The Risk Based Supervision Approach for AML/CFT in Banks and Financial Institutions Course

Why select this training course?

You may have noted the sudden increase in surveillance and controls related to anti-money laundering (AML)/combating the financing of terrorism (CFT). Over the years, financial institutions have realized the need to mitigate the adverse effects of criminal economic activity and foster integrity and stability in financial markets. Serious steps are being implemented to help control and monitor financial transactions and other similar activities that could serve as grounds for fraud or illegal terrorism-aiding activities. As a result of the various controls set in place, the financial system today is safer and more resilient than before. However, this comes at the cost of complex and more stringent overseas business terms and conditions. Thus, effective training in this area will ensure optimal and smart use of robust systems to prevent money laundering and terrorism financing and facilitate seamless business operations and transactions.

What is Risk-Based Supervision in financial institutions?

The Risk-Based Supervision (RBS) approach is a method used by regulatory authorities to assess and manage money laundering (ML) and terrorism financing (TF) risks in banks and financial institutions. RBS aims to ensure that banks and financial institutions have effective Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) systems in place and are implementing these systems effectively. Under RBS, regulatory authorities assess the ML/TF risks faced by each bank and financial institution and prioritize their supervisory activities based on these risks. This allows regulatory authorities to allocate their resources more effectively and target their supervisory activities where they are most needed.

What are the key steps in Risk-Based Supervision?

The RBS approach involves four key steps

• Risk Assessment: Regulatory authorities assess the ML/TF risks faced by each bank and financial institution, considering factors such as size, complexity, and product and service offerings.
• Risk Mitigation: Based on the risk assessment results, regulatory authorities work with banks and financial institutions to develop and implement effective ML/TF risk mitigation measures.
• Risk Monitoring: Regulatory authorities monitor the implementation and effectiveness of the risk mitigation measures and assess the bank’s overall ML/TF risk profile.
• Risk Reporting: Regulatory authorities report on the results of their supervisory activities, including the effectiveness of the bank’s ML/TF systems and the impact of the supervisory activities on the bank’s ML/TF risk profile.

At Rcademy, we have designed a course to raise awareness of AML/CFT among financial institutions and all related professionals and, more importantly, help them thoroughly understand and gain supreme experience in adopting and successfully undertaking a risk-based approach to AML/CFT. The Risk Based Supervision Approach for AML_CFT in Banks and Financial Institutions Course by Rcademy is customized to include all aspects of present-day challenges and specific aspects requested by the trainee participants. We aim to empower our participants with a comprehensive understanding and detailed information of all it takes for successful AML/CFT activities, specifically the risk-based approach.

Who should attend?

TheRisk Based Supervision Approach for AML_CFT in Banks and Financial Institutions Course by Rcademy is relevant to you if you are:

• An executive or a professional working in the banking sector or any other related financial institution, as it provides all information necessary for improving the efficiency of internal processes and systems
• A professional specifically handling funds, transactions and other functions involving the movement of funds across parties
• A senior management representative of your organization partaking in critical decision-making during such adverse events
• A legal official for an organization wherein you are responsible for handling and overseeing all legal aspects on behalf of the organization
• A quality analyst or official responsible for maintaining and updating relevant process and system documentation for your organization to adhere to required international standards
• An auditor (external/internal) ensuring that all institutions within the banking sector update and maintain their systems and processes as per the requirement under various regulations and legislations concerning AML/CFT
• A professional aspiring to build a stronger career in the banking sector, specializing in AML/CFT activities and measures

What are the course objectives?

