Financial Crime World

Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), and Combating the Proliferation of Weapons of Mass Destruction (CPF) Guidelines

Risk Assessment Overview

The Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), and Combating the Proliferation of Weapons of Mass Destruction (CPF) regulatory commission emphasizes the importance of conducting comprehensive risk assessments to identify and mitigate Money Laundering (ML), Terrorist Financing (TF), and Proliferation Financing (PF) risks.

Understanding Group Structure

For entities that are part of a group, it’s crucial to understand the entire group structure, including:

  • Ownership
  • Subsidiaries
  • Branches in other jurisdictions
  • Entities within the group regulated by various authorities

Sectoral Risk Assessment

There should be adequate knowledge and understanding of sector-specific risk factors relevant for all sectors under supervision. This involves conducting sectoral risk assessments at least every two years to identify new risks common to the sector.

Group-Level Risk Assessment

Assessing ML/TF/PF risk at a group level requires a holistic view, considering both domestic and foreign risk factors. Particular attention is paid to:

  • Cross-border operations
  • Branches and subsidiaries in other jurisdictions
  • Exposure to high levels of corruption or predicate offenses to ML

Jurisdictional Considerations

The assessment should reflect risks associated with exposure to jurisdictions that have been identified as having strategic deficiencies in their AML/CFT/CPF regimes, prohibiting group-wide policies, or are exposed to high levels of corruption or predicate offenses to ML.

Information Sharing

Necessary information for a comprehensive risk assessment includes:

  • The ML/TF/PF risk profile of branches and subsidiaries assessed by relevant competent authorities
  • Sector-specific risk assessments conducted by these authorities
  • Findings from their assessments on control quality within branches or subsidiaries
  • Serious breaches in these entities identified by competent authorities
  • Supervisory measures/sanctions imposed

Cooperation with Stakeholders

The FSRC should cooperate and exchange all relevant information with other stakeholders, including:

  • Prudential supervisors
  • Financial intelligence units
  • Tax authorities
  • Law enforcement agencies
  • Judicial authorities
  • AML/CFT/CPF supervisors of other jurisdictions

Objective of Cooperation

The extent and objective of cooperation should be considered to determine the most effective approach, with more frequent cooperation necessary for competent authorities and prudential supervisors than for financial intelligence units, tax authorities, and law enforcement agencies.

These guidelines emphasize the importance of comprehensive risk assessment, understanding group structures, sectoral considerations, jurisdictional risks, information sharing, and cooperation among stakeholders in effectively regulating entities to prevent ML/TF/PF.