Risk Assessment Guideline for Banking Sector
Risk Assessment Guideline for Banking Sector
Chapter: One : Overview of AML/CFT Risk
1. Introduction
As a lead agency for prevention of money laundering and combating financing of terrorism, Bangladesh Financial Intelligence Unit (BFIU) is very keen to achieve highest success in this regard. The success of AML/CFT program highly depends on efficient assessment of related risk/vulnerability/threat and placing combating tools as per the result of assessed risk/vulnerability/threat.
The purpose of this guideline is to:
- provide general information about risks related with the products, services, delivery
channels, and geographical locations; - assist reporting entities to assess their risks efficiently;
- enable reporting entities in implementing an AML/CFT program appropriate to their
business having regard to the business size, nature and complexity; and - provide a broad risk management framework based on high-level principles and
procedures that a reporting entity may wish to consider when developing and
implementing a risk-based approach to identify, mitigate and manage ML/TF risks.
1.2 What are the obligation for such Risk Assessment and Management?
As per the first Recommendation of Financial Action Task Force (FATF) revised 40 Recommendations, each country should require financial institutions and designated nonfinancial businesses and professions (DNFBPs) to identify, assess and take effective action to mitigate their money laundering and terrorist financing risks.
BFIU is the lead agency for AML/CFT issues in Bangladesh. Money Laundering Prevention Act, 2012 empowers BFIU sufficiently to establish a sound and efficient AML/CFT regime. Every reporting agency has to comply with the instructions issued by BFIU under the power of Money Laundering Prevention Act, 2012 and Anti Terrorism Act, 2009. This Guideline has been issued through BFIU circular aiming to strengthen AML/CFT regime in Bangladesh. Therefore, it is obligatory for all reporting entities to comply with this Guideline.
1.3 Assessing risk:
Financial institutions should be required to take appropriate steps to identify and assess their money laundering and terrorist financing risks (for customers, countries or geographic areas; and products, services, transactions or delivery channels). They should document those
assessments in order to be able to demonstrate their basis, keep these assessments up to date, and have appropriate mechanisms to provide risk assessment information to competent authorities and self regulatory bodies (SRBs).
1.4 Risk management and mitigation:
Financial institutions should be required to have policies, controls and procedures that enable them to manage and mitigate effectively the risks that have been identified. They should be required to monitor the implementation of those controls and to enhance them, if necessary.
The policies, controls and procedures must be approved by senior management, and the measures taken to manage and mitigate the risks (whether higher or lower) should be consistent with national requirements and with guidance from competent authorities and SRBs.
See the full guideline: