Simplified Supervisory Interventions for AIs and RIs: Risk-Responsive Approach
In an effort to address the evolving threats in the financial sector, the Namibia Financial Institutions Supervisory Authority (NAMFISA) has introduced simplified supervisory interventions for Artificial Intelligence (AI) and Reporting Institutions (RI). The risk-based approach ensures that regulatory oversight is tailored to individual institutions’ risk profiles.
Guiding Principles
The revised framework focuses on promoting a clear understanding of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations and Money Laundering/Terrorist Financing/Personnel Financing (ML/TF/PF) risks among AIs and RIs. NAMFISA will:
- Provide guidance and advice to institutions
- Issue guidelines for detecting suspicious patterns of behavior
- Develop typologies on the manifestation of ML/TF/PF risks
Risk-Based Supervision
NAMFISA’s risk-based approach involves conducting regular examinations to assess whether AIs and RIs are adequately implementing compliance measures consistent with the requirements under the Financial Institutions Act (FIA). The intensity of inspections will depend on institutions’ ML/TF/PF risk profiles and systemic risk.
Inspection Schedule
| Risk Category | Inspection Period | Number of AIs and RIs |
|---|---|---|
| High | Every year | None |
| Medium-High | Every 2 (two) years | 21 |
| Medium-Low | Every 3 (three) years | 43 |
| Low | Every 2 (two) years for SIFIs, when necessary for non-SIFIs | 93 |
Key Findings
The risk-based approach will help NAMFISA:
- Focus on areas posing medium-high risks of ML/TF/PF
- Conduct intensified on-site and off-site inspections for industries and institutions rated medium-high
- Monitor low-risk industries and institutions through off-site inspections, unless they are systematically important FIs
By adopting a risk-responsive approach, NAMFISA aims to:
- Promote effective AML/CFT compliance
- Reduce the risk of ML/TF/PF activities
- Enhance financial stability in Namibia