1

Derisking:ImplicationsforAML/CFTRegime

Dakar,SenegalAugust2017

2

Topics1. Conceptofde-risking2. ConsistencyofderiskingwiththeFATFstandards3. Whysomefinancialinstitutionsde-risk4. Isderiskinganescaperouteforproperrisk

management?5. ImplicationstheemergingtrendforAML/CFT

3

Session6– Derisking:ImplicationsforAML/CFTRegimeNewregulations,thecostofmanagingML/TFrisks,risingregulatorysanctionsandenforcementactionsaremakingitincreasinglyexpensiveforfinancialinstitutions,especiallybanks,indevelopedcountriestodobusinesswithsomebanks/clientsindevelopingcountries,includingthoseinWestAfrica,untiltheyareabletoprovethattheirAML/CFTprogrammescomplywithinternationalrequirements.Thishasledtothebanksterminatingorrestrictingtheirbusinessrelationshipswithindividualsandentitiesfromregionsthatareconsideredhigh-riskformoneylaunderingandotherfinancialcrimesorclientsthattheyconsidertopresentanunacceptablelevelofrisktotheinstitutions.Thesessionwilldiscusstheconceptofde-risking,whysomefinancialinstitutionsde-risk,andtheriskofderisking.Overall,thesessionwillprovideinternationalperspectivestothesubjectmatter;discusstheconsistencyofthisapproachwiththeFATFstandards,whetherthispracticeisanescaperouteforproperriskmanagement,andwhatimplicationsthisemergingtrendhasontheimplementationofglobalAML/CFTregime.

Programme

4

• TheFATFRecommendations,June2012.InternationalStandardsonCombatingMoneyLaunderingandtheFinancingofTerrorism&Proliferation

• FATFGuidance,February2013.Anti-MoneyLaunderingandTerroristFinancingMeasuresandFinancialInclusion

• FATFGuidance,February2013.NationalMoneyLaunderingandTerroristFinancingRiskAssessment

• WorldBank,2013.GlobalRemittancesWorkingGroup.BarrierstoaccesstoPaymentsystemsinsendingcountriesandProposedsolutions.Special-PurposeNote

• BaselCommittee,January2014.SoundManagementofRisksRelatedtoMoneyLaunderingandFinancingofTerrorism

• WorldBank,2014.EmikoTodoroki,WameekNoor,KuntayCelik,andAnomaKulathunga.MakingRemittancesWork- BalancingFinancialIntegrityandInclusion

• WorldBank,October2015.ReportontheG20SurveyOnDe-RiskingActivitiesintheRemittanceMarket

References

5

• FATFREPORT,October2015.EmergingTerroristFinancingRisks• IMF,June2016.PreparedbyMichaelaErbenová,YanLiu,NadimKyriakos-Saad,

AlejandroLópez-Mejía,GiancarloGasha,EmmanuelMathias,MohamedNorat,FranciscaFernando,andYasminAlmeida.TheWithdrawalofCorrespondentBankingRelationships:ACaseforPolicyAction

• IMF/WORLDBank2016AnnualMeetingsSmallStatesFormSpeech.PresentedbyTheHonourableAudleyShawCD,MP.MinisterofFinanceandthePublicService.Topic:EquitableGrowth,FinanceandInstitutions.Sub–topic:De-RiskingandRemittancesintheCaribbean

• FATFGuidanceforaRisk-basedApproach,February2016.MoneyorValueTransferServices

• SWIFT,August2016.Addressingtheunintendedconsequencesofde-risking–FocusonAfrica

• FATFGuidance,October2016.CorrespondentBankingServices• FSB,December2016.FSBactionplantoassessandaddressthedeclinein

correspondentbanking-End-2016progressreportandnextsteps

References

6

• WorldBank• October2015• SurveyonDe-RiskingActivitiesintheRemittanceMarket

References

• FATFGuidance• February2013• AML/CFTMeasuresandFinancialInclusion

• FSB• December2016• De-Risking• Causeforconcern

• SWIFT• August2016• Maymakebusinesssensefortheindividualbanks

• Widerconsequences

7

Topics• Whatisderisking?• Whatishappening?• Deriskingexample

1.ConceptofDerisking

8

WhatisDerisking?

