Audit reports covering AML/CFT issues can yield important information for the examination. It is also important to review the correspondence between the institution’s management and its auditors, especially to determine if any remedial action has been taken to correct deficiencies found by the auditor. Reviewing this information up front will facilitate the interviews with staff of the institution and the examination of systems and files. The information can provide a preliminary view of the AML/CFT compliance systems and processes in place. Reviewing the policies is very important to determine, for instance, if there are systems for enhanced due diligence and monitoring when higher risks are involved or if simplified due diligence can be applied for lower risks. Assessing the effectiveness of the compliance processes is part of the actual on-site inspection, where examiners can test and verify the implementation of the processes. The evaluation of off-site and other information will assist the examination team to determine more precisely the specific objectives and scope of inspections and, in particular, to ascertain areas that require more intense review. The preliminary assessment of this information will also allow the supervisors to amend the duration of the inspection, the staff resources required, and the assignment of examiner responsibilities and tasks.
MANAGEMENT OF THE ON-SITE EXAMINATION Supervisory authorities should establish on-site AML/CFT examination procedures to ensure effective and efficient processes. The examination procedures should reflect the risk, size, complexity, and systemic importance of a sector. The process should be linked closely to off-site AML/CFT processes. Of course, examination planning should remain flexible to accommodate unplanned cases. Detailed inspection procedures should be documented in, for example, an AML/CFT examination manual. The manual should include processes for the following: ●● Developing the annual calendar of inspections; ●● Undertaking unplanned inspections triggered by risk events or new information; ●● Planning the examination of individual financial institutions and financial groups; ●● Conducting on-site examinations; ●● Writing the report; and ●● Taking follow-up actions after the examination. The on-site examination generally includes a kick-off meeting with management as well as an exit meeting. The kick-off meeting is held to inform the institution’s managers of the objectives and process of the inspection. The exit meeting provides management with the preliminary key findings. During the exit meeting, management should preferably already have committed to making improvements or to taking corrective actions where needed. To improve the accuracy of the findings, the examination team should be receptive to any reasonable clarifications and corrections of fact that management offers. During the exit meeting, timelines with respect to the examination report and possibilities for the institution to provide comments should also be discussed. The duties and responsibilities of the examination team should be clearly assigned. The examination team leader carries the primary responsibility for planning and overseeing inspections, 102
PREVENTING MONEY LAUNDERING AND TERRORIST FINANCING
