Professional Documents
Culture Documents
PART I
Essential Elements
I
n January 2014, the Basel Committee on Banking
Supervision (BCBS), the international standard
setter for banking supervisors, issued Sound
Management of Risks Related to Money Laundering
and Financing of Terrorism, guidance1 to banks on
how to manage the risks of money laundering (ML)
and the financing of terrorism (FT). The BCBS has
long recognized that sound management of ML risks
protects banks and the national banking system, as
well as preserving the integrity of the international
financial system. The guidance combines, updates and
http://www.bis.org/publ/bcbs275.pdf
R E G U LATORY I N ITIATIVE S
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R E G U LATORY I N ITIATIVE S
Audits should
be properly
scoped to
evaluate the
effectiveness
of the program
R E G U LATORY I N ITIATIVE S
Management of information
Reporting of suspicious
transactions and asset freezing
Ongoing monitoring of accounts and
transactions will enable banks to identify
unusual activity, refer unusual activity
to an internal review function, eliminate false positives and report suspicious activity in a timely and confidential
manner. This process should be clearly
spelled out in policies and procedures
and communicated to appropriate staff.
Where suspicious activity has been
reported, the bank should take appropriate action regarding the customer,
including raising the risk rating of the
customer and/or deciding whether to
retain the relationship (either the account
or the entire relationship). In some
cases, it may make sense to close out
one account and not the whole relationship, such as when a customer has both
a checking account and an outstanding
loan. Banks should screen new customers
against applicable sanctions lists and the
existing portfolio against changes to the
sanctions list to identify relationships
that may need to be frozen; banks should
have a means of properly freezing any
assets identified as part of this process.
Conclusion
While many of the concepts contained in
the BCBS guidance are not new to the
industry, it is important to note that this
guidance is being provided to banking
supervisors to help them develop a
common international understanding of
what is expected of financial institutions
to mitigate ML/FT risk. Harmonized
legislation in the various jurisdictions
removes many of the incentives for
money launderers to seek out weaker
jurisdictions and promotes a stronger
and safer financial system that can better
identify criminal misuse of the system
and facilitate the detection, prevention
and, eventually, prosecution of financial
crimes. While banks continue to get bad
press for their role in the financial crisis,
it is comforting to know that AML efforts
undertaken following the guidance
provided by the BCBSand replicated
internationally throughout the financial
industrymake our communities a bit
safer with every report of suspicious
activity that results in another criminal
taken off the streets.
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