CRS Compliance: A comprehensive set of solutions for complying with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) requirements, including tax residency verification, ongoing due diligence, reporting, and record-keeping
• Privacy Law Compliance: A range of solutions covering development, implementation, and testing of data privacy controls, procedures, and tools required to meet the applicable obligations under the Privacy Act, the GDPR, ISO 27701, etc.
• Financial Licensing and Registration: A set of financial licensing solutions for financial advisors, including preparation, licensing process management, regulator liaison, and post-licensing support in:

• The United States
• Australia
• The United Kingdom
• The European Union
• Singapore
• New Zealand
• Offshore financial centres and tax havens

 

 

Common Money Laundering Risks for Financial Advisors

Financial advisors’ money laundering risk types can be broadly classified into five categories:

• Product types (services offered)
• Delivery methods
• Customer types
• The institutions involved in delivering your services
• Jurisdictions of operation

Given the variety of products offered by different businesses, as well as their different business structures and operations, the examples below of money laundering risks faced by financial advisors represent only a sample and are not exhaustive.

 

Product-Related Risks and Financial Advisors’ AML Compliance

Some of the product-related ML/TF risks relevant to financial advisors’ anti-money laundering compliance include:

• Lack of Verification for High-Risk Investment Products: Absence of controls to assess and monitor investments in high-risk products, such as derivatives, hedge funds, or private equity funds, increases ML/TF exposure by enabling illicit fund layering.
• Insufficient Processes to Verify Source of Wealth for Large Contributions: Failure to verify the origin of significant investments into portfolios or funds leaves financial advisors vulnerable to handling illicitly sourced funds.
• Inadequate Oversight of Insurance-Linked Investment Products: Lack of mechanisms to detect and prevent misuse of insurance products, such as single-premium policies or annuities, for laundering money through layering or integration stages.
• Failure to Monitor Multi-Layered Financial Instruments: Lack of effective controls to identify risks associated with opaque financial instruments used to conceal asset ownership and obscure the movement of illicit funds.
• Risks Tied to Unregistered Securities: Investments in private placements or unregistered securities create additional vulnerabilities due to limited regulatory oversight and disclosure requirements.

 

Customer Type-Related AML Risks for Financial Advisors

Some of the customer type-related ML/TF risks relevant to financial advisors’ anti-money laundering compliance include:

• Failure to Identify High-Risk Clients with Complex Corporate Structures: Inadequate verification of ultimate beneficial ownership (UBO) in clients using layered corporate entities or trusts to obscure identities and asset origins increases ML/TF vulnerabilities.
• Insufficient Enhanced Due Diligence (EDD) for High-Net-Worth Individuals (HNWIs): Lack of effective EDD measures for HNWIs engaging in complex investment activities may result in undetected ML/TF risks, particularly when sources of wealth or funds are unverifiable.
• Lack of Mechanisms to Identify Risks in High-Risk Industries: Advising clients from industries with elevated ML/TF risks, such as gambling, high-value commodities, or cannabis, without tailored risk-based measures increases the likelihood of undetected illicit activities.
• Failure to Detect Large, Complex, or Unusual Transaction Patterns: Insufficient systems to monitor or flag clients funding investments through multiple sources not aligned with their declared source of wealth (SOW) creates opportunities for layering illicit funds.

 

Delivery Method Risks and Financial Advisors’ AML Compliance

Some of the delivery method-related ML/TF risks relevant to financial advisors’ anti-money laundering compliance include:

• Inadequate Verification in Non-Face-to-Face Onboarding: Failure to implement effective identity verification measures for remote onboarding increases exposure to fraudulent clients or identity theft, which can facilitate money laundering.
• Reliance on Third-Party Digital Platforms Without Oversight: Using external platforms for client onboarding, document submission, or advice delivery without sufficient monitoring increases vulnerabilities, particularly if these platforms lack proper AML/CFT controls.
• Failure to Implement Effective Robo-Advisory Compliance Measures: Automated advisory tools, if not designed with adequate screening or monitoring capabilities, may allow clients to structure funds without triggering alerts or reviews.

 

Jurisdictional Risks and Financial Advisors’ AML Compliance

Some of the jurisdictional ML/TF risks relevant to financial advisors’ money laundering prevention include:

• Inadequate Screening for Overseas Beneficial Ownership: Failure to verify the beneficial ownership of clients located in higher ML/TF risk jurisdictions may obscure the true origins of funds or control over assets.
• Insufficient Focus on Jurisdiction-Specific Red Flags: Failure to adapt ML/TF risk assessments for clients from high-risk jurisdictions or industries prone to corruption or illicit financing (e.g., mining, gambling) creates vulnerabilities in due diligence measures.
• Failure to Address Cross-State Transactions: Providing advice for clients operating across multiple states without recognizing jurisdiction-specific tax and AML implications increases exposure to regulatory and compliance risks.

 

Institutional Risks and Financial Advisors’ AML Compliance

Some of the institutional ML/TF risks relevant to financial advisors’ anti-money laundering compliance include:

• Reliance on Financial Institutions with Weak AML Controls: Advisors collaborating with banks, payment processors, or custodial institutions with insufficient AML/CFT measures may inadvertently expose themselves to ML/TF risks.
• Outsourcing Compliance Functions Without Adequate Oversight: Delegating AML compliance components, such as transaction screening or UBO verification, to third-party providers without ensuring their processes meet USA-specific regulations increases exposure to risks.
• Lack of Monitoring for Transactions via Intermediaries: Failure to scrutinize transactions processed through intermediaries or correspondent banks in high-risk jurisdictions can result in undetected ML/TF activities.

