Understanding AML Requirements for Financial Services

If you're in the financial services space, complying with Anti-Money Laundering (AML) regulations is non-negotiable. Each country has its own regulatory framework, but there are core principles that global AML programs typically share.

In the U.S., AML obligations are governed by the Bank Secrecy Act (BSA). Compared to many other jurisdictions, the BSA is relatively flexible in how companies can meet their obligations. It sets clear expectations, but it allows businesses to decide the best approach to compliance based on their specific risks. If you're launching a cross-border business that touches the U.S., the BSA is a great reference point and template to build from.

Beyond regulatory expectations, a strong compliance framework is also a strategic advantage. Banking partners, service providers, and investors will want to see that your business takes AML seriously and that it does not represent a risk. Rather than viewing compliance as a burden, see it as a tool to help you grow, expand into new markets, and build lasting trust.

Here are the AML Program Basics also known as the 5 compliance pillars:

1. Risk Assessment and written policies and procedures

Every company must identify and evaluate its AML risks—such as customer type, geography, products, and services—and determine how to mitigate them. While the BSA gives flexibility in how to conduct this assessment, using more structured approaches—like those from the European Banking Authority—can help ensure your program is aligned not only with U.S. standards but also with stricter international expectations.

Your AML program should be documented in clear, formal policies outlining your obligations and how you plan to meet them. These policies should also reflect how you’ll mitigate the risks identified in your risk assessment. The basic policies that everyone should have are the:

• AML Policy – outlines your overall approach to AML compliance without going into too much detail.Generic is best.

• KYC Policy – KYC is considered as the 5th compliance pillar. This policy should explain your customer due diligence (CDD) and enhanced due diligence (EDD) practices.

• Transaction Monitoring Policy – describes how you detect and respond to suspicious activity.

2. Compliance Officer

You need to designate a qualified Compliance Officer responsible for overseeing the AML program. This person should understand the applicable regulations and be empowered to implement and enforce your program. Some countries (like Mexico) require the officer to hold a specific title or certification. Others simply expect a "qualified individual"—but be prepared to submit a resume or demonstrate experience during examinations or due diligence processes. This person serves as the point of contact for internal teams, external auditors, and regulators and should have a close relationship with leadership in the company to ensure compliance in part of decisions and culture of the company. 

3. Training

Compliance is not just the job of one team—it’s everyone’s responsibility. From top leadership to frontline staff, every employee plays a role in maintaining the integrity of your business.  

Financial crime trends evolve quickly, and regulations are constantly being updated. That means training must be ongoing, not just a one-time onboarding event. In general, onboarding compliance training and an annual training with a test should be enough to satisfy the regulators expectations. Annual refreshers are a baseline, but high-risk roles or fast-changing environments may warrant quarterly updates. 

4. Audit and Review

An independent audit is considered best practice—and in many jurisdictions, it's legally required. Whether or not it's mandatory in your country, having your AML program independently reviewed is critical to ensuring its effectiveness and readiness for regulatory scrutiny.

At a minimum, an AML audit should be conducted every 18 months, though annual external audits are widely considered best practice. For high-risk businesses, more frequent internal reviews are expected. A strong approach combines both: implement internal controls that are reviewed on a monthly, quarterly, or annual basis depending on the risk level, and complement them with a comprehensive third-party audit once a year. This layered structure helps ensure ongoing compliance, early detection of issues, and readiness for regulatory inspections.

5. Customer Due Diligence

Knowing your customer is one of the most critical—and often most resource intensive —components of an AML program. Regulators expect that you not only identify and verify your customers, but also understand the nature of their business, the source of their funds, and whether their activity aligns with what you’d reasonably expect.

When something doesn’t seem right—whether flagged through transaction monitoring or other red flags—you’re expected to perform Enhanced Due Diligence (EDD). This means going deeper to validate the customer’s identity, business relationships, and financial behavior to ensure everything checks out.

For digital platforms, this process can be costly. Identity verification tools, sanctions screenings, and adverse media checks require both technology and compliance expertise. Poorly designed onboarding or overly intrusive requests can also lead to customer frustration and churn—making it a delicate balance between compliance and user experience.

However, when well-planned and strategically managed, CDD can be a competitive advantage. A thoughtful, risk-based approach—combined with smooth onboarding flows—can help build trust, improve customer retention, and meet regulatory expectations without slowing down your business.

