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Financial Institution Risk Assessment Proposals in Chad
The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury has released a proposal aimed at strengthening anti-money laundering and countering the financing of terrorism (AML/CFT) regulations for financial institutions operating in Chad.
Enhancing Compliance Requirements
The proposed rule seeks to enhance compliance requirements and mitigate the risks associated with money laundering and terrorist financing. To achieve this, FinCEN proposes that financial institutions maintain “effective, risk-based” AML/CFT programs, which would be based on a mandatory risk assessment process.
Mandatory Risk Assessment Process
The risk assessment process would consider factors such as:
- Business activities
- Distribution channels
- Customers
- Intermediaries
- Geographic locations
This comprehensive approach aims to identify and mitigate potential risks associated with money laundering and terrorist financing.
Effectiveness Standard for AML/CFT Programs
The proposed rule also introduces an effectiveness standard for AML/CFT programs, requiring institutions to demonstrate that their programs are effective in identifying and mitigating risks. This standard would help ensure that financial institutions are taking concrete steps to prevent money laundering and terrorist financing.
Documentation and Disclosure Requirements
Financial institutions would be required to:
- Document their AML/CFT programs
- Make them available to FinCEN
This transparency requirement aims to promote accountability and cooperation between financial institutions and regulatory authorities.
Impact on Financial Services Access
Experts predict that the proposed rule will lead to increased spending on compliance efforts by financial institutions, potentially diminishing access to financial services for underserved communities. However, FinCEN hopes that the enhanced flexibility in evaluating money laundering and terrorist financing risks will allow financial institutions to extend financial services to individuals and companies historically subject to barriers in accessing financial services.
Public Comment Period
The proposed rule is open for public comment until September 3, 2024.