Description• “Generallyspeaking,de-riskingreferstothephenomenonoffinancial

institutionsterminatingorrestrictingbusinessrelationshipswithclientsorcategoriesofclientstoavoid,ratherthanmanage,riskinlinewiththeFATF’srisk-basedapproach”FATF,2014

• “Situationswherefinancialinstitutionsterminateorrestrictbusinessrelationshipswithcategoriesofcustomers”– FATF,2015

Isallderiskingbad?• Goodderisking …..• Badderisking …..Perspectives• Countrylevel• Institutionlevel

DefinitionTomakesomethingsaferbyreducingthepossibilitythatsomethingbadwillhappenandthatmoneywillbelosthttp://dictionary.cambridge.org/us/dictionary/english/derisk

9

WhatisHappening?

G20Survey,2015• The“de-risking”trendimpactsmoreMTOstodaythanafewyearsago

• Declineincorrespondentbankingrelationships

• TheMTOsbusinessmodelisoftenperceivedashighrisk.

• However,thesurvey“highlightsaratherlownumberofviolationsoftherelevantlegalrequirements”

ThemaindriversforMTOaccountclosureinclude:• Profitability• Pressurefromotheractors(correspondentbanks)andfearofregulatoryscrutiny

• LackofconfidenceintheMTOs’procedures• Reputationalrisk

10

DesriskingExample

Somalia• Dependentonremittances• DiasporaremitsapproxUS$1.3billionto

Somalia(perannum)• MainlyviatheSomalimoneytransfer

operators (MTO)• Estimatedat25-45%ofSomaliGDP• Greaterthanalltheincomeitreceivesfrom

aid,foreigndirectinvestment,andexportscombined

• Countryrisk- High• OFAClist- al-Shababconcerns• Politicalrisk• Economicrisk• Crimerisk

• Bankclosedtheaccountsofmoneytransferorganizations(MTO)–2013/14

• Dahabshiil and a number of others

• MTOs outside the risk appetite

11

Topics• Driversofderisking• FATFperspectives• R.1– Assessingrisksandapplyingarisk-basedapproach• R.10– Customerduediligence• R.13– Correspondentbanking• R.14– Moneyvaluetransferservices• R.15– Newtechnologies• R.16– Wiretransfers

2.ConsistencywithFATFStandards

12

DriversofDerisking

FATFacknowledgementBrisbane,26June2015- Situationswherefinancialinstitutionsterminateorrestrictbusinessrelationshipswithcategoriesofcustomer(so-called“de-risking”)isacomplexissuethatgoesfarbeyondanti-moneylaundering(AML)andcounter-terroristfinancing(CFT).TheFATFhasgatheredpreliminaryinformationonthepotentialdriversof“de-risking”,withinputfromtheprivatesectorwhichhighlightsthatthereisacontinuedneedtoimprovetheevidencebase inordertodeterminethecauses,scaleandimpactofde-risking.TheFATFapproachto“de-risking”isbasedonthe FATFRecommendations whichrequirefinancialinstitutionstoidentify,assessandunderstandtheirmoneylaunderingandterroristfinancingrisks,andimplementAML/CFTmeasuresthatarecommensuratewiththerisksidentified.

