Financial Institutions’ Executives Face Personal Liability for Weak Anti-Money Laundering and Counter-Terrorism Financing Programs
The Shift towards Personal Liability
Financial regulatory bodies are now holding executives personally liable for the effectiveness of their institutions’ anti-money laundering (AML) and counter-terrorism financing (CTF) programs. This new approach aims to ensure that these programs are robust enough to detect and prevent illicit activities.
Key Risk Indicators: A Critical Element in Identifying Weaknesses
To identify potential weaknesses, regulators are focusing on key risk indicators (KRIs). These KRIs provide a snapshot of an institution’s AML/CTF program, highlighting areas that require attention. By monitoring these metrics, executives can take proactive steps to strengthen their programs.
Examples of KRIs
• The percentage of non-risk-rated customers • Accounts with KYC alerts outstanding for more than 30 days • Accounts with incomplete CDD/KYC • Number of accounts opening declined by compliance • Percentage of system-generated alerts that resulted in a SAR
Ensuring Critical Controls Work as Intended
To ensure the effectiveness of AML/CTF programs, regulators are scrutinizing controls to prevent weaknesses from going undetected. This requires defining objective KRIs and identifying critical process weaknesses.
Conclusion
In today’s complex and rapidly changing environment, executives must remain vigilant in managing AML/CTF risk exposures. Effective KRIs provide a lens on an institution’s existing risk exposures and actionable intelligence for decision-making. Risk assessments and KRIs should be refreshed periodically to ensure they remain relevant.
Industry Insights
We spoke with industry experts Michael Matossian, EVP and Chief Compliance Officer at Arab Bank plc, and Sharon Craggs, Group Compliance Officer at Arab Banking Corporation (ABC), Bahrain.
Interviews
- Michael Matossian: “Compliance officers must continually seek to improve their understanding of evolving risks and take pre-emptive steps to manage and mitigate AML/CTF risk exposures.”
- Sharon Craggs: “Effective KRIs provide actionable intelligence for decision-making, enabling executives to identify areas that require attention and take proactive steps to strengthen their programs.”
About the Authors
Michael Matossian is EVP and Chief Compliance Officer at Arab Bank plc. Sharon Craggs is Group Compliance Officer at Arab Banking Corporation (ABC), Bahrain.
MENA Financial Crime Compliance Group (MENA FCCG)
The MENA FCCG is a voluntary body that seeks to bring collective action in the fight against money laundering and terrorist finance in the region. The group comprises 12 banks representing eight MENA countries.