Preventing Money Laundering and Terrorist Financing
the bank reasonably identifies money laundering and terrorist financing risks. In doing so, the supervisor will need to evaluate all relevant factors, including those that should have been considered by the bank, such as total asset size, customer base, products and services offered, and branch locations. The supervisor should apply a personal awareness of the risks associated with these factors and with the particular bank and use the expertise of other competent authorities knowledgeable about money laundering and terrorist financing, such as the financial intelligence unit (FIU) and law enforcement agencies. An understanding of the most current typologies and trends is helpful. The supervisor must then decide whether the individual bank’s risk assessment is adequate, so as to determine whether modifications to it are needed. If the bank has not performed its own risk assessment, the supervisor will need to develop a preliminary risk profile based on the analysis of the above-mentioned factors. The supervisor should establish the scope of examinations based upon the risk profile determined either by the bank or as established by the supervisor. The on-site examination should, in part, be used to determine the accuracy of the individual bank’s risk profile and the adequacy of its mitigating controls. This chapter is broken into four main sections. Section 2.2 introduces the antimoney laundering and combating the financing of terrorism (AML/CFT) risk management process. Section 2.3 discusses the specific risks associated with money laundering, terrorist financing, and related compliance issues. Section 2.4 reviews the risk assessment process from the individual bank’s perspective. Finally, section 2.5 presents the expected outcomes of the ML/FT risk assessment.
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