Keyconcerns• Complexissuethatgoesfarbeyondanti-moneylaundering(AML)andcounter-

terroristfinancing(CFT)• Continuedneedtoimprovetheevidencebaseinordertodeterminethecauses,

scaleandimpactofde-risking• TheFATFapproachto“de-risking”isbasedonthe FATFRecommendations

13

DriversofDerisking

FATFacknowledgement“De-riskingcanbetheresultofvariousdrivers,suchasconcernsaboutprofitability,prudentialrequirements,anxietyaftertheglobalfinancialcrisis,andreputationalrisk.Itisamisconceptiontocharacterisede-riskingexclusivelyasananti-moneylaunderingissue”- FATF,2014

Drivers• Profitability• Prudentialrequirements• Anxietyaftertheglobalfinancialcrisis• Reputationalrisk

Observation• Increasingunderstandingofderisking

http://www.fatf-gafi.org/publications/fatfrecommendations/documents/rba-and-de-risking.html

14

FATFPerspectives

FATFpositioni.r.o.derisking“De-risking”shouldneverbeanexcuseforabanktoavoidimplementingarisk-basedapproach,inlinewiththeFATFstandards.TheFATFRecommendationsonlyrequirefinancialinstitutionstoterminatecustomerrelationships,onacase-by-casebasis,wherethemoneylaunderingandterroristfinancingriskscannotbemitigated.ThisisfullyinlinewithAML/CFTobjectives.WhatisnotinlinewiththeFATFstandardsisthewholesalecuttinglooseofentireclassesofcustomer,withouttakingintoaccount,seriouslyandcomprehensively,theirlevelofriskorriskmitigationmeasuresforindividualcustomerswithinaparticularsector.”

Considerations• Deriskingshouldneverbeanexcuse…..• Terminatecustomerrelationships

• Onacasebycasebasisonly- WhereML/TFcannotbemitigated• Seriouslyandcomprehensivelytakeintoaccountthelevelofriskorriskmitigation

15

WhatRiskisBeingAddressed?

WhentheFATFtalksaboutrisk– whatrisk?• Regulatoryrisk• Compliancerisk• MLrisk• TFrisk

Whenyouconductduediligence,whatriskisbeingmitigated?• Asabaseline:

• “Don’tdobusinesswithsomeoneyoudonotknow”• ThisdoesnotnecessarilymitigateML/TFrisk

De-marketing• insomecases,bankswillexittherelationshipsolelyonthebasisofprofits

(“de-marketing”),irrespectiveoftheriskcontextandofmarketcircumstances

16

R1.Assessingrisksandapplyingarisk-basedapproach–“Countriesshould”• Identify,assess,andunderstandMLandTFrisksforthecountry• Takeaction,includingdesignatinganauthorityormechanismtocoordinateactionstoassessrisks,andapplyresources,aimedatensuringtherisksaremitigatedeffectively

• Basedonthatassessment,countriesshouldapplyaRBAtoensurethatmeasurestopreventormitigateMLandTFarecommensuratewiththerisksidentified

• EssentialfoundationtoefficientallocationofresourcesacrosstheAML/CFTregimeandtheimplementationofrisk- basedmeasuresthroughouttheFATFRecommendations

• Wherecountriesidentifyhigherrisks,theyshouldensurethattheirAML/CFTregimeadequatelyaddressessuchrisks

• Wherecountriesidentifylowerrisks,theymaydecidetoallowsimplifiedmeasuresforsomeoftheFATFRecommendationsundercertainconditions

• RequireFisandDNFBPstoidentify,assessandtakeeffectiveactiontomitigateMLandTFrisks

Recommendation1

Perspectives• Country• InstitutionQuestions• Whatistheendgame?

• Whatdoessuccesslooklike?

• Istherealignment?

• Whatgovernanceinneeded?

17

Recommendation10

Customerduediligence“Financialinstitutionsshouldbeprohibitedfromkeepinganonymousaccountsoraccountsinobviouslyfictitiousnames.Financialinstitutionsshouldberequiredtoundertakecustomerduediligence(CDD)measureswhen:(i) establishingbusinessrelations;(ii) carryingoutoccasionaltransactions:(i)abovethe

applicabledesignatedthreshold(USD/EUR15,000);or(ii)thatarewiretransfersinthecircumstancescoveredbytheInterpretiveNotetoRecommendation16;

(iii) thereisasuspicionofmoneylaunderingorterroristfinancing;or

(iv) thefinancialinstitutionhasdoubts abouttheveracityoradequacyofpreviouslyobtainedcustomeridentificationdata.”