 

 

Financial Advisors and Anti-Money Laundering Obligations

Given the variety of BSA/AML requirements for financial advisors, this list is not exhaustive:

• Conducting customer due diligence, including appropriate KYC checks: Ensuring verification of customers’ identities, as well as identities of beneficial owners of customers that are legal entities.
• Conducting transaction monitoring:  Monitoring deposits, withdrawals, and other transactions to identify and report suspicious transactions and patterns. However, this largely depends on the business model of a particular business and local AML/CFT obligations.
• ODD requirements: Conducting ongoing customer due diligence, which is generally based on the customers' ML/TF risk profiles and ML/TF risk categories, as well as changes in their activities, behaviours, or risk factors.
• Staff Vetting: Performing comprehensive background checks and ongoing vetting of staff to maintain high standards of integrity and awareness.
• Reporting Certain Non-Suspicious Transactions: Obligation to report cross-border or cash transactions over a certain threshold, as per the local AML/CFT regulations, in a timely manner. However, if the transaction is processed through a local bank or another reporting entity, reporting requirements may depend on the local AML/CFT regulatory interpretation.
• Compliance with the regulatory obligations: Including registering with your local AML/CTF supervisor, appointing an AML/CTF officer or an MLRO, answering requests for information from the police, regulators and your AML/CTF supervisor, filing an annual report and more.
• Regular Staff Training: Providing continuous training to ensure employees are aware of AML/CFT protocols and can recognise red flags.
• Timely Reporting of Suspicious Transactions: Ensuring that suspicious transactions and activities are reported to the relevant authority (either your local AML/CFT supervisor or a financial intelligence unit (FIU)) within the required deadlines.

• ML/TF Risk Assessments: Conducting regular assessments of ML/TF risks faced by your business is a part of AML risk management for financial advisors and planners.
• Independent AML/CFT Audits and Financial Advisors: Organising periodic independent reviews of the AML/CFT program, other core documents, and components of your AML/CFT framework to assess their existence, compliance, application, and, where applicable, effectiveness, depending on local AML/CFT audit guidance.
• Applying EDD measures: Conducting enhanced due diligence on certain customers and certain transaction types.
• Establishing Clear AML/CFT Policies and Procedures: Creating documented guidelines for staff to follow.
• Monitoring PEPs and Sanctioned Entities: Implementing measures for additional scrutiny of politically exposed persons and entities on sanction lists.
• Screening Against Watchlists: Regular checks of clients against domestic and international watchlists.
• Ensuring Proper Record-Keeping: Maintaining detailed and accurate records of client information and transactions in compliance with AML/CFT regulations.

Common Financial Advisors’ AML/CFT Issues

This is not an exhaustive list and could include:

During Customer Onboarding

• Failure to Conduct Comprehensive Due Diligence for High-Risk Clients: Advisors neglecting EDD for clients with ties to higher-risk jurisdictions or industries may facilitate the onboarding of individuals involved in financial crime.
• Inadequate Validation of Client-Provided Information: Accepting self-reported financial details without independent verification increases the risk of onboarding clients with misrepresented SOW/SOF or fictitious identities.

 

After Customer Onboarding

• Neglect of Periodic Risk Reassessment for Clients: Absence of mechanisms to reassess client profiles after significant changes—such as unexpected investment behaviors or high-value transactions—creates vulnerabilities in identifying emerging ML/TF risks.
• Failure to Refresh KYC Based on Triggering Events: Without specific triggers—such as portfolio changes, withdrawal patterns, or jurisdictional shifts—advisors may retain outdated client information, leading to missed detection of evolving ML/TF risks.

 

Common Financial Advisors’ Fraud Risks

The following list of financial advisors’ fraud types is not exhaustive:

• Financial Advisors and Identity Fraud: Fraudsters impersonating advisors to access clients' sensitive financial information or accounts.
• Financial Advisors and Ponzi or Pyramid Scheme Facilitation: Advisors negligently recommending investments tied to Ponzi schemes.
• Financial Advisors and Transaction Fraud: Falsified trade confirmations or documentation to justify improper fund movements.
• Financial Advisors and Offshore Investment Fraud: Promoting offshore investments with limited oversight, exposing clients to misappropriation risks.

 

 

Common AML/CTF Red Flags for Financial Advisors

The Financial Action Task Force (FATF) and various national AML/CTF supervisors outline the following ML/TF red flags for financial advisors’ anti-money laundering compliance. This is not an exhaustive list:

• Unusual Wealth Indicators: Clients whose wealth, assets, or investments significantly exceed their declared income or financial history, without verifiable explanations.
• Complex or Layered Investment Structures: Use of intricate investment arrangements that obscure the origin of funds or beneficial ownership, particularly across multiple jurisdictions.
• High-Risk Jurisdiction Investments: Failure to detect or monitor investments tied to jurisdictions with sanctions, weak AML/CFT controls, or tax evasion risks due to inadequate due diligence measures.
• Frequent Portfolio or Strategy Changes Without Rationale: Unexplained or unjustified alterations in investment strategies or portfolios, inconsistent with the client’s profile or objectives.
• Use of Offshore Entities Without Verification: Advising on or managing investments through offshore entities without mechanisms to verify ownership or economic purpose raises ML/TF risks.
• Unverified Source of Funds: Clients unable or unwilling to provide documentation verifying the source of funds or wealth for their investments.
• Third-Party Directed Investments: Clients following directives from unrelated third parties to make investments, raising questions about the true purpose or intent.
• Inconsistent Investment Returns Without Explanation: Investments generating atypical returns that cannot be justified by market trends or risk profiles may indicate financial crime risks.