Consistency between manuals, methodology, and operations: the criterion most closely reviewed by AML/CFT authorities.

FINANCE AND BANKING / by Miguel Gallardo Guerra

In the area of Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT), one of the aspects most frequently reviewed by supervisory authorities is the overall consistency of the automated system or the AML/CFT framework.

It is not enough to have formally approved manuals, documented methodologies, and well-drafted policies. Authorities assess whether there is real alignment between what an entity states in its internal documents and how it operates in practice.

A lack of alignment among these elements is one of the main sources of regulatory findings.

Manuals: the internal regulatory framework.

Internal manuals and policies constitute the regulatory framework that governs the entity’s conduct for AML/CFT purposes. They must clearly and precisely describe:

• Customer identification and know-your-customer procedures.
  
• The risk assessment and risk-rating methodology.
  
• Monitoring processes and alert generation.
  
• The roles of the Compliance Officer and internal governance bodies.
  
• Training mechanisms and recordkeeping requirements.
  

However, when manuals contain generic, outdated provisions, or are disconnected from the actual business model, they become merely formal documents that do not reflect the entity’s effective operations.

Methodology: the technical design of the AML/CFT system.

The risk assessment methodology is the conceptual backbone of the AML/CFT system. Its design must respond to the specific profile of the reporting entity, considering its customers and users, products and services, countries and geographic areas, as well as transactions and operating channels.

A robust methodology must be duly approved, implemented, and reflected in the entity’s systems and operational controls.

When the documented methodology does not match how customers are risk-rated, how alerts are generated, or how due diligence measures are applied, the logic of the AML/CFT system breaks down, weakening its effectiveness.

Operations: the ultimate test.

Daily operations are the ultimate test of an AML/CFT system’s effectiveness. Supervisory authorities typically verify, among other aspects:

• Whether customer and/or user risk ratings correspond to real transactional behavior.
  
• Whether generated alerts are analyzed in accordance with previously established criteria.
  
• Whether decisions and determinations are properly documented.
  
• Whether mitigating controls are proportionate to the identified risk level.
  

When manuals, methodology, and operations are consistent, the AML/CFT system demonstrates technical soundness and operational integrity. Conversely, any disconnect among these components may be interpreted as a structural weakness.

The importance of consistency in audit processes.

AML/CFT auditing plays a critical role in assessing internal consistency, as it helps determine whether there is effective alignment between internal normative documents, the risk methodology, and operational practice.

A proper technical review should be conducted transversally and on an evidence-based basis, analyzing not only the formal content of policies, manuals, and methodologies, but also their correct implementation across processes, systems, controls, and operational decisions.

The goal is not merely to confirm formal compliance with obligations, but to assess whether the AML/CFT system operates in an integrated, consistent manner aligned with the entity’s risk profile. A lack of consistency between what is documented and what is executed is often one of the main sources of supervisory findings.

Conclusion.

In the current supervisory environment, the consistency of the AML/CFT system has become a decisive criterion for evaluating its real effectiveness.

Having well-drafted manuals, formally approved methodologies, and implemented controls is not enough if these elements are not fully aligned with each other and with actual operations.

A deep, technical audit makes it possible to identify and promptly correct any disconnect, contributing to the continuous strengthening of the compliance framework and reducing regulatory risk.