Financial Crime World

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Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Guidelines

Principle IV: Independent Audit

Independent auditors play a critical role in evaluating internal controls and AML/CFT procedures. The scope of the audit should be adequate to address risks, and auditors should have the necessary expertise.

  • Ensure that independent auditors are appointed to evaluate internal controls and AML/CFT procedures.
  • Verify that auditors have the necessary expertise to perform their duties effectively.
  • Confirm that the scope of the audit is adequate to address identified risks.

Principle V: Board Oversight

The Board should ensure that the financial crime risk management regime is commensurate with regulatory standards and risk profile. Key areas for review include:

  • Legislative changes
  • Relationship & customer acceptance
  • Ongoing monitoring
  • Correspondent banking
  • Exception reporting
  • Cash transactions
  • Suspicious activity reports
  • Employee ethical behavior
  • Know-your-customer standards

Principle VI: Business Acceptance

Licensees must verify client identities as required by law and regulations. Independent source documents should be used in addition to customer attestations for this purpose.

  • Verify client identities using independent source documents.
  • Use customer attestations only in conjunction with independent source documents.
  • Confirm that the verification process meets regulatory requirements.

Principle VII: Ongoing Monitoring

The risk management system should be risk-based and not pose significant inconvenience to legitimate customers. Due diligence must be applied commensurate with the level of risk associated with each relationship.

  • Ensure that the risk management system is risk-based and does not unduly inconvenience legitimate customers.
  • Apply due diligence commensurate with the level of risk associated with each relationship.
  • Simplified measures are appropriate for lower-risk relationships, while enhanced measures should be taken for higher-risk relationships.