Use aml.plus Tips&Tricks and Be Ready for SRS Audit

Entrepreneurs often get really worried when they get a notice from the State Revenue Service (SRS) about checking if they’re following the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing (AML/CTF) and the requirements of the International and Latvian National Sanctions (Sanctions) Law, or, as it is also known, a SRS AML (Anti Money Laundering) review.

What can you expect from the review, and how can you prepare for it? If a business owner diligently complies with the requirements of the AML Law and Sanctions Laws, there is no reason to worry.

However, if you feel that something may have been overlooked, read our blog post and check yourself. If any of the points have not been fulfilled, it is advisable to rectify this as soon as possible.

So, make sure that you have:

1. submitted a report to the SRS on your type of activity as a subject of the AML Law;

2. appointed an employee, including from senior management, who is authorized to make decisions and is responsible for compliance with the AML and Sanctions Laws requirements, and reported this to the SRS;

3. performed and documented ML and sanction risk assessments in accordance with your type of activity to identify, assess, understand, and manage the ML and sanction risks inherent in your activity, including:

   3.1. determined the overall ML/TF risk;

   3.2. determined the overall sanctions risk;

4. developed an internal control system for ML/TF and sanctions risk management, providing for:

   4.1. the procedure and scope of customer due diligence,

   4.2. the procedure for documenting and reviewing with the customer, their country of residence, the customer’s economic or personal activities, the services and products used and their delivery channels, as well as the ML/TF and sanctions risk associated with the transactions carried out,

   4.3. the procedure for monitoring customer transactions,

   4.4. the procedure for detecting suspicious transactions,

   4.5. the procedure for preventing suspicious transactions,

   4.6. the procedure for reporting suspicious transactions to the Financial Intelligence Unit,

   4.7. the procedure for reporting violations or attempts to violate sanctions restrictions, as well as circumvention or attempts to circumvent sanctions restrictions, 

   4.8. the procedure for storing and destroying information and documents obtained during research and monitoring of customer transactions,

   4.9. the rights, duties, and responsibilities of employees in complying with the requirements of the AML Law;

   4.10. the procedure for ensuring anonymous internal reporting of violations of the requirements of the law and the evaluation of such reports, if, considering the number of employees of the obliged entity, such reporting is applicable,

   4.11. an independent audit function, if applicable, taking into account the risk of money laundering and terrorist and proliferation financing and the scale and nature of the economic activities of the subject of the law,

   4.12. requirements and procedures for regular review of policies and procedures in accordance with changes in regulatory enactments or the subject’s operational processes, services provided, management structure, customer base or regions of operation;

The SRS will also check whether you have:

5. assessed the reputation of the person applying for the position of responsible employee for compliance with the requirements of the AML law

6. provided regular training to the responsible employee and other employees in the field of AML and sanctions;

In cases where a suspicious transaction has been detected:

7. ensure that all documents, decisions, reports related to the detection, assessment, reporting or prevention of a suspicious transaction are in order.

Keep in mind that the SRS will not only check whether you have an internal control system in place, but will also make sure that you comply with the internal control system’s  requirements, so organize all documents related to customer identification, research (KYC, CDD, EDD), and monitoring, and make sure that you have assessed your and your customers’ ML/TF and sanction risks.

If you have any doubts about the compliance of your Internal Controls System with the current requirements of the AML and Sanctions Laws, or if you need to develop a new system, you can safely contact our experts by writing to [email protected]  or by calling 6000 7770.

aml.plus team