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FATF Issues Guidance on Implementing Risk-Based AML Approach
By Brian Monroe
printThe Financial Action Task Force identified key elements of gauging geographic and other risks and of defining acceptable threat levels to aid governments and financial institutions adopting risk-based anti-money laundering programs. The Paris-based FATF, which sets global AML standards, issued the guidelines Thursday in response to a study showing that banks largely support a risk-based approach to AML compliance but want more specifics on how to do so. Using a risk-based approach, governments and institutions identify and evaluate the geographic, business line, product and other threats they face, then allocate their AML resources to the relatively greater risks. Banks favor...
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Large banks need to clearly delineate which senior executives are responsible for Bank Secrecy Act compliance violations, the U.S. Comptroller of the Currency said in a speech Monday.
Prompted by financial regulators, some of the largest U.S. banks have been reevaluating how they gauge geographic financial crime risks in designated high-risk regions of the country, say sources.
Since 2008, federal financial regulators have increasingly quizzed compliance staff about such scenarios in an effort to determine how banks are distinguishing their low-, moderate- and high-risk clients, according to bank officials.
Reaching the point where an off-limits, high-risk jurisdiction becomes bankable is a complex compliance process involving many factors, including political and economic stability, country reports by international watchdogs and old-fashioned shoe leather, say former bankers and consultants.
The FATF, in a four-year plan the group adopted April 12, said it will meet with financial institutions and other private businesses at trade group events and consultative forums as it develops policies to battle laundering and terrorist financing threats worldwide.
The OCC has asked financial institutions to submit comments about the data collection system, which the agency says is designed to "enhance the ability of examiners and bank management" to identify money laundering risks in bank products, services, customers and locations.
Treasury Secretary Henry Paulson, speaking Friday at the Financial Crimes Enforcement Networks headquarters, announced initiatives that include a more risk-based examination process and a narrower definition of the money services businesses industry.
Henry Paulson, at a meeting scheduled for Friday at the Financial Crimes Enforcement Networks headquarters, will disclose plans to improve risk-based exam procedures for institutions, people familiar with the matter said.
A survey of 34 government entities and large banks by the Financial Action Task Force suggests they don't agree on how institutions should adopt the risk-based approach, whereby banks identify their risks then allocate anti-money laundering resources to the most vulnerable areas.