Clarency under the microscope

As we develop our systems to increase our capacity and improve our customer service, it's vital that our compliance-first focus and commitment to AML and ATF doesn't waver, and that we continue to set a benchmark for transactional diligence. Nothing beats a set of independent expert eyes inspecting and reporting on the best - and exposing the flaws - of internal systems and processes. We recently commissioned SightSpan to perform Design Effectiveness and Operational Effectiveness reviews to examine exactly what we do and to highlight what's working well and what we could improve.

The project included the following elements:

1. AML Framework and Governance (to include AML Policy, Risk Assessment, Risk Appetite, Three Lines of Defence, Governance and Management Information)
2. KYC (to include CDD, EDD and related due diligence requirements, and periodic refresh)
3. Risk screening, (to include OFAC and Sanctions, Politically Exposed Persons (“PEP”), and adverse news/negative media)
4. Ongoing Monitoring and Controls (specific to this review: Transaction Monitoring (“TM”), Client Exit/Retention Processes and Decisions and, Model/rule configuration and tuning; alert management; case management
5. Investigations and SARs; (for example, how outputs from the systems are used as inputs into investigations and SAR processes)
6. Technology, Systems and Data; (this is related more to specifications, instructions, rule sets, features, functions, data structures, data requirements, DQ, etc.)
7. AML Training
8. AML Operational QA and AML Testing (to include all Three Lines of Defense)

It's with great pleasure - and a certain degree of relief - that Clarency came through looking reassuringly shiny. Here are a few quotes:

• The firm has a very strong culture of communication and collaboration as evidenced from regular reviews of operations and reporting from manual compliance controls, while it works to further automate operations for monitoring and screening.
• AML Framework and Governance is deemed to be Effective with no Observations
• The firm has a clear structure and review process according to the KYC & Due-Diligence Policy, and was witnessed during shadowing/interviews
• Following a thorough review of policies and procedures pertaining to the requirements when CDD and EDD should be conducted, and whether the reviews are performed using a sufficient risk-based methodology, the [reviewers] concluded that Clarency has implemented a clear and thorough process
• Clarency has demonstrated to have a highly complex and comprehensive KYC and CIP program operating at a high level of efficiency and in line with industry standards.

We don't claim to be perfect, and SightSpan's review confirmed that we're not. We expected and welcomed observations on where we can improve, and were delighted to see that of those made, nearly all will be resolved by biz.Clarency 2.0, which is already being introduced to our processes. Here's how SightSpan put it:

As Clarency is already underway to implement enhancements to its core platforms to include
greater automation and accuracy, this is considered a minor Observation, but has been noted here in
order to track mitigation of this risk with the planned enhancements

We're grateful to Joe Bognanno, John Walsh, Stoyan Lozanov and the SightSpan team for making the review an pleasurable and effective process. They've fired us up to keep getting better.

"Clarency has demonstrated an overall impressive level of high standards in both understanding and managing Anti-Money Laundering and Financial Crime Risk. There is a “Culture of Compliance” demonstrated at all levels of the organization."

SightSpan, February 2023

The full report is available to organisations currently working with us, or those with an interest in doing so. To request a copy under NDA, please click here