Sound management of risks related to money laundering and financing of terrorism – consultative document

by Sabrina I. Pacifici on June 27, 2013

BIS: “The Basel Committee has a long-standing commitment to promote the implementation of sound policies and procedures to combat money laundering (ML) and the financing of terrorism (FT). Its commitment to combating ML and FT is fully aligned with its mandate to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability.” Prudent management of risks related to ML and FT along with effective supervisory oversight are critical in protecting the safety and soundness of banks and the integrity of the international financial system. The inadequacy or absence of sound management can increase the exposure of banks to serious risks, especially reputational, operational, compliance and concentration risks. Recent developments, including robust enforcement actions taken by regulators and the corresponding direct and indirect costs incurred by banks due to their lack of diligence in applying appropriate risk management policies, procedures and controls, have highlighted those risks. These costs and damage could probably have been avoided had the banks maintained effective risk-based policies and procedures to protect against risks arising from ML and FT. In February 2012, the Financial Action Task Force (FATF) released a revised version of the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation (the FATF standards), to which the Committee provided input. The Committee’s intention in issuing this consultative paper is to support countries’ implementation of the FATF standards with respect to their banks and banking groups, by exploring complementary areas and leveraging the expertise available in both organisations. Therefore, these guidelines are intended to be consistent with and to supplement the goals and objectives of the FATF standards. The Committee has included cross-references to FATF standards in this document in order to assist banks in complying with national requirements based on the implementation of those standards.”

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