Agenda •What we’ll cover and what we won’t •Background on RBA •Working through it . products, services & delivery channels they utilize; geographical location and their characteristics and patter of activities.. 13 Identification of Inherent Risks 5. There will be some overlap between these risk factors and we have set out further guidance below. 2.8. 5 Delivery channels 6 Others Based on the various considerations above which are intended to prompt considerations of areas that may be considered to be of a higher risk from a money laundering perspective, each firm is required to conclude on an overall money laundering risk … When developing your customer identification and verification procedures, you must also consider the risk posed by: the beneficial owner/s of your customers; whether your customers or their beneficial owners are PEPs; your customers’ source of … These Guidelines are part of the ESAs' wider work on fostering a consistent and effective approach to AML/CFT by both, credit and financial institutions, and AML/CFT supervisors. AML/CFT Guidelines on Risk Based Approach 2 (i) Delivery Channels: Identifying risks associated with delivery channels which may vary from customer to customer depending on their needs; and (ii) Geographic/Jurisdictional: Risks resulting from customer geographic presence and jurisdiction in which the customer is operating. Transactions and Delivery Channel Risk No Risk Factors Total Percentage (%) 1 Mode of delivery Volume of non-face-to-face transactions e.g. What is Money Laundering? Provide detailed risk analysis to assist in formulating a list of priorities for programmeenhancement where needed. The regulations cited in this manual are only the minimum standards for the banking industry in AML/CFT & CFP regime. 2.9, 2.10. AML/CFT risks and vulnerabilities present in those parts of the financial sector that are subject to limited or no supervision, such as the SIBL-EP sector. AUSTRAC compliance officers assessments have found that many reporting entities only considered the risks posed by their business at a single point in time, typically when they first developed their AML/CTF program. Delivery Channel Risk: This is risk associated with how FRFIs’ products/services are delivered to clients including services delivered to clients non-face-to-face. This is because customers, products, delivery channels and technologies change over time. Customer risk. AML- Risk assessment & RBA EARLEEN MOULTON VP COMPLIANCE, BRIDGEFORCE FINANCIAL GROUP. Delivery channels. Set up dynamic criteria parameters that automatically assess clients as high risk (e.g. However, the following areas may be at high risk of being used for money laundering or terrorist financing: client’s money bank accounts; directors loan accounts. The Guidelines promote a common understanding of the risk-based approach to AML/CFT and set out how it should be applied. You can allocate more resources for high risk areas. Delivery/distribution channel risk. Compliance management arrangements . Many delivery channels are non face-to-face and accessible 24 hours a day, seven days a week. You can continue to use Chapter 4 of the CCAB guidance to help you perform your risk assessment. One is heightened scrutiny by banking regulators of their Bank Secrecy Act and Anti-Money Laundering (BSA/AML) compliance efforts. • Delivery channel type STEP 3 - Consider adapting the Society’s Business Risk Assessment Template 18 STEP 4 - Obtain Senior Management Approval of the firm’s Business Risk Assessment 18 STEP 5 - Keep Business Risk Assessments under review in line with Policies, Controls and Procedures 18. LCs / AEs are required to have effective controls to ensure proper implementation of AML/CFT policies and procedures. The ESAs have issued guidelines on risk-based supervision in accordance with Article 48(10) of Directive (EU) 2015/849. AML/CFT and TFS for DNFBPs and NBFIs. 2.5 - 2.7. Two recent trends are converging to increase banks’ risk management obligations. BENEFITS. Customisable risk factors which include country risk, delivery channel risk, product / service risk, customer risk. risk assessments and AML/CFT policies and procedures. Managing Risk Risk Assessment of your institution will enable you to develop proper policies, procedures and controls to manage and mitigate ML/TF Risk. PEP, High Risk Country parameters). 6. laundering and counter financing of terrorism (AML/CFT) measures effectively and efficiently to mitigate and manage the risks. Have you established appropriate compliance management arrangements to facilitate the implementation of AML/CFT systems to comply with … Set up your own Risk Evaluation Levels (Low, Low-Medium, Medium, Medium-High, High, Extremely High). It should be commensurate with the nature, size and complexity of the business. Your AML/CTF program should set out how you minimise and manage each level of risk. Senior management should agree and document a risk tolerance they are willing and not willing to accept during the course of business. Delivery/distribution channels Examples* of risk factors to be considered when assessing ML/TF risks: Face-to-face (with the entity) Non-face-to-face –reliance on outsourcing to third parties, and/or intermediaries which are not subject to the same level of AML/CFT regulations of an entity, or is not known to the entity Delivery channel risk. Delivery / distribution channel risk Product / service risk Customer risk Country risk AML/CFT systems Paragraph 2.2 FIs should establish and implement adequate and appropriate AML/CFT systems taking into account factors including the above. Examiners should evaluate the adequacy and effectiveness of AML/CFT & CFP controls assessment, which categorizes its customer types, products and services, delivery channels and jurisdictions as presenting a high, medium or low potential risk for ML/TF. If you provide services to your clients online, without meeting them, you may be at high risk of being used for money laundering or terrorist financing. 3. Please also refer to Guidance on Application of Risk-Based Approach Application. Products, services and delivery channel Begin your risk assessment by taking a business-wide perspective. •The act of transforming dirty money into clean money. Money laundering in any form is extremely complex, and every day FIs see new threats arise as a result of their global presence and vast diversity of products, markets, business lines, and delivery channels. Proper risk mitigation measures are required at instances where you can effectively mitigate risks. delivery / distribution channel. •Any effort to disguise the source of money or assets derived from criminal activity. the delivery channels. online, agents Value of non-face-to-face transactions (RM) e.g. 22. Request demo. AML requirements as promulgated by the FATF, which are consolidated into 40 Recommendations (hereafter referred to ‘FATF’s Recommendations’) 2 and it is important that Hong Kong complies with the international AML standards in order . The sectoral risk assessment should form the basis for firms' own risk assessments along with the national risk assessment 2 and a comprehensive knowledge of their services, clients and delivery channels. Country risk. Interface Risk The channels through which a subject person establishes a business relationship and through which transactions are carried out have a bearing on the risk assessment. For example, if a customer is inactive over a longer period of time, his risk rating may need to be revised. You should rank each service as low, medium or high risk. As a CU/CP, you must assess all your products, services and delivery channels to determine if they pose a high risk of ML/TF. Competent authorities should also consider the extent to which these guidelines can inform the assessment of the ML/TF risk associated with their sector, which forms part of the risk-based approach to supervision. The other is customers’ increasing demand for electronic banking (e-banking) services, which can increase a bank’s BSA/AML risks. You must also take into account the size and nature of your practice. Key risks are classified in the following four risk factors category. As a result, in 2019, the Cayman Islands undertook a full risk assessment of SIBL-EPs. Application of Simplified Due Diligence. 5.2. Inherent risk assessment result. Geographic location risk. Each customer must receive an initial AML/CFT risk rating at the beginning of the business relationship, and it must be kept current based on updates and changes in the relationship. factor in their distribution network and channels when performing their ML/TF risk assessment. customers, products, geography, and delivery channels into risk categories. The Company’s inherent risk level based on the assessment results is determined to be General High (please check one of the boxes). Global regulators, including the BNM and SC recommend that organisations adopt a Risk Based Approach (“RBA”) in their AML… Transaction and delivery channel risk. The Guidance underlines that the development of the ML/TF risk assessment is a key starting point for the application of the RBA by life insurers and intermediaries. Delivery Channels Risk. Customer risk A.02. your delivery channels. These may therefore exacerbate the risks faced by subject persons. 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