What is the purpose of a horizontal AML compliance audit?

What is the purpose of a horizontal AML compliance audit?

• A. To test all components in a department
• B. To review the effectiveness of all AML policies
• C. To test the same process across multiple departments
• D. To evaluate only transaction monitoring systems

Answer: (C)

A horizontal AML compliance audit serves the purpose of examining a specific process or function, such as customer due diligence or transaction monitoring, across various departments or business units within an organization. This type of audit allows for a comparison of practices, controls, and effectiveness in different areas of the business that may deal with similar risks. By testing the same process across multiple departments, auditors can identify inconsistencies, strengths, and weaknesses in the AML compliance framework, leading to a more comprehensive understanding of how effectively the AML program is being applied organization-wide. In contrast, the other options lack the specific focus on cross-departmental analysis that defines a horizontal audit. Testing all components within a single department would be characteristic of a vertical audit, which looks at the in-depth compliance of that particular department. Reviewing the effectiveness of all AML policies would be more aligned with a general compliance review rather than a focused audit, which may not provide insights across departments. Evaluating only transaction monitoring systems would limit the scope to just one aspect of AML compliance, failing to capture the broader organizational practices. Thus, the essence of a horizontal audit is its ability to evaluate consistency and effectiveness across multiple departments involved in the same processes, making the selected answer a clear fit for the purpose of this type of

A horizontal AML compliance audit serves the purpose of examining a specific process or function, such as customer due diligence or transaction monitoring, across various departments or business units within an organization. This type of audit allows for a comparison of practices, controls, and effectiveness in different areas of the business that may deal with similar risks. By testing the same process across multiple departments, auditors can identify inconsistencies, strengths, and weaknesses in the AML compliance framework, leading to a more comprehensive understanding of how effectively the AML program is being applied organization-wide.

In contrast, the other options lack the specific focus on cross-departmental analysis that defines a horizontal audit. Testing all components within a single department would be characteristic of a vertical audit, which looks at the in-depth compliance of that particular department. Reviewing the effectiveness of all AML policies would be more aligned with a general compliance review rather than a focused audit, which may not provide insights across departments. Evaluating only transaction monitoring systems would limit the scope to just one aspect of AML compliance, failing to capture the broader organizational practices. Thus, the essence of a horizontal audit is its ability to evaluate consistency and effectiveness across multiple departments involved in the same processes, making the selected answer a clear fit for the purpose of this type of