Financial Crime World

Bank’s Risk Appetite Framework Focused on Combating Money Laundering and Terrorist Financing

A leading financial institution has unveiled its Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CTF) risk appetite framework, aimed at minimizing the likelihood of its systems and processes being used for illicit activities.

Framework Overview

The AML/CTF risk appetite framework is designed to consider various factors based on a risk-based approach analysis. It sets out clear guidelines for managing AML/CTF risks associated with the distribution of banking products and services.

Measures to Detect, Prevent, and Minimize Risk

  • Increased awareness of higher-risk situations
  • Enhanced Know Your Customer (KYC) procedures
  • Ongoing monitoring of transactions

Capital Adequacy and Liquidity

The Bank has calculated its capital requirements emanating from ML/TF risks under the Internal Capital Adequacy Assessment Process (ICAAP). Scenarios are drafted relating to Money Laundering, Terrorist Financing, or Sanctions Risk, and historical data is considered along with existing mitigating measures to calculate the expected loss in case a scenario crystallizes.

Staff Awareness and Training

  • Clear and well-articulated framework to ensure relevant employees are aware of their obligations in preventing ML and TF
  • Adequate annual training provided to employees for identification and reporting of suspicious transactions, commensurate with each staff member’s duties and relevant ML/TF risks

Quantitative Statements

The Bank has set quantitative statements to monitor its AML/CTF risk appetite, including:

  • The percentage of blocked not reviewed (CCM) high-risk clients to total number of high-risk clients should not exceed 10%.
  • The percentage of high-risk customers to overall customers should not exceed 1.6%.

Tier Indicators and Thresholds

Tier indicators and thresholds are set for each business division, providing a framework for monitoring and controlling AML/CTF risks.

Financial Crime Compliance Risk

The Bank maintains zero tolerance for ML/TF risk and is committed to transacting its business in a way that minimizes the risk of its systems and processes being used for ML or TF purposes. The Bank also has a zero-tolerance policy for violations of sanctions or other measures imposed by regulatory authorities.

Conclusion

Overall, the Bank’s AML/CTF Risk Appetite Framework demonstrates its commitment to combating financial crime and ensuring the integrity of its operations.