has screening procedures to ensure high standards and to avoid any conflicts of interest. The inspection with respect to processes should focus on the following: ●● Screening procedures for employees, including consultants, and more stringent screening for employees who will be working in high-risk areas; ●● A policy prohibiting employees from managing their own accounts or accounts on behalf of related parties and additional controls on the ability of employees to access their own accounts; and ●● A policy on penalties for violations of internal rules and legislation by employees.
OTHER EXAMINATION PROCEDURES In addition to the examination procedures related to the general AML/CFT compliance framework described above, specific AML/CFT topics may need to be evaluated in some cases. For instance, the supervisor may want to assess whether the institution has adequately assessed specific inherent risks related to geography or delivery channels. Specific examination procedures will also be relevant for certain high-risk customers, such as correspondent relationships.
Geographic Risk Examiners need to ascertain whether the institution’s AML/CFT framework takes adequate account of geographic risk exposure, both domestic and cross-border, with respect to its client base and branch and subsidiary network. Such an assessment is important for determining whether the institution adequately identifies and assesses the risks when establishing or acquiring foreign branches or subsidiaries. The examination of geographic risk exposure should undertake the following: ●● Assess whether the institution’s policy and procedures take into account FATF-listed jurisdictions and United Nations–sanctioned jurisdictions as well as other reliable sources, such as the national risk assessment; ●● Determine whether the institution’s geographic risk assessment captures high-risk domestic regions; ●● Assess whether the institution assesses the jurisdiction’s risks with respect to its branches and subsidiaries; ●● Assess whether the institution takes geographic risk into account when assessing or reviewing business relationships and monitoring transactions; and ●● Assess whether enhanced customer due diligence measures are implemented for business relationships in higher-risk jurisdictions.
Delivery Channels ML/TF practices can proliferate amid digital financial platforms that facilitate anonymity in transactions, jeopardizing the overall integrity of the financial system. Fintech activities carry important risks Chapter 5: On-Site Risk-Based AML/CFT Supervision
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