Financial Crime World

FIAU Emphasizes Proportional Approach to AML/CFT Supervision

Safeguarding the Financial System, Economy, and Society

In a bid to protect the financial system, economy, and society from the risks of money laundering (ML) and terrorism financing (TF), the Financial Intelligence Analysis Unit (FIAU) has reiterated its commitment to adopting a proportional approach to anti-money laundering and combating the financing of terrorism (AML/CFT) supervision.

Balancing Compliance with Regulatory Burden

According to the FIAU, the aim is to strike a balance between ensuring that financial institutions comply with AML/CFT regulations and minimizing the regulatory burden on these entities. This approach recognizes that not all financial institutions are created equal and that those with higher ML/TF risks should be subject to more stringent supervision.

Risk-Based Approach to AML/CFT Supervision

The FIAU has established a risk-based approach to AML/CFT supervision, which categorizes financial institutions into three groups based on their level of ML/TF risk:

  • Category One firms: Major banks and other high-risk entities will undergo regular onsite visits and provision of information to ensure compliance with AML/CFT regulations.
  • Category Two firms: Selected through a randomized process, these firms will be subject to sampled reviews to identify any weaknesses in their AML/CFT arrangements. These reviews will focus on the highest risk areas of each firm’s business model.
  • Event-Driven Review System: The FIAU has also established an event-driven review system, which involves as-needed reviews of firms where specific control weaknesses have been identified or breaches have occurred.

Emphasis on Senior Staff Competence

The FIAU has emphasized the importance of ensuring that senior staff at financial institutions possess the necessary honesty, integrity, and competence to carry out their roles effectively. This includes demonstrating an understanding of AML/CFT regulations and the critical role they play in preventing ML/TF.

Minimizing Regulatory Burden

The agency’s efforts are aimed at protecting the financial system, economy, and society from the risks of ML/TF, while also minimizing the regulatory burden on financial institutions. By adopting a proportional approach to AML/CFT supervision, the FIAU is confident that it can achieve its objectives effectively and efficiently.