Preventing Money Laundering and Terrorist Financing
2 Main Features of the Off-Site Supervision System 2.1 General Characteristics of Ongoing Supervision AML/CFT supervision, as part of the overall ongoing supervision process, should be fundamentally based on the analysis of declared documents which, depending largely on the institution’s size and activity, it submits at prescribed intervals. These are accounting and financial documents, calculations done to meet statutory standards, annual internal supervision reports, and various other books and materials. Off-site supervisors, who, in addition, make use of documents published by banks, should maintain direct contact with the institutions, their directors, and their auditors, and should engage in the increasingly common practice of regular meetings and visits.
2.1.1 Main Features of Off-Site Prudential Supervision The design and implementation of AML/CFT off-site supervision is largely inspired by that of prudential off-site supervision, whether AML supervision is undertaken by the prudential supervisor or not. It is therefore useful to identify some key characteristics of off-site prudential supervision (while identifying in the rest of the chapter where off-site AML/CFT supervision differs).
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• It is meant to be continuous. At any given institution, there is ongoing monitoring by the teams in charge. The nature of the monitoring is updated on the basis of new information, which may have been provided in regular reports, or at meetings, or during regular visits. • It is meant to be universal. In principle, as part of the entire banking system, all institutions, large or small, are closely monitored as part of the entire national banking system. Banks that appear to be weaker, however, will generally be more carefully monitored, will be required to submit additional analyses, will receive more numerous requests for information, and so forth. • It covers the totality of banking regulations. In fact, the prudential supervisor is responsible for enforcing compliance on the part of the institutions using the prudential standards established by the regulator. • It has a warning and preventive role. From the initial signs of a bank’s difficulty or increased risk, documentary supervision must include any measures deemed necessary to analyze the problems and to prevent any loss.
2.1.2 Resources for Ongoing Supervision Ongoing supervision includes access to numerous resources, but the resources actually used depend on the organization and operational methods of the particular supervision authority. 60