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The Four Most Common Mistakes Businesses Make When Selecting External Money Laundering Prevention Experts

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The Four Most Common Mistakes Businesses Make When Selecting External Money Laundering Prevention Experts

Bonatti Compliance emphasizes that there is no better defense for the company than the preventive audit and analyzes the recurring failures of the companies

BY RRHHDigital, 1:30 p.m. – April 21, 2021

Mistakes always take their toll, but even more so when it comes to business. These can translate into serious problems, especially when they relate to compliance and money laundering issues and no matter the size of the business, any business must invest a tremendous amount of time and effort. ‘efforts to comply with applicable legislation. .

Francisco Bonatti, managing partner of Bonatti Compliance, underlines in this regard that “compliance with legislation on the prevention of money laundering is a practice that many companies take lightly and want to do quickly, but whose disdain may be theirs. cost millions if they ignore the totality and complexity of the demands they face ”.

This is why it is essential that companies adopt the right measures and processes to avoid serious administrative and criminal penalties. Francisco Bonatti underlines that “there is no better defense for the company than prevention”. In this sense, this expert explains that the role of the external expert in the prevention of money laundering is essential to avoid economic damage and reputations in companies.

What are the most common mistakes that obligated subjects can make when choosing an external expert?

From Bonatti Compliance, they highlight the four most common mistakes businesses typically make when selecting outside experts in money laundering prevention:

Select an auditor who does not have the necessary level of independence and impartiality: this is usually the result primarily of business or other relationships that may exist between the organization providing the audit service and the client. For example, previous or subsequent training or advisory services on money laundering prevention (prohibited within two years before or after the report is issued), or through other types of relationships, even not related to prevention of money laundering (such as procedural defense services, financial or tax advice). Another risk is that the organization offering the audit service has a formally correct level of autonomy and independence, but the external auditor does not ensure the same level or may maintain some type of conflict of interest. ‘interests with the subject under audit which affects its own autonomy and independence. Choose an auditor who is conditioned in his work by internal or external commercial pressure: this usually results in poor quality reports that can be sanctioned by the authorities. These circumstances sometimes arise because of the surrender to pressure from clients which condition the auditor’s selection of the price criteria of the service, at other occasions because of the needs of the company of the external expert, who is subject fluctuations in the market and may need to bill. or who wants to enter an industry that does not know or attract a new client, or that lacks specific auditors for that client profile and who voluntarily calculate or reduces the times and costs that will be reasonable in their offer, as an incentive to ensure that the customer accepts his contract. Choose an auditor who does not have a procedures audit department: a good service is established by means of a manual which establishes clear criteria, with formats, instructions and procedures adapted to the applicable standards and legal requirements . Running the risk of doing so without it may lead to reports that omit critical aspects of the audited reporting entity, that do not generate evidence of their sampling and substantive testing, or that are erroneous within the scope of the report. audit, thus generating a serious risk of sanctions by the authorities. Opt for an auditor based on their commercial or brand actions, without applying due diligence to the selection process: to date, there has been no external and objective benchmark that would serve the subjects obliged to select the auditor. entity or external expert making your report. In this way, the obligated subject depends exclusively on the technical capacities and the knowledge of the market that its own staff had to carry out the selection of the candidates and to apply to them the corresponding Due Diligence procedure. In this context, the selection was made on the basis of the commercial, reputation or brand actions carried out by the candidates (assuming for this reason that they are competent, independent and impartial), or on the basis of the relationship of clients with whom the candidate may have services rendered. Faced with the enormous risks involved in this selection method, the Accredited Entities provide with the ENAC seal the guarantee that the National Accreditation Entity evaluates them periodically, by ensuring through audits that the structure and internal organization of the entities The management system and the quality system comply with legal regulations and the standard established by ENAC through its specific accreditation criteria.

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