Through this course, we at Rcademy aim to provide you with the following:

• Complete knowledge and information about the importance of AML/CFT and ways to effectively adopt a risk-based approach to AML/CFT
• Technical know-how to actively participate in conducting risk assessments and obtaining risk ratings for your organization
• Analytical skills to interpret results of risk assessments conducted for AML/CFT and take corrective action in case of such instances
• Confidence and experience to effectively and calmly handle situations of money laundering and terrorism financing following relevant legal and regulatory requirements
• Experience and exposure as well as knowledge to ensure continuous training and upskilling of inhouse staff regarding AML/CFT best practices
• Overall skillset and capabilities to work with updated systems and processes, including technology, to counter or prevent any chances of money laundering or terrorism financing
• Enhanced ability to notice any instance or hint of such activities and spring into action with appropriate resources, systems, and knowledge to prevent adverse effects on the organization
• Specialized expertise in risk management and assessment for AML/CFT, thus creating a strong professional portfolio for yourself in the industry
• Greater and better opportunities for critical roles within your organization because of capabilities and potential demonstrated in handling AML/CFT, including supervisory roles fostering growth
• International exposure in terms of scrutiny and discussion of relevant case studies and incident reports helps you successfully undertake any global opportunity coming your way

How will this course be presented?

Rcademy recruits specialists in the relevant field to frame the training content and deliver the training. The content is curated per client requests and presents needs in the particular area of interest. We encourage our trainees to partake in training through discussions and tasks assigned in groups or individually. Trainee feedback is also taken before and after the training to improve our courses. Most training sessions allow for site visits, role-plays, etc., allowing our participants to interact with other professionals from the field.

This approach aims to give you a realistic picture of all possible scenarios related to the training topic.

What are the topics covered in this course?

Module 1 – Phases of AML/CFT Risk Assessment

• Identification of inherent ML/FT risks
• Assessment of internal controls
• Assessment of residual risks

Module 2 – Categories to be Considered During Risk Assessment

• Customer base
• Products and services offered
• Delivery channels
• Jurisdictions
• Other qualitative risk factors
  – Expected account and revenue growth
  – Recent AML/CFT compliance personnel turnover
  – Reliance on third-party providers for AML/CFT responsibilities
  – Recent enforcement actions and penalties
  – Independent audit and regulatory findings

Module 3 – Various AML/CFT Compliance Aspects

• Customer due diligence process
• Suspicious transaction reporting
• Cash transaction reporting
• Training
• Systems supporting AML/CFT compliance
• AML/CFT methodologies used by a bank

Module 4 – Factors Prompting Banks for Customer Due Diligence (CDD)

• Establishment of a new business relationship
• Occasional transactions
  – Above applicable threshold
  – Cross-border and domestic wire transfers
• Suspicion of money laundering/terrorist financing
• Doubts about the adequacy of previous customer identification data

Module 5 – Customer Risk Rating

• Customer’s demographics
• Products/services/channels
• Geographies
• Other factors
  – Country/regulatory risk
  – Customer’s ALF/CMT program
  – Negative news/regulatory action
  – Compliance History
  – Suspicious transaction reports

Module 6 – Residual Risk Approach

• Definition and objective
• Residual risk rating calculation
• Visual heatmap format of risk presentation

Module 7 – Common Risk Control Categories

• AML/CFT corporate governance, management oversight and accountability
• Policies and procedures
• Customer due diligence, enhanced due diligence, simplified due diligence, politically exposed persons
• Management information system (MIS)/Reporting
• Record keeping and retention
• Designated AML/CFT officer
• Detection and suspicious activity report (SAR) filing
• Monitoring and controls
• Training
• Independent testing and oversight

Module 8 – Factors Considered During Control Effectiveness Assessment

• Review of banks’ policies and procedures
• Walkthroughs with business and operations teams
• Sample testing against key control indicators/control sample testing thresholds

Module 9 – Pointers when Developing Groupwide AML/CFT Policies and Procedures (Multiple Jurisdiction Operation)

• Data protection- and customer privacy-related local laws and regulations
• Handling requests from law enforcement, supervisory authorities, etc.
• Type of information to be shared
• Storage, retrieval, distribution and disposal requirements
• Potential risks from reported activity

Module 10 – Fine-tuning AML/CFT Monitoring Systems

• Scenario/rule selection
• Customer segmentation identification
• Initial threshold setting/pre-production tuning
• Production threshold tuning
• Documentation

Module 11 – Common Challenges in RBA Implementation

• Allocating responsibility under RBA
• Identifying money laundering/terrorist financing risks
• Assessing money laundering/terrorist financing risks
• Mitigating money laundering/terrorist financing risks
• Developing a common understanding of RBA
• Financial inclusion