the development and implementation of group-wide risk assessments and risk mitigation strategies, including compliance with group policies, procedures, and controls. A financial group should, when required, inform its supervisor(s) about its global framework for identifying, assessing, and managing its ML/TF risks and its consolidated AML/CFT policies, procedures, and controls and group-wide information-sharing arrangements. Mixed financial groups comprising banks, securities, insurance, and other financial businesses can present additional complexity in the development and consolidation of group processes and systems. Differences in the nature of activities and types of business relationships in each sector may require or justify variations in the AML/CFT requirements imposed on each sector. For instance, simplified customer due diligence measures may be allowed for customers of the group that request term life or non–life insurance products, especially products without a surrender value, while standard customer due diligence will apply to the same customer in other lines of business. At a mimimum, mixed groups should ensure that the required group AML/CFT policies, procedures, and controls are implemented and that information on ML/TF risks and customers is shared across the entire group.
NOTES 1. De-risking is the phenomenon of financial institutions terminating or restricting business relationships with clients or categories of clients to avoid rather than manage risks. See also chapter 6. 2. The 2019 closure of Atlantic International Bank Limited in Belize (an offshore bank) due its alleged involvement in a real estate scam, is instructive in this regard. Also, the so-called 311 Special Measures for Jurisdictions, Financial Institutions, or International Transactions of Primary Money Laundering Concern by FinCEN (the US financial intelligence unit) caused the closure of the Latvian ABLV Bank and of Banca Privada d’Andorra. See https://www.fincen.gov /resources/statutes-and-regulations/311-special-measures. 3. FATF Recommendation 1, interpretive note to Recommendation 1 and Criterion 1.10 of the FATF methodology. 4. The business-wide risk assessment is sometimes referred to as an enterprise-wide risk assessment. 5. For examples of guidance on business-wide risk assessments, see DNB (n.d.-a); IFC (2019); and Wolfsberg Group (2015). 6. FATF Recommendation 18. 7. FATF Recommendation 10 and its interpretive note. 8. FATF Recommendation 11. 9. FATF Recommendation 20. 10. See, for instance, the guidance documents of DNB (n.d.-b) and IFC (2019). 11. The term “group” refers to organizations comprising more than one financial institution, including the branches and majority-owned subsidiaries of the institution wherever they may be located. The term “head office” refers to the parent institution of the group, generally where the group AML/CFT risk management department is located.
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PREVENTING MONEY LAUNDERING AND TERRORIST FINANCING
