AML Compliance Evidence for Payment Firms

Payment institutions and EMIs face significant regulatory challenges in maintaining auditable Anti-Money Laundering (AML) compliance evidence. The Financial Conduct Authority (FCA) mandates robust Customer Due Diligence (CDD), ongoing monitoring, Suspicious Activity Report (SAR) governance, and sanctions screening as part of their AML obligations. These requirements necessitate a systematic approach to evidence collection and retention, ensuring that firms can demonstrate compliance effectively during audits or inspections.

Firms must produce comprehensive CDD records that include customer identification, verification details, and risk assessments. This evidence should be readily accessible and demonstrate that appropriate measures were taken to understand the nature and purpose of customer relationships. The FCA's SYSC 6.3.1R highlights the need for firms to establish and maintain effective AML systems and controls, making it essential for firms to document their CDD processes meticulously.

Ongoing monitoring involves tracking customer transactions and behaviour to identify potential money laundering activities. Firms should maintain records of transaction monitoring results, including any alerts generated and subsequent investigations. The FCA expects firms to have documented procedures for ongoing monitoring, as outlined in the FCA's Financial Crime Guide, which underscores the importance of having clear and repeatable processes.

SAR governance requires firms to document the decision-making process for filing or not filing a SAR. This includes maintaining records of internal discussions, escalations, and decisions made by the Money Laundering Reporting Officer (MLRO). Effective SAR governance ensures that firms can provide evidence of their rationale and compliance with the Proceeds of Crime Act 2002, which is critical during regulatory reviews.

Sanctions screening processes must be documented to show how firms identify and manage sanctioned entities. Firms should keep records of screening results, any matches found, and actions taken. The FCA's guidance on financial crime emphasises the need for effective sanctions controls, making it crucial for firms to have an auditable trail of their screening activities.

Current approaches using spreadsheets, email, and shared folders often create governance gaps and increase the risk of non-compliance. These methods lack the necessary control, visibility, and auditability required by the FCA. Payment firms should implement structured systems that provide board visibility, maintain escalation records, and ensure repeatable evidence to strengthen their compliance posture.

RegNexus offers regulatory operating infrastructure that helps payment institutions and EMIs organise their AML compliance evidence. By providing a centralised platform for governance, evidence management, and reporting, RegNexus supports firms in meeting FCA requirements efficiently. This solution aids in building a robust and auditable AML compliance framework.