Annual independent fair‑trade/ethical trade and AML assurance outcome
Assesses whether the organization undergoes an annual independent assurance review of its ethical trade (including modern slavery and supplier due diligence) and AML framework aligned to a risk‑based approach, with documented remediation and board oversight. Annual independent assurance is delivered either as (i) an ISAE 3000 (Revised) limited assurance report over the AML control framework and ethical trade due diligence controls, or (ii) an Agreed-Upon Procedures (AUP) report with pre-agreed tests and sampling, approved by the board/audit committee.
| Metric | Composite Assurance Score (Findings, Remediation, Coverage) |
|---|---|
| Target | 0 Critical Findings; >95% Remediation |
| Frequency | Annual |
| Method | Audit Report Analysis |
| Unit | Composite |
Level 1: Initial/Ad-hoc
Ad-hoc Approach: Policies for fair trade and AML are informal or non-existent. No formal audits are conducted; compliance checks are reactive and inconsistent.
Level 2: Developing
Defined Approach: Formal policies for fair trade and AML are documented. Audits are conducted internally but may be infrequent or lack comprehensive scope. No clear distinction between regulated and non-regulated obligations.
Level 3: Established
Managed Approach: Regular, annual internal audits are conducted for both fair trade practices and AML controls. Findings are documented, and a formal process exists for tracking corrective actions.
Level 4: Advanced
Quantitatively Managed Approach: Independent external assurance (ISAE 3000 limited assurance or AUP) is conducted annually, with board-approved scope and tracked remediation. Coverage meets defined thresholds (≥80%).
Level 5: Optimizing
Optimizing Approach: Audit outcomes are integrated into a continuous improvement cycle. The organization publishes high-level outcomes (scope, methodology, aggregate findings, remediation stats) in a transparency report, explicitly excluding SAR details/tipping-off, and demonstrates leadership in ethical supply chains.
Organisation Types
By Organisation Size
| Size | Applicability | Notes |
|---|---|---|
| Micro | exempt | Independent assurance and formal MLR Reg 18 equivalent assessments are highly disproportionate in cost and scope for volunteer-run groups. |
| Small | exempt | Disproportionate burden; while basic POCA duties apply, formal independent assurance and business-wide documented assessments are not expected. |
| Medium | partial | Must maintain a proportionate documented AML risk assessment, but full annual independent assurance may be scaled down unless operating in high-risk areas. |
| Large | full | Fully applicable; expected to have resources for formal independent assurance and comprehensive MLR-aligned risk assessments. |
| Major | full | Fully applicable; statutory obligations, complex supply chains, and independent assurance are standard governance expectations at this scale. |
Applicable When
- The organization engages in financial transactions (collecting/distributing funds, investments, sales etc.)
- The organization engages in international activities where AML compliance is legally required
- The organization sources products or services through supply chains
- The organization has employees.
- The organization is registered in a jurisdiction with Fair Trade Laws
Not Applicable When
- The organization operates solely on a volunteer basis with no financial transactions
- The organization's activities are entirely non-commercial and do not involve any form of revenue or investment
- The organization is a very small entity operating below the threshold requiring AML compliance (check local laws).
Discussion (1)
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