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Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Guidelines for Financial Institutions
Risk Assessment
Conducting regular risk assessments is crucial to identify potential AML/CFT risks. The following factors should be considered:
- Products and services offered
- Transaction types
- Countries and geographic areas of transactions
- Customer attributes, etc.
These risk assessments should be conducted at least once a year or when new risks emerge or significant regulations are introduced.
Risk Mitigation
To mitigate identified AML/CFT risks, financial institutions must implement effective measures. This includes:
- Collecting and verifying information about customers and their activities and transactions to identify potential risks.
- Taking enhanced mitigation measures for high-risk customers, while simplified measures can be applied for lower-risk customers.
Customer Due Diligence (CDD)
CDD is a series of processes in which a financial institution identifies and assesses AML/CFT risks regarding a specific customer. This includes:
- Collecting and verifying fundamental information about the customer and their transactions
- Comparing it with risk assessment results
- Determining measures necessary to mitigate identified risks
Required Actions for Financial Institutions
To comply with these guidelines, financial institutions must:
- Collect and verify information about customers and their activities and transactions.
- Determine and implement effective measures to mitigate identified risks.
- Undertake enhanced mitigation measures for high-risk customers.
- Examine updated cases and information from domestic and foreign authorities and industry associations, and undertake mitigation measures commensurate with the risk faced by the financial institution.
By following these guidelines, financial institutions can prevent AML/CFT activities and maintain a secure and trustworthy environment for their customers.