What are dual controls in the context of AML?

Dual controls refer to a system designed to ensure that two individuals must be involved in certain activities or processes to reduce the risk of error or fraud. In the context of Anti-Money Laundering (AML), dual controls are particularly relevant during Customer Due Diligence (CDD) processes.

When applied to CDD, dual controls help ensure the accuracy and completeness of the information collected about customers. This is critical in AML efforts, as having verified and correctly assessed client information allows for better identification and reporting of suspicious activities. For example, having one employee gather the information while another reviews and approves it ensures that no single individual has unchecked authority or access to sensitive data, thereby mitigating risks associated with potential compliance breaches.

In contrast, other options do not accurately relate to the principle of dual controls in AML. Approval systems for customer communications, backup systems in financial transactions, and protocols for risk assessment reporting, while relevant to compliance and financial processes, do not specifically embody the dual control framework that seeks to cross-verify actions to safeguard against misuse.