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Supervisory Interventions Adapt to Evolving Risks for AIs and RIs
The Namibia Financial Institutions Supervisory Authority (NAMFISA) has announced a new risk-based approach to supervising Artificial Intelligence (AI) and Risk Intelligence (RI) entities that pose lower ML/TF/PF risks. This move comes as the risks faced by AIs and RIs evolve, requiring NAMFISA to adapt its supervision strategy to ensure effective compliance with anti-money laundering and combating the financing of terrorism regulations.
Guidance and Advice
To support AIs and RIs in detecting suspicious patterns of behavior and mitigating ML/TF/PF risks, NAMFISA will provide guidance and advice on request or at its own initiative. The authority will also develop typologies on the manifestation of ML/TF/PF risks in specific sectors to promote a deeper understanding of these activities.
Supervision
NAMFISA’s supervision strategy will focus on risk-based inspections, with the frequency and intensity of inspections dependent on the institution’s ML/TF/PF risk profile and systemic risk. The authority has outlined a table detailing the inspection period for each risk category:
| Risk Category | Inspection Period | Number of AIs/RIs |
|---|---|---|
| High | Every year | 0 |
| Medium-High | Every 2 years | 21 |
| Medium-Low | Every 3 years | 43 |
| Low | Every 2 years (SIFIs), when necessary for non-SIFIs | 93 |
Inspection Scope
The scope of inspections will vary depending on the institution’s risk rating. For medium-high risk industries and institutions, NAMFISA will conduct full-scope inspections focusing on areas posing medium-high risks of ML/TF/PF. Off-site monitoring will be used to verify compliance in low-risk institutions, with on-site inspections conducted only as needed.
Annual Outreach/Awareness Program
NAMFISA aims to promote a clear understanding of AML/CFT obligations and ML/TF/PF risks among all AIs and RIs under its supervision. The authority will achieve this through its Annual Outreach/Awareness Program, which will include guidelines on detecting suspicious patterns of behavior, typologies on the manifestation of ML/TF/PF risks, and educational materials for personnel.
Conclusion
NAMFISA’s new risk-based approach to supervising AIs and RIs demonstrates a commitment to adapting to evolving risks and ensuring effective compliance with anti-money laundering regulations. The authority’s guidance, advice, and inspections will support AIs and RIs in detecting suspicious patterns of behavior and mitigating ML/TF/PF risks.