Financial Crime World

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Action Plan for Addressing Weaknesses in AML/CFT Mechanisms

As financial institutions, it’s essential to have a robust Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) mechanism in place. To ensure that your institution is compliant with regulations and effective in detecting and preventing financial crimes, follow these key steps:

1. Identify Gaps

Before creating an action plan, it’s crucial to identify gaps in your current AML/CFT procedures and systems. This includes reviewing automated transaction monitoring systems and policies. Some areas to focus on include:

  • Transaction monitoring systems: Are they effective in detecting suspicious transactions?
  • Policies and procedures: Are they up-to-date and aligned with regulatory requirements?

2. Prioritize Actions

Prioritize actions based on the impact of identified gaps on overall efficiency. If multiple new measures are required, focus on those with the greatest impact first.

  • High-impact activities: Focus on implementing changes that have a significant impact on AML/CFT effectiveness.
  • Medium-impact activities: Implement changes that have a moderate impact on AML/CFT effectiveness.
  • Low-impact activities: Implement changes that have a minimal impact on AML/CFT effectiveness.

3. Ensure Coherence

Ensure that the action plan is coherent by requiring more substantial actions for activities or risk factors assessed as high and less for those assessed as low.

  • Risk-based approach: Use a risk-based approach to determine the level of effort required for each activity.
  • Proportionality principle: Ensure that the effort required is proportional to the risk involved.

4. Implement Corrective Measures

Implement all corrective measures necessary by July 1, 2019. If unable to do so, submit a reasoned request for postponement to the NBB by May 31, 2019.

  • Deadlines: Establish clear deadlines for implementing corrective measures.
  • Postponement requests: Submit postponement requests in a timely manner if necessary.

5. Update Overall Risk Assessment

Update the overall risk assessment whenever significant events occur that could modify ML/FT risks or their assessment. This includes internal changes and external events such as legal and regulatory changes, major socio-economic changes, emergence of new forms of crime, etc.

  • Risk updates: Regularly update the risk assessment to reflect changing circumstances.
  • External factors: Consider external factors that may impact ML/FT risks.

6. Review Relevance

Review the relevance of the overall risk assessment annually or more frequently if necessary, taking into account the principle of proportionality based on the financial institution’s nature and size.

  • Annual reviews: Conduct annual reviews to ensure the risk assessment remains relevant.
  • Proportionality principle: Apply the principle of proportionality when assessing the relevance of the risk assessment.

7. Document and Submit Updates

Document, update, and submit the overall risk assessment to the NBB as required. Include updates in the activity report of the AMLCO and provide updated versions of relevant documents.

  • Documentation: Maintain accurate records of changes to the risk assessment.
  • Submissions: Submit updates to the NBB as required.