Supervision Department - AML/CFT
Training
CIP - High Risk Customers and PEPs - EDD Monitoring
- Transaction monitoring which takes account of up-
to-date CDD information including expected
activity, source of wealth and source of funds.
- Regularly reviewing PEP relationships at a senior
level based on a full and balanced assessment of the
source of wealth of the PEP.
- Monitoring new clients more closely to confirm or
amend the expected account activity.
- A risk-based framework for assessing the
necessary frequency of relationship reviews and the
degree of scrutiny required for transaction
monitoring.
- Proactively following up gaps in, and updating,
CDD during the course of a relationship.
- Ensuring transaction monitoring systems are
properly calibrated
to identify higher risk
transactions and reduce false positives.
-
Keeping good records and a clear audit trail of
internal suspicion reports sent to the MLRO,
whether or not they are finally disclosed to The
FMS.
- A good knowledge among key AML staff of a
bank‘s highest risk/PEP customers.
- More senior involvement in resolving alerts raised
for transactions on higher risk or PEP customer
accounts, including ensuring adequate explanation
and, where necessary, corroboration of unusual
transactions from risk managers and/or customers.
- Global consistency when deciding whether to keep
or exit relationships with high-risk customers and
PEPs.
- Assessing RMs‘ performance on ongoing
monitoring and feeding this
into their annual
performance assessment and pay review.
•
Lower transaction monitoring alert
thresholds for higher risk customers.
- Failing to carry out regular reviews of high-risk
and PEP customers in order to update CDD.
- Reviews carried out by RMs with no independent
assessment by money laundering or compliance
professionals of the quality or validity of the review.
- Failing to disclose suspicious transactions to The
FMS.
- Failing to seek consent from The FMS on
suspicious transactions before processing them.
- Unwarranted delay between identifying suspicious
transactions and disclosure to The FMS.
- Treating annual reviews as a tick-box exercise and
copying information from the previous review.
- Annual reviews which fail to assess AML risk and
instead focus on business issues such as sales or debt
repayment.
-
Failing to apply enhanced
ongoing monitoring
techniques to high-risk clients and PEPs.
- Failing to update CDD based on actual
transactional experience.
- Allowing junior or inexperienced staff to play a
key role in ongoing monitoring of high-risk and PEP
customers.
- Failing to apply sufficient challenge to
explanations from risk managers and customers
about unusual transactions.
- Risk Managers failing to provide timely responses
to alerts raised on transaction monitoring systems.
Examples of GOOD Practice
2
Examples of POOR practice
Supervision Department - AML/CFT Training
CIP - Risk Assessment - Correspondent Banking
- Regularly assessments of correspondent banking
risks taking into account various
money laundering
risk factors such as the country (and its AML
regime); ownership/management structure
(including the possible impact/influence that
ultimate beneficial owners with political
connections may have); products/operations;
transaction volumes; market segments; the quality
of the respondent‘s AML systems and controls and
any adverse information known about the
respondent.
- More robust monitoring of respondents identified
as presenting a higher risk.
- Risk scores that drive the frequency of relationship
reviews.
- Taking into consideration publicly available
information from national
government bodies and
non-governmental organizations and other credible
sources.
-
Failing to consider the money-laundering risks of
correspondent relationships.
- Inadequate or no documented policies and
procedures setting out how to deal with respondents.
- Applying a ‗one size fits all‘ approach to due
diligence with no assessment of the risks of doing
business with respondents located in higher risk
countries.
- Failing to prioritize higher risk customers and
transactions for review.
- Failing to take into account high-risk business
types such as money service businesses and offshore
banks.
Examples of GOOD Practice
2
Examples of POOR practice
Supervision Department - AML/CFT Training
CIP - Correspondent Banking - New
Accounts
- Assigning clear responsibility for the CDD process
and the gathering of relevant documentation.
- EDD for respondents that present greater risks or
where there is less publicly available information
about the respondent.
- Gathering enough information to understand client
details; ownership and management; products and
offerings; transaction volumes and values; client
market segments; client reputation; as well as the
AML control environment.
- Screening the
names of senior managers, owners
and controllers of respondent banks to identify PEPs
and assessing the risk that identified PEPs pose.
- Independent quality assurance work to ensure that
CDD standards are up to required standards
consistently across the bank.
- Discussing with overseas regulators and other
relevant bodies about the AML regime in a
respondent‘s home country.
- Identifying risk in particular business areas (eg.
informal value transfer such as ‗hawala‘, tax
evasion, corruption) through discussions with
overseas regulators.
- Visiting, or otherwise liaising discuss with,
respondent banks to discuss AML issues and gather
CDD information.
- Gathering information about procedures at
respondent financial institutions for sanctions
screening and identifying/managing PEPs.
- Understanding respondents‘
processes for
monitoring account activity and reporting suspicious
activity.
-
Requesting details of how respondents manage
their own correspondent banking
relationships.
- Inadequate CDD on parent banks and/or group
affiliates, particularly if the respondent is based in a
high-risk jurisdiction.
- Collecting CDD information but failing to assess
the risks.
- Over-relying on the Wolfsberg Group AML
questionnaire.
- Failing to follow up on outstanding information
that has been requested during the CDD process.
- Failing to follow up on issues identified during
the CDD process.
- Relying on parent banks to conduct CDD for a
correspondent account and taking no steps to ensure
this has been done.
- Collecting AML policies
etc but making no effort
to assess them.
- Having no information on file for expected activity
volumes and values.
- Failing to consider adverse information about the
respondent or individuals connected with it.
- No senior management involvement in the
approval process for new correspondent bank
relationships or existing relationships being
reviewed.
Examples of GOOD Practice
2
Examples of POOR practice