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Central Bank Embarks on Risk-Based Approach to Combat Money Laundering and Terrorist Financing

The Bank of Jamaica has taken a crucial step towards enhancing its risk management framework by implementing a risk-based approach (RBA) to combat money laundering and terrorist financing. This strategic move aims to identify, assess, and mitigate potential risks associated with financial transactions.

Risk Assessment Guide

The RBA is based on a comprehensive guide that outlines the key risks and vulnerabilities faced by the Central Bank. The guide highlights areas of concern, including:

  • Corrupt officers and employees
  • Undue influence from the private sector or politically exposed persons
  • Use of the Central Bank’s services to commit or facilitate money laundering or terrorist financing

Main Risks Identified

The main AML/CTF risks affecting the Central Bank stem from:

  • Corrupt officers and employees
  • Undue influence from the private sector or politically exposed persons
  • Use of the Central Bank’s services to commit or facilitate money laundering or terrorist financing

Operational Risks

The Banking Department within the Central Bank is particularly vulnerable to operational risks, including:

  • Handling mutilated bank notes
  • Transactions conducted with overseas counterparts that may have facilitated a financial crime
  • High cash value transactions
  • Transactions attempted or conducted using forged signatures
  • Transactions attempted or conducted with counterfeit notes

Risk Assessment Process

The Central Bank will undertake regular risk assessments to identify potential threats and vulnerabilities. This process involves:

  • Identifying money laundering and terrorist financing methods and trends
  • Assessing the impact of economic, geographical, and social environment factors
  • Evaluating weaknesses and gaps in AML/CTF laws and regulations
  • Analyzing the adequacy and capacity of resources to prevent money laundering and terrorist financing

Implementation

The Central Bank will implement measures to mitigate identified risks, including:

  • Improving internal controls and defense mechanisms
  • Enhancing awareness and commitment amongst clients and stakeholders
  • Strengthening national AML/CTF frameworks and infrastructure
  • Implementing effective strategies for detecting and preventing money laundering and terrorist financing

By adopting a risk-based approach, the Central Bank demonstrates its commitment to combating money laundering and terrorist financing, protecting the integrity of the financial system, and maintaining public trust.