Gabon Moves Towards Risk-Based Approach for Compliance
The Financial Action Task Force (FATF) has long advocated for a risk-based approach to anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations. This approach requires financial institutions to perform individual customer risk assessments, which is now being adopted by Gabon.
Implementing Risk-Based Negative News Screening
On May 11th, the Wolfsberg Group released an FAQ on negative news considerations, highlighting the importance of incorporating a risk-based approach to AML/CFT compliance. In response, Gabonese financial institutions are taking steps to integrate this strategy into their existing frameworks.
Key Benefits of Risk-Based Approach
- Balances regulatory obligations with budget and resources
- Directs time and money towards higher-risk customers rather than lower-risk ones
- Crucial given the complexity and expense of AML/CFT compliance
Determining Customer Risk Profiles
Gabonese financial institutions must use customer risk profiles to determine the focus and scope of their negative news screening measures. Key factors include:
- Services and products used
- Demographic profile
- Geographic location
- Criminal risks associated with the industry segment
- Internal risk profile
Additional Factors for Shaping Risk-Based Negative News Screening Solution
Internal and business factors will also play a part in shaping a risk-based negative news screening solution. Financial institutions should consider:
- How often previous customers have been involved in criminal incidents
- Legal and reputational consequences of doing business with customers involved in financial crime
- Speed at which they could move to address exposure to compliance liability
- Financial crime typologies typically revealed by effective negative news screening
- Available resources for adverse media screening
Categorizing News Stories Effectively
To categorize news stories effectively, Gabonese financial institutions should group them according to risk level, including:
- Regulatory violations
- Drug trafficking
- Human trafficking
- Cybercrime
- Financial crime
Source credibility, governmental influence, and customer relationship are also crucial factors in determining the significance of negative news stories.
Support from Next-Generation Risk Management Technology
As Gabon moves towards a risk-based approach for compliance, Ripjar’s next-generation risk management technology can support businesses in implementing this strategy effectively. With expertise in AML/CFT compliance, Ripjar can provide insights into how to manage risk and mitigate potential liabilities.