• Whydidthishappen?• FATFstandardsarenotprescriptive

• Identificationandverification• Proportionateresponses• Wearewhereweare– Whatisthewayforward?

Inarulesapproach,typically:• Name• DateofBirth• IDNumber• Address• Contactnumber

18

Recommendation13

Correspondentbanking“Financialinstitutionsshouldberequired,inrelationtocross-bordercorrespondentbankingandothersimilarrelationships,inadditiontoperformingnormalcustomerduediligencemeasures,to:(a) gathersufficientinformationaboutarespondentinstitutiontounderstand

fullythenatureoftherespondent’sbusinessandtodeterminefrompubliclyavailableinformationthereputationoftheinstitutionandthequalityofsupervision,includingwhetherithasbeensubjecttoamoneylaunderingorterroristfinancinginvestigationorregulatoryaction;

(b) assesstherespondentinstitution’sAML/CFT controls;

(c) obtainapprovalfromseniormanagementbeforeestablishingnewcorrespondentrelationships;

(d) clearlyunderstandtherespectiveresponsibilitiesofeachinstitution;and

(e) withrespectto“payable-throughaccounts”,besatisfiedthattherespondentbankhasconductedCDDonthecustomershavingdirectaccesstoaccountsofthecorrespondentbank,andthatitisabletoproviderelevantCDDinformationuponrequesttothecorrespondentbank.”

• NotrequireKYCC• Monitorrespondentinstitution’stransactions

• Respondentinstitution’sriskprofile

• RFIonanyparticulartransaction

19

Recommendation14

MoneyValueTransferServices“Countriesshouldtakemeasurestoensurethatnaturalorlegalpersonsthatprovidemoneyorvaluetransferservices(MVTS)arelicensedorregistered,andsubjecttoeffectivesystemsformonitoringandensuringcompliance withtherelevantmeasurescalledforintheFATFRecommendations.CountriesshouldtakeactiontoidentifynaturalorlegalpersonsthatcarryoutMVTSwithoutalicenseorregistration,andtoapplyappropriatesanctions.Anynaturalorlegalpersonworkingasanagent shouldalsobelicensedorregisteredbyacompetentauthority,ortheMVTSprovidershouldmaintainacurrentlistofitsagentsaccessiblebycompetentauthoritiesinthecountriesinwhichtheMVTSprovideranditsagentsoperate.CountriesshouldtakemeasurestoensurethatMVTSprovidersthatuseagentsincludethemintheirAML/CFTprogrammes andmonitorthemforcompliancewiththeseprogrammes.”

• Supervisors shouldclarifyexpectations–managementofrisk

• Avoidoverlyconservativecompliance

• ProvidesexamplesofCDDpractices

20

Recommendation15

Newtechnologies“Countriesandfinancialinstitutionsshouldidentifyandassessthemoneylaunderingorterroristfinancingrisksthatmayariseinrelationto(a)thedevelopment ofnewproductsandnewbusinesspractices,includingnewdeliverymechanisms,and(b)theuse ofnewordevelopingtechnologiesforbothnewandpre-existingproducts.Inthecaseoffinancialinstitutions,suchariskassessmentshouldtakeplacepriortothelaunchofthenewproducts,businesspracticesortheuseofnewordevelopingtechnologies.Theyshouldtakeappropriatemeasurestomanageandmitigate thoserisks.”

Perspectives• Firstly,opportunitiestomisusetechnologiesforML/TF.

