ECCB Unveils New ML/TF/PF Risk Assessment Tool
The Eastern Caribbean Central Bank (ECCB) has launched a new risk assessment tool to help financial institutions better manage money laundering, terrorist financing, and proliferation financing (ML/TF/CPF) risks.
What is the ML/TF/PF Risk Rating Tool?
The ML/TF/PF Risk Rating Tool uses information gathered from the PR14 submission to assist ECCB in developing a preliminary ML/TF/PF risk rating for licensed financial institutions (LFIs). The tool combines both quantitative and qualitative information to assess two major categories: governance framework and inherent risk.
How Does the Tool Work?
The tool is designed to help LFIs identify their ML/TF/PF risk profile by assessing their internal controls, independent testing, skills and expertise of MLRO/compliance officers, and training focus. The tool also considers the risks associated with a LFI’s products and services, customers, entities, and geographic locations.
What Are the Results of the Risk Assessment?
The results of the ML/TF/PF risk assessment produce a risk rating assigned to each LFI, which is a function of the aggregate level of inherent ML/TF/PF risk offset by the aggregate level of quality of risk management. The tool generates a risk rating of low, moderate, above average, and high in relation to the aggregate level of inherent risk and quality of risk management for products and services, customers and entities, and geographies.
Supervisory Engagement Schedule
ECCB has outlined its process for conducting onsite examinations, which is guided by the ML/TF/PF risk profile and risks of each LFI. The frequency of supervisory engagement, including examinations, remedial action, and prudential visits, will be determined by the ML/TF/PF risk rating assigned to each LFI.
- Low-risk LFIs: once every 36 months
- Moderate-risk LFIs: once every 24 months
- Above-average-risk LFIs: once every 18 months
- High-risk LFIs: once every 12 months
Examination Process Guidelines
ECCB’s Risk-Based AML/CTF/CPF Onsite Examination Manual and Remote Examination Procedures for Supervisors provide further guidance on the examination process.
Conclusion
The launch of this new tool is a significant step forward in ECCB’s efforts to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) framework, and we look forward to working closely with our licensed financial institutions to ensure their compliance with these important regulations.