Compliance Cost-Cutting Tips for Early-Stage  

For fintech startups, compliance is one of the biggest cost centers. Operating in the financial services space means navigating a maze of regulations, setting up proper controls, and investing in tools and talent to manage risk effectively. But while a strong compliance program is non-negotiable, overspending too early can cripple your runway.

Failing to get compliance right doesn’t just result in fines. It can delay product launches due to licensing issues, damage your reputation with regulators and customers, and create risks that can compound over time. For pre-seed or early-stage teams, the challenge is finding a lean, practical way to build a compliance foundation without breaking the bank.

Here are some smart ways to manage costs across the main AML compliance functions while still protecting your business.

1. Build Around Your Compliance Officer (Without Overpaying)

Hiring a full-time Chief Compliance Officer (CCO) in the U.S. in the range of  $150,000 to over $300,000. That may be a big ask for an early-stage startup. 

One highly recommended alternative is hiring a compliance consulting firm. This gives you access to seasoned professionals at a fraction of the cost—and in many cases, they can even serve as your named compliance officer. Eventually, as you escalate, they can advise you as to how to build your in-house compliance department and assist with hiring needs.

For startups with extremely limited budgets, doing it yourself is an option, but only with the right preparation. Taking a certification course like ACAMS can give founders or early team members a solid grounding in compliance. It's important to use reputable templates and have a consultant review your program before launch. This DIY route works best for companies with low transaction volume and relatively simple risk profiles.

2. Support Functions: Analysts, Contractors, and Global Talent

Once your program is in motion, someone will need to handle day-to-day tasks like reviewing KYC files, evaluating transaction monitoring alerts, and handling sanctions screening hits. In the earliest stages, this may fall to your compliance officer—or even a founder. But as things ramp up, the workload grows fast.

Rather than immediately hiring in-house analysts, you may consider working with independent contractors or consulting firms that specialize in these tasks. Another cost-effective option is hiring remote compliance professionals in lower-cost jurisdictions, especially for roles like KYC reviews or AML alert analysis. You can find excellent professionals and build a global team that is  lean, skilled, and scalable.

3. Be Strategic with Your Systems

Even at a small scale, it’s hard to manage compliance without some level of automation or tooling. Choosing the right systems early on can help you scale without drowning in manual work.

For KYC, most fintechs use third-party vendors that offer identity verification and AML screening. Prices typically range from $1 to $5 per client verification. Some tools offer bundled services, which can help save. If your volumes are very low, you may be able to verify IDs manually—asking users to join a video call and comparing their face to the ID they submitted. Just remember to document the verification process thoroughly.

When it comes to sanctions screening, all major lists (like OFAC’s SDN list) are public, and you can technically download and screen them yourself manually. This can work in the beginning, but automating this process becomes important quickly, especially if you’re screening against multiple lists or need ongoing checks. Many KYC vendors offer screening as an add-on.You can also easily build your own internal tool to screen if you have some technical help.

Transaction monitoring is one area where DIY can stretch surprisingly far. You can set up basic logic—like spending thresholds or known red flags—and flag transactions in your database. With a clear process to review alerts and document your decisions, this setup can work until you need something more robust. When you do, there are vendors offering flexible and scalable solutions starting around $2,000 per year.

4. Don’t Skip the Audit and be selective

At some point, especially if you’re raising funds, you’ll be asked for an independent audit of your compliance program. These can be expensive—anywhere from $25,000 to $150,000—but they’re also necessary for credibility and risk management in addition to legally required in many jurisdictions.

Some firms offer lighter reviews or "readiness assessments" that cost less while still giving you useful insights. Just make sure to work with someone who understands your business stage and doesn’t push you toward unnecessary enterprise-level controls that you can’t deliver at the stage you are in.

5. Train Your Team in a Way That Scales

Regulators expect you to train your staff on compliance fundamentals. That doesn’t mean you need to license expensive software from day one. In the early days, you can build your own training deck covering core topics—risk assessment, AML fundamentals,  internal controls, and ongoing training. Track attendance, test knowledge, and keep clear records.

Later on, once your team grows or you operate in more than one jurisdiction, you might consider learning management systems (LMS) or off-the-shelf training platforms. These typically cost between $5,000 and $20,000 annually.