• Ontheotherhand,technologiesprovideopportunitiesforimprovedAML/CFTresponses:• Fintech• Regtech

• Whatquestionisbeingansweredi.r.o.AML/CFT?

21

Recommendation16

Wiretransfers“Countriesshouldensurethatfinancialinstitutionsincluderequiredandaccurateoriginator information,andrequiredbeneficiary information,onwiretransfersandrelatedmessages,andthattheinformationremainswiththewiretransferorrelatedmessage throughoutthepaymentchain.Countriesshouldensurethatfinancialinstitutionsmonitorwiretransfersforthepurposeofdetectingthosewhichlackrequiredoriginatorand/orbeneficiaryinformation,andtakeappropriatemeasures.Countriesshouldensurethat,inthecontextofprocessingwiretransfers,financialinstitutionstakefreezingactionandshouldprohibitconductingtransactions withdesignatedpersonsandentities,aspertheobligationssetoutintherelevantUnitedNationsSecurityCouncilresolutions,suchasresolution1267(1999)anditssuccessorresolutions,andresolution1373(2001),relatingtothepreventionandsuppressionofterrorismandterroristfinancing.”

Parties• Originator• OrderingInstitution• IntermediaryInstitution• BeneficiaryInstitution• Beneficiary/Payee

FATFguidance• TFrisks• WhatriskappetiteforTF?

22

Topics• Deriskingresearch• Levelofunderstandingofderisking• Graduatedapproach• Riskappetite• Identityandidentification• Costofcompliance

3.WhySomeFIsDe-risk

23

DesriskingResearch

DowJones&ACAMS- GlobalAnti-moneyLaunderingSurveyResults2016Haveexited40% ofrespondentsreporttheircompanieshaveexitedafullbusinesslineorsegment ofbusinessinthepast12monthsduetoperceivedregulatoryriskand/ortheorganization’sinabilitytomanagetherisk- Increasefrom2015

PlanningtoexitAboutone-thirdofrespondentsclaimtheircompaniesareplanningtoexitand/orareinvestigatingthepossibilityofexitingabusinesslineorsegment inthenext12monthsduetoregulatoryrisk

24

DesriskingResearch

TypesofSegmentsConsideringExiting %

Industriesthathavebeendesignatedhigh-riskbygovernmentagencies 51%

Specificproducts/productlines 45%

Specificgeographicarea(s) 40%

Non-governmentalorganizations(NGOs)orcharities 14%

Other 8%

ReasonsConsideringExitingSegment- 2016 %

Segmentnolongerwithinorganization’sriskappetite 56%

Costofcompliancemakessegmentunprofitable 51%

Segmentdrawsexcessiveregulatoryoversight 40%

Noconfidenceregulatorswillapproveriskmanagementapproach 20%

Segmentisgenerallyunprofitable 18%

Other 1%

Source: Dow Jones & ACAMS

25

LevelofUnderstanding?

Howwelldoregulatorsunderstandthedrivers• Profitabilityconsiderations• Reputationalandliabilityrisks• Changesinbanks’financialriskappetites• Theamountoffinancialpenaltiesimposedby

supervisoryandlawenforcementauthorities• Increasedcompliancecostsassociatedwith

implementingconflictingregulatoryrequirements,includingAML/CFT

• ConfusioncausedbythetermKYCC• Complexity,numberandchangesinsanctions

regimes,andalsouncertaintyrelatedtotheinterplayofdifferentsanctionsregimesandtheirapplicabilitytofinancialinstitutions

Questions:1.HowwelldoAML/CFTstakeholdersunderstandthedriversofderisking?

2.WhatisneededtoavoidunintendedconsequencesofAML/CFTrequirementsinfuture?

26

GraduatedApproach

Questions:1. Whatarethemostsignificant

capacitybuildingopportunitiesi.r.o.AML/CFTframeworks?

2.WhereshouldthefocusbeinrespectofthesupervisionofAML/CFTrequirements?

