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Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT): Key Requirements

Financial institutions must adhere to strict guidelines to prevent money laundering and financing of terrorism. Here are the key requirements:

I. Risk Assessment

Conducting regular risk assessments is essential for financial institutions. The assessment should consider various factors such as:

• Products and services offered
• Transaction types
• Countries and geographic areas
• Customer attributes

Breaking Down Risks

Risks should be broken down into smaller categories, assessed individually, and then combined to visualize the firm-wide risk assessment.

II. Risk Mitigation

Risk mitigation measures are required to mitigate a financial institution’s ML/FT risks. Measures must be implemented according to the level of risks posed by each individual customer and their transactions.

Measures for High-Risk Customers

Enhanced measures are required for high-risk customers, while simplified measures are allowed for lower-risk customers.

III. Customer Due Diligence (CDD)

Customer due diligence is a series of processes in which a financial institution collects and verifies information about specific customers and their activities and transactions.

Key Requirements

1. Collect and verify customer information
2. Compare the collected information with risk assessment results to determine effective measures to mitigate identified risks

Required Actions for Financial Institutions

To comply with AML/CFT regulations, financial institutions must:

• A: Collect and verify customer information, compare it with risk assessment results, and implement effective mitigation measures.
• B: Undertake enhanced mitigation measures in cases where ML/FT risks are high.
• C: Examine updated cases and information from domestic and foreign authorities and industry associations, and then undertake mitigation measures commensurate with the risks faced.