Research On Internal Auditing Of Bank Anti-money Laundering

China has made a great effort to fight against money-laundry and got a lot of achievement recent years. However, we can not be proud of that because the criminals are constantly making new challenges to us. According to the anti-money laundering report, the amount of money-laundering crime is increasing from35billion to nearly300billion during just a few years, which is really amazing. Money laundering will bring a serious threat to the health development of our politics and economy and undermines the reputation of social justice and government. Nowadays, auditing can be applied to anti-money laundering, the new field, and auditors have already made a great help in it. But unfortunately, research on anti-money laundering audit both domestically and internationally are not enough. Especially, literature on the internal auditing of bank anti-money laundering is really little.Applying standard analytical methods mainly, this paper begins with the statement of relevant literature, and point out the room and necessarily to conduct further research. Then, the author provides the definition and components of anti-money laundering. There are three internal reasons of why anti-money laundering will be generated definitely. In the third part, this paper provides the theory framework of internal auditing of bank money laundering and after that, is the auditing procedures. Finally, two cases will be given to prove the necessarily of internal auditing of bank anti-money laundering both positively and negatively.There are five parts in this paper. The first one is introduction, which consists of the research background, research idea and methods. The most important part is the statement of relevant literature, which provides the room and necessarily to conduct further research. In the second part, the overview of money laundering and anti-money laundering is given first. Then explain what is anti-money laundering auditing. Anti-money laundering auditing means that auditors perform auditing progress of anti-money laundering to check whether the entity followed the law and regulation and established anti-money laundering controls, and then auditors assess the effectiveness of these measures and implementation, in addition, make sure whether the entity had followed up and reporting suspicious clues of money laundering suspicious clues. Because of the internal consistency on risks, independence and profession, the appearance of anti-money laundering audit has its inherent rationality.Anti-money laundering auditing is composed of three parts:government auditing; independent audit, which means government department or certain non-financial sector with specific anti-money laundering obligations hire registered public accounting firm to auditing process; internal auditing, which has two parts:the auditing to subordinate institution by the internal audit department of people’s Bank of China or auditing conducted by internal auditing department of the bank. Internal auditing of bank anti-laundering is of the most special meaning in the three components because bank is the main battlefield of money laundering and anti-money laundering and it is playing an important role in the fighting against money laundering criminals.In the third part, theory framework of internal auditing of bank anti-laundering is given from6aspects, which are nature, function, premise, object, target and regulation. Internal auditing of bank anti-money laundering is essentially a control activity against money-laundering. Auditing has three functions:monitoring, evaluation and verification. They are equal and combined while with a sort of emphasize. In internal auditing of bank anti-money laundering, the function of monitoring is emphasized but this just presented in the final auditing report handed in to the bank’s management. There are four premises here, relationship responsibilities assumption, justifiable doubts assumption, confirmable assumption and independent assumption. The object of anti-money laundering audit is abnormal movement of funds, but the object of internal auditing of bank anti-money laundering is bank’s anti-money laundering organizations and control system. The purpose is to make sure that the banks’ obligation of anti-money has been done effectively. Auditing can not be performed well without the help of technical and social regulation. Technical regulation means a "guidelines of internal auditing of bank anti-money laundering" while the social norms including auditing professional ethics and law on internal audit of bank anti-money laundering.For the auditing to subordinate bank conducted by internal auditing department of people’s bank of China, there are three steps. First is preparation. In this step, auditors should determine the object and collect relevant materials. Audit team should be established and responsibilities should be clear. They have to develop audit implementation plan, and notice the audited agency five days before the beginning. In addition, audit team members should be trained again.The following content should be audited:anti-money laundering organization building, anti-money laundering internal control system, customer identification detective, large and suspicious transactions clues reports, account information and transaction record, as well as anti-money laundering awareness and professional training. After the auditing,"Audit Report" should be issued and submitted to the higher people’s bank.The auditing conducted by bank’s internal auditing department can be divided by the following steps. Determine the materiality level according to the environment. The materiality level has both quality and quantity characteristics, which can greatly improve the efficiency of anti-money laundering. Than assess the auditing risks, which include Inherent risk, following risk and detection risk. Contents of compliance testing are:getting the knowledge of anti-money laundering origination and the establishment and implementation of internal control system; check the detective situation of customers’identity, large and suspicious transactions reporting. Substantive testing include:sampling the right of grading approval accept cash payment and the record of large amount cash payment by unit and person; the situation of the applying and opening accounts; review whether the transfer between unit and person is reasonable.Finally, two cases will be given to prove the necessarily of internal auditing of bank anti-money laundering both positively and negatively.