3. WhatregionalsupportisneededinrespectofthedevelopmentofinstitutionalRBAs?

4.Whatregionalsupportisneededtopromotefinancialinclusionandimprovetheprospectsforfinancialintegrity?

DraftRBAGuidance- PublishedJune2017(SA)Higherrisk• Enhancedduediligence• Wheretheriskofabuseisassessedtobehigher• Systemsandcontrolsshouldprovidefor:

• More information tobeobtainedaboutclients• More secureconfirmationofclients’informationtobeapplied

• Closer scrutiny tobeconductedtotheirclients’transactionactivities

Lowerrisk• Simplifiedduediligence• Wheretheriskofabuseisassessedtobelower• Systemsandcontrolsmayallowfor:

• Less information tobeobtained• Less secureconfirmationofinformationtobeapplied• Less frequentscrutinytobeconducted

27

RiskAppetite

Addressriskappetiteconsiderations• IndeterminingthedesiredoutcomesofanNRA

andRBA,countries insub-SaharanAfricashouldconsidertheirriskappetite

• Riskcannotbeeliminatedcompletely

• Thisisnotspecifically/comprehensivelyaddressedinFATFrecommendationsorguidancethathasbeenpublishedbytheFATF

• Therewouldbevalueindevelopingaregionalconversation

• Institutionswilldeterminetheirriskappetiteaspartoftheirriskmanagementframeworkandprocess,i.e.relatingtocompliance,ML/TFandotherrisks

• Arobustunderstandingofthedynamicsrelatingtheretowillassistinavoidingso-calledde-risking

Source:FSDA

COSO“…theamountofrisk,onabroadlevel,anorganisationiswillingtoacceptinpursuitofvalue."KingIII“Thelevelofresidualriskthecompanyispreparedorwillingtoacceptwithoutfurthermitigationactionbeingputinplace,ortheamountofriskthecompanyiswillingtoacceptinpursuitofvalue.”

28

RiskAppetite

Zerotolerance• Draftguidance– para56

“Therisk-basedapproachisnota“zerofailure”approachastheremaybeoccasionswhereaninstitutionhastakenallreasonablemeasurestoidentifyandmitigateML/TFrisks,butitisstillexploitedformoneylaunderingorterroristfinancingpurposes.”

• Howfarhavewecomewiththis?• Yougetthesensethatitispossiblethattherecould,

acrossmorestakeholders,beasharedvisionofsuccess

• However,thisisnotalineardebate– Itscomplex• Thereisaninterrelationshipbetweencompliance

riskandML/TFrisk

Source:FSDASettingof• Riskappetite• Risktolerances

Governance• Strategy• Structure• Ethics• Culture

Roles&responsibilities• Board• Management• Compliance• Risk• Audit

29

IdentityandIdentification

IdentityIdentitycanbedeterminedbyreferencetoanumberofcharacteristics- Attheverybasiclevel,thesecharacteristicsaretheperson’s:

• fullnames,• dateofbirthand,• inmostcases,auniqueidentifyingnumberissuedbya

governmentsource.

Informationaboutanaturalperson’sidentitymaybesupplementedbyapplyingothercharacteristicsofanaturalpersonincluding:

• his/herphysicalappearanceorotherbiometricinformation,

• placeofbirth,• familycircumstances,• placeofemploymentorbusiness,• residentialaddress,• contactparticulars(e.g.telephonenumbers,e-mail

addresses,socialmedia),• contactswiththeauthorities(e.g.taxnumbers)orwith

otheraccountableinstitutions.

