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Anti-Money Laundering and Combating of Financial Crime
Risk-Based Approach (RBA) for Managing Money Laundering Risks
The Central Bank of Bahrain’s Rulebook Volume 6: Capital Markets outlines a Risk-Based Approach (RBA) for managing money laundering, terrorist financing, and proliferation financing risks. This section provides an overview of the RBA framework.
Key Principles of the RBA
- Identify and assess the risk of money laundering, terrorist financing, and proliferation financing
- Classify entities based on their risk profile
- Implement controls and measures to mitigate identified risks
Key Points of the Risk-Based Approach
- Risk Assessment: A thorough assessment of the entity’s activities, products, services, customers, and geographic location to identify potential money laundering risks.
- Customer Due Diligence (CDD): The process of verifying a customer’s identity, assessing their risk profile, and conducting ongoing monitoring to prevent illicit activity.
- Transaction Monitoring: Continuous monitoring of transactions to detect suspicious activities.
- Reporting Suspicious Transactions: Entities must report any suspicious transactions to the relevant authorities.
Implementation of the RBA
To implement an effective RBA, entities must:
- Establish a clear risk management framework
- Develop policies and procedures for managing money laundering risks
- Provide training for employees on anti-money laundering regulations and procedures
- Conduct regular reviews and updates to ensure compliance
Conclusion
The Risk-Based Approach is a crucial component of anti-money laundering regulations. By understanding the key principles and implementation requirements, entities can effectively manage money laundering risks and prevent illicit activity.
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