Which statement describes the role of independent audit in an AML program?

• A. It tests the effectiveness of the AML program and controls
• B. It approves new customers
• C. It sets product pricing
• D. It processes transactions

Answer: (A)

In AML programs, an independent audit provides an objective evaluation of whether the program’s controls are properly designed and operate effectively over time. It involves reviewing policies and procedures, testing the controls (such as customer due diligence, ongoing monitoring, alert handling, and SAR filing), and assessing how well issues are identified and remediated. The goal is to give management and the board assurance that the program actually prevents and detects money laundering and remains aligned with regulatory requirements and the organization’s risk profile.

This is why the best statement is that an independent audit tests the effectiveness of the AML program and controls. It’s about verification and improvement, not performing day-to-day duties. Activities like approving new customers, setting product pricing, or processing transactions are operational tasks handled by different parts of the organization and would compromise the independence of the audit.