DraftRBAGuidance- PublishedJune2017(SA)

DateofBirth

Name

IDNumber

PhysicalAppearance

FamilyCircumstances

ResidentialAddress

PlaceofEmployment

PlaceofBirth

ContactParticulars

ContactswithAuthorities

Other characteristics of a natural person

Basic characteristics of a natural person

30

CostofCompliance

Developingunderstandingofcosts“Thereasonswehaveheardfortherestrictionorterminationofcorrespondentbankingrelationshipsaremixed.Thepredominantonepointstothehighcostofcompliance forglobalcorrespondentbanksstemmingfromheightenedanti-moneylaunderingandcounterfinancingofterrorism(AML/CFT)requirements.Thecorrespondentbankssaythiscostofcompliancedwarfsthebusinessreturns fromsmallerterritories,particularlyiftheyareclassifiedashighriskclientsandproducts.Inthiscontext,correspondentbanksareapprehensiveaboutdoingbusinesswithmoneytransferoperatorsandremittancecompanies.”Source:IMF/WorldBank2016AnnualMeetingsSmallStatesFormSpeech

Questions:

1.Whatarethecosts?2.Whyistherenotmoreempiricaldatarelatingtocosts?

3.Whatarethecostdrivers?

4.Howdoyoudeveloptheunderstandingofcosts?

31

CostofCompliance

Doinstitutionshavecapacity?• Systems

• Legacysystems• Singleviewofcustomer• Clientrelationshipsvssingletransactions• CDDandriskdata• Monitoring

• Newriskprocesses• ML/TFriskassessment• Processvsevent

• Riskmanagementknowledge,skillsandexperience• Firstlineofdefence– riskowner• Secondlineofdefence– support• Thirdlineofdefence– assurance

Source:FinMarkTrust,2016

ProjectApproach

Costcategorised• Systems• Processes• People• OtherTypesofcost• Fixedvsvariable• UpfrontvsongoingStakeholderengagement• Data• Modelling

32

Topics• Escaperoute?

4.IsDeriskinganEscapeRoute?

33

Youhavetoask- Escaperoutefromwhat?• Businessrisk• Productrisk• Deliverychannelrisk• Clientrisk• Geographyrisk

Escapefrompastsins?• Duediligence• Reporting• Recordkeeping• Training• Monitoring

EscapeRoute?

Isderiskinganescaperoute?• Yes• No

Perspectives• Country• Institution

Riskresponses• Transfer• Tolerate• Treat• Terminate

WhywasderiskingasurprisetoAML/CFTstakeholders?

34

Topics• Keyissues• Wayforward

5.ImplicationsforAML/CFT

35

KeyIssues

AsrecognisedbyFATFIntroduceriskandopacity:• Intotheglobalfinancialsystem• Terminationofaccountrelationshipshasthepotential

toforceentities/personsintolessregulatedorunregulatedchannels

• Movingfundsthroughregulated,traceablechannelsfacilitatestheimplementationofAML/CFTmeasures

Financialinclusion:• ItiscentraltotheFATFmandatetoensurethatthe

globalAML/CFTstandardiswellunderstoodandaccuratelyimplemented

• CountriesandtheirfinancialinstitutionsshouldbeprovidedwithsupportindesigningAML/CFTmeasuresthatmeetthegoaloffinancialinclusion

“ThisisaseriousconcernfortheFATFandtheFATF-style regionalbodies(FSRBs)totheextentthatde-riskingmaydrivefinancialtransactionsintoless/non-regulatedchannels,reducingtransparencyoffinancialflowsandcreatingfinancialexclusion,therebyincreasingexposuretomoneylaunderingandterroristfinancing(ML/TF)risks.”

36

WayForward

Whatistheendgame?• Whatdoessuccesslooklike?• Istherealignment?• Whatgovernanceinneeded?• WhoshoulddevelopML/TFriskstandards?• Whatmitigatescomplianceriskandbyhowmuch?• WhatmitigatesMLriskandbyhowmuch?• WhatmitigatesTFriskandbyhowmuch?• Isahighriskappetitebad?• Whatarethemeasuresofsuccess?

37

Thank You

Governance, Risk, ComplianceJohn Symington

Contact: Lucy Mabenalucym@yebo.co.za+27 11 463 5769