Financial Crime World

FSC AML/CTF Handbook Amendments: Strengthening Risk-Based Approach to Combat Money Laundering and Terrorism Financing

In a bid to combat the ever-evolving threats of money laundering (ML) and terrorism financing (TF), the Financial Services Commission (FSC) has introduced amendments to its AML/CTF Handbook. The revised guidelines aim to enhance the risk-based approach adopted by financial institutions in identifying, assessing, and mitigating ML/TF risks.

Robust Risk Assessment Crucial

According to the FSC, a robust risk assessment is crucial in determining the basis for a risk-sensitive approach. Financial institutions are now required to conduct thorough Business Risk Assessments (BRAs) to identify potential vulnerabilities and develop targeted mitigation strategies.

Importance of Independent Audits

The amended guidelines also emphasize the importance of independent audits as the final line of defense against ML/TF risks. The scope of independent audits should be tailored to each financial institution’s unique risks, testing compliance in areas such as:

  • AML/CTF policies
  • Internal risk assessment
  • Mitigating controls

Recent Findings and Improvements

In a recent inspection of the TCSP sector, the FSC found significant improvements in compliance levels, with a notable increase in the percentage of institutions that have implemented effective BRAs. The commission also highlighted the importance of leveraging independent audits to identify and address gaps in AML/CTF policies and procedures.

Key Takeaways

  • Financial institutions must conduct thorough BRAs to identify potential vulnerabilities and develop targeted mitigation strategies.
  • Independent audits should be tailored to each financial institution’s unique risks, testing compliance in areas such as AML/CTF policies, internal risk assessment, and mitigating controls.
  • Compliance levels have improved significantly, with a notable increase in the percentage of institutions that have implemented effective BRAs.

Strengthening Risk-Based Approach

The FSC’s revised guidelines aim to strengthen the risk-based approach adopted by financial institutions in combating ML/TF risks. By implementing these measures, financial institutions can better protect themselves against these threats and maintain public trust in the financial sector.