COURSE DESCRIPTION
The aim of this course is to provide participants with a comprehensive understanding of the Risk-Based Approach (RBA) in Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT). This course seeks to delve into the evolution of AML compliance, transitioning from a conventional ‘checkbox’ methodology to the dynamic and proactive RBA. Participants will gain insights into the global standards set by the Financial Action Task Force (FATF) and explore how the RBA enables financial institutions to efficiently allocate resources, manage risks, and implement tailored measures. Moreover, the course aims to equip individuals with the knowledge and skills necessary to develop and maintain robust AML/CFT risk models, ensuring a flexible and effective approach to risk management.
The course is split into the following units:
Unit 1 – Risk Assessment for Money Laundering
This unit describes the need for combating AML risks and other financial crimes. Financial institutions must be able to respond to threats on a contextual basis to balance efficiency and cost needs with compliance obligations. The most effective way to achieve that objective is to take a risk-based approach, meaning an AML compliance program tailored to the individual levels of risk exposure that each customer presents.
Unit 2 – Risk-Based Approach (RBA)
Prior to the introduction of risk-based approaches to AML, banks and financial institutions would manage their compliance obligations using a ‘checkbox’ approach – that is, simply fulfilling a standardized list of AML requirements for every customer.
This unit describes the RBA methodology when assessing risk according to the Financial Action Task Force (FATF) recommendation: taking into account risks relating to types of customers, countries or geographic areas, and particular products, services, transactions or delivery channels.
Unit 3 – Assessing & Managing the ML/TF Risk
A risk assessment enables the Financial Institutions to focus on its AML/CFT efforts and to adopt appropriate measures to optimally allocate the necessary resources. On the basis of the assessments conducted, the Financial Institutions should have controls, policies and procedures that enable them to manage and mitigate the identified risks effectively.
- The process of ML/TF risk assessment has the following stages:
- Identifying the area of the business operations vulnerable to ML/TF
- Conducting an analysis to assess the likelihood and impact of ML/TF
- Managing the ML/TF risks by developing policies, procedures and processes, and
- Regular monitoring and reviewing the ML/TF risks.
LEARNING OUTCOMES:
- This course aims to describe and explain the Risk-Based Approach (RBA) procedures so that the firms focus their efforts on those areas where the risk of ML and TF appears to be higher. Resources should be efficiently invested and applied where they are most required.
- The risk-based approach (RBA) is central to the effective implementation of the FATF Recommendations. It means that supervisors, financial institutions, and intermediaries identify, assess, and understand the money laundering and terrorist financing (ML/TF) risks to which they are exposed, and implement the most appropriate mitigation measures.
- This course includes a general presentation of the RBA and provides specific guidance using risk criteria such as country or geographic risk, customer risk, product or service risk. In addition, examples of risk factors under these risk categories are provided.
- Emphasize the importance of monitoring customer transactions as a fundamental component of the RBA.
- Define essential terms such as Risk-Based Approach, Risk Appetite, and Enhanced Due Diligence.
- Outline the first recommendation of the Financial Action Task Force (FATF).
- Describe how countries should apply the RBA according to FATF guidelines.
- Identify key sections within an AML Risk Appetite Statement.
- Illustrate how a well-designed risk-based approach allows institutions to identify potential money laundering risks.
- Explain the need for assessing risks at the enterprise, customer type, and customer levels.
- Describe the critical components of a risk-based approach in creating and maintaining an AML/CFT risk model.
- Emphasize the importance of periodic reviews and updates to the risk model.
- Explain how financial institutions can mitigate risks through controls such as due diligence.
- Highlight the flexibility, effectiveness, and proportionality of the risk-based approach.
- Emphasize the ability of companies to assess and mitigate specific money laundering and terrorist financing risks they face.
- Define risk-scoring models and their numeric values for determining risk categories.
- Illustrate the application of risk scoring in evaluating product risk and determining appropriate controls.
- Describe the factors that trigger a re-evaluation of customer risk ratings.
- Emphasize the importance of considering a customer’s actual activity and behaviour over time in risk assessments.
PARTICIPANT PROFILE
This course is addressed to all individuals who practice Anti-Money Laundering such as Compliance/AML Managers in Banks, Investment Firms, Investment Funds, ASPs, Trust Service Corporate Providers and Lawyers.
