The Step-by-step Process Of AML Regulatory Remediation

Regulatory breaches in Anti-Money Laundering (AML) compliance can have serious consequences—from reputational damage to financial penalties and even license revocation. When a financial institution or reporting entity is found to have deficiencies in its AML program, regulators often require corrective action, known as regulatory remediation.

AML regulatory remediation is not just about fixing issues—it's about rebuilding trust with regulators and ensuring ongoing compliance. This blog outlines the structured, step-by-step approach necessary for successful remediation and highlights how expert support can streamline the process.

What Is AML Regulatory Remediation?

AML regulatory remediation refers to the process of addressing compliance deficiencies identified by regulators through audits, examinations, or investigations. It involves the development and implementation of corrective measures to meet applicable legal and regulatory standards.

Failures triggering remediation can include:

Inadequate Know Your Customer (KYC) or Customer Due Diligence (CDD)
Insufficient transaction monitoring systems
Gaps in suspicious transaction reporting (STRs)
Lack of documented policies and procedures
Deficient staff training programs

Step-by-Step Process of AML Regulatory Remediation

Step 1: Identify the Regulatory Breach

Remediation begins with understanding exactly what went wrong. Regulatory findings may come from:

A FINTRAC examination or desk review
A regulatory audit (domestic or international)
Internal compliance reviews
Whistleblower reports or enforcement actions

Understanding the root cause is key—whether it was due to policy gaps, staffing limitations, or technology failures.

Related Service: AML Effectiveness Review

Step 2: Engage Experienced Compliance Professionals

Time is of the essence when regulators issue findings. Engaging external experts—such as AML Incubator’s regulatory remediation team—can help ensure the remediation plan is robust, realistic, and regulator-ready.

Benefits of outsourcing include:

Objective insights from third-party professionals
Proven methodologies based on regulatory expectations
Enhanced credibility with regulators

Step 3: Conduct a Gap Analysis

A detailed gap analysis assesses your current AML program against regulatory requirements and industry best practices.

This analysis will review:

Customer onboarding and risk rating
Transaction monitoring systems and thresholds
Suspicious activity escalation and reporting
Record-keeping practices
Staff competency and training levels

Step 4: Develop a Comprehensive Remediation Plan

A successful remediation plan should be:

Tailored to your business model and size
Risk-based, addressing high-priority issues first
Time-bound, with clear milestones and owners

Plans often include:

Policy and procedure revisions
Staff re-training
System upgrades (e.g., transaction monitoring tools)
Hiring or appointing a qualified CAMLO/MLRO

Step 5: Implement Corrective Actions

Once approved, the remediation plan must be executed with precision. This stage involves:

Updating systems and processes
Conducting training sessions
Enhancing reporting procedures
Collecting documentation for regulator review

This is also a good time to consider integrating tools for Enhanced Due Diligence (EDD) or upgrading KYC protocols for higher-risk customers.

Step 6: Independent Validation

Many regulators require third-party validation that the corrective actions were properly implemented. This could involve:

A second effectiveness review
External audit of the implemented controls
Documentation of operational testing and outcomes

Partnering with an independent compliance advisor—such as AML Incubator—adds an extra layer of credibility.

Step 7: Ongoing Monitoring and Reporting

Even after the immediate remediation, regulators expect firms to demonstrate continuous compliance. This means:

Ongoing internal audits
Regular training updates
Monitoring of policy adherence
Proactive reporting of emerging risks

In some cases, periodic progress reports must be submitted to the regulator over an agreed timeframe.

Why AML Incubator Is Your Trusted Partner in Regulatory Excellence

Navigating regulatory remediation can be overwhelming. AML Incubator’s hands-on team of compliance professionals helps you manage the entire lifecycle—from assessment to validation. Whether you are a startup, MSB, or crypto exchange, we help restore compliance and strengthen your defenses.

We also support clients with:

Regulatory remediation is not just a legal necessity—it’s an opportunity to rebuild and future-proof your compliance framework. A structured, professional approach ensures not only regulator satisfaction but also better protection against financial crime. Whether you're responding to a FINTRAC review or preparing for MiCA regulations in Europe, AML Incubator is here to help.