KPMG anti-money laundering audit (AML audit)

Rising expectations amid new regulations to combat money laundering: Financial institutions will need to be even more thorough in their analyses.

The regulatory environment in the area of combating money laundering has become more international, more dynamic and more continuous. Combined with increasingly demanding and complex customer behavior, financial institutions face significant challenges in combating money laundering and the financing of terrorism.

KPMG’s dedicated tools help financial institutions to assess the risks of money laundering and terrorist financing, delivering real-time insights down to the last detail and individual customer.

Adrian Huser

Partner, Financial Services, Audit Banking

KPMG Switzerland

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Combating money laundering is an ongoing challenge for financial institutions

Regulation to combat money laundering and terrorist financing has increased significantly, placing ever greater demands on financial institutions in particular. The provisions below are some of the latest changes encouraging financial institutions in Switzerland to conduct in-depth risk analyses:

Revised Swiss Anti-Money Laundering Act (AMLA, in force since January 2023) and, with it, the partially revised Ordinance of the Swiss Financial Market Supervisory Authority FINMA (AMLO-FINMA, in force since January 2023)
FINMA Guidance "Money laundering risk analysis pursuant to Article 25 para. 2 AMLO-FINMA" (FINMA Guidance 05/2023, August 2023)
Upcoming revision of the Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB, in force from 2027 at the earliest)

The market environment has also become more dynamic and complex than it was just a few years ago, and economic sanctions and embargoes are constantly being updated.

Financial institutions are required to implement these within a very short space of time – or risk serious reputational damage. In addition, the regulatory focus is increasingly on risk appetite, which demands structured risk monitoring.

At the same time, it has become easier to obtain information about customers. This simplifies the monitoring of business activities – but comes with the imperative to keep customer documentation up to date at all times.

How can financial institutions effectively address risks in this environment?

All of these factors combine to demand a multifaceted, risk-based approach. Financial institutions need to consider a very broad spectrum of information when assessing the risk of customer relationships. In addition, the risk assessments themselves must always be up to date.

It is not only financial institutions that are affected by these requirements. When conducting anti-money laundering audits, KPMG as an audit firm also has to comply with a specific catalogue of FINMA requirements on combating money laundering and terrorist financing.

Sample based review of business relationships and transactions are central to the regulatory audit. And a robust audit opinion is only possible if they focus on the relevant risks.

KPMG’s solution built around powerful tools

KPMG AML Audit D&A Dashboard

To meet regulatory requirements, respond to the market environment and comply with audit standards, KPMG as an audit firm has developed a sophisticated tool: the KPMG AML Audit D&A Dashboard ("AML" stands for "Anti-Money Laundering", "D&A" for "Data & Analytics"). It is not only of great benefit to our regulatory audit clients, but also advisory clients. Using the dashboard, KPMG is able to provide targeted and effective support in monitoring risks.

The newly developed dashboard brings together two powerful success factors: KPMG’s many years of experience in combating money laundering and terrorist financing, and best practice in the Swiss financial market. The new tool allows an analytical view of a financial institution’s entire customer structure, even if only a small amount of customer data is available. It is also fully scalable with compliance risk indicators and transaction data.

The KPMG AML Audit D&A Dashboard also provides a complete overview of customer risks related to money laundering. Thanks to predefined D&A routines, users get a holistic view of the customer base as well as of each individual customer – for perfection in every portfolio analysis. The D&A routines link the customer and transaction aspects, providing in-depth insights into customer behavior. Furthermore, with the additional tool "K-3PID", an independent view of the respective customer can be gained in just a few minutes.

K-3PID tool

The real, in-depth analysis begins once potentially risky areas or customer groups have been identified. KPMG’s forensic specialists have developed the "Third-Party Intelligent Diligence Solution" (K-3PID) especially for this purpose. By searching a wide range of open sources – including structured data sources, direct search websites and the open web, media, corporate registries, sanctions lists, data aggregators. And it’s fast, creating a detailed risk profile of the customer in question within a few minutes.

K-3PID has been in use with great results for some time now. Used together with the dashboard, effectiveness is guaranteed.

If required, KPMG forensic experts from over 90 language regions are also on hand to assist in preparing a comprehensive risk report. Our experts can be involved in in-depth investigations of individual cases or entire customer groups, and they have permanent access to over 60,000 other data sources from KPMG’s global network.

Features of the KPMG AML Audit D&A Dashboard at a glance

Financial institutions can run the KPMG AML Audit D&A Dashboard on their own systems.
It meets the audit requirements of FINMA and EXPERTSuisse.
In the portfolio analysis, the “KPMG Audit Score” provides valuable information on the money laundering risks of the analyzed customer bases.
The deep-dive function enables a detailed analysis down to the level of an individual customer or a specific customer transaction.

Advantages of the KPMG AML Audit D&A Dashboard

The algorithms and routines are the result of years of experience, specialized knowledge and the latest market standards.
The dashboard enables a vertical view of customer-specific risk factors: customers are analyzed with regard to all of their characteristics and activities.
Risk factors can be analyzed in a targeted manner at any time, whether at the level of the financial institution, customer group, individual customer or transaction.
Benchmark data enables an independent risk assessment of customer relationships as well as an independent view of the actual customer risks.
Risk trends and measures can be tracked across defined timeframes.
The dashboard can be used as part of the audit in a variety of ways: for example, in risk analysis, test of operating effectiveness, substantive audits or analytical testing of the risk appetite.

The tool enables a data-driven audit that eliminates chance in samples and makes the audit itself more effective.
The complex mass of data is analyzed in full, leading to an impressive analysis report with a clear and simple structure.

Potential dashboard users represent a diverse group, from banks and portfolio managers to trustees and investment firms. KPMG can use the dashboard with all clients, both in audit and other specific engagements. The KPMG dashboard is suitable for all financial institutions and can be tailored to any customer base.

In a nutshell

The KPMG AML Audit D&A Dashboard helps in:

Independently assessing the relevant risk classification model
Presenting the risks of the entire customer portfolio independently and clearly
Identifying individual customer groups and risk clusters for in-depth analysis
Preparing data for event-related focus topics such as sanctions or leaks

Partnering for success: now is the time analyze the risks in your customer base

Don’t hesitate – now is the time to get an independent and in-depth overview of the risks in your customer base. Would you like to learn more about KPMG’s audit tools for combating money laundering and terrorist financing?

We’re here for you. Our experts will be happy to answer your questions and respond to any suggestions or comments you may have.