The ABS partnership outlines best practices for bank audits against money laundering

The ABS has published guidelines to improve anti-money laundering audits in banks.

This initiative was executed in collaboration with the Anti-Money Laundering Audit Peer Group (AAPG), an industry-led organization founded in October 2022 to enhance AML/CFT audit best practices within Singapore's banking sector. Co-chaired by DBS and OCBC, the AAPG also partners with Ernst and Young Advisory (EY) and the Institute of Internal Auditors Singapore (IIA). The group aims to foster engagement with the Monetary Authority of Singapore (MAS) and the wider audit community to address critical AML/CFT risk areas effectively.

On Monday, ABS announced the release of a best practice report crafted in collaboration with industry and professional associations. This report aims to enhance AML/CFT auditing standards in Singapore by establishing a standardized framework for both internal and external auditors engaging with banks.

The document outlines baseline standards that delineate the minimum expected auditing standards and processes for auditors to implement. Additionally, it highlights best practices that auditors are encouraged to adopt based on their bank's or clients' risk profiles. The baseline standards and best practices were informed by feedback from banking institutions and audit firms that participated in AAPG's benchmarking survey in 2023.

AAPG has developed comprehensive guidelines addressing key priority areas, including risk assessment, for both internal and external audit functions, informed by survey results. Among the areas of focus are the extent and quality of external audit coverage, the effectiveness of reporting and follow-up on findings, and the methodologies employed in audits. The study also presents case examples illustrating how financial institutions can leverage analytics to enhance their AML/CFT audit processes. According to AAPG, an increasing number of banks are harnessing data analytics to achieve successful outcomes in their AML/CFT evaluations. ABS highlights that this approach aids in the identification of high-risk clients and market segments, which can then be subjected to more rigorous audit scrutiny.