Measuring Money Laundering Risks Across A Business

A written risk assessment is the starting point for development of a compliance framework designed to combat money laundering and financing of terrorism.

The anti-money laundering (AML) business risk assessment seems to cause many businesses to operate with regulatory risk by not having an adequate assessment or having no AML risk assessment.

With no adequate risk assessment in place, this increases the risk that the policies, procedures and controls are likely to be operating ineffectively. Therefore, the exposure increases to unwittingly facilitating money laundering or financing of terrorism.

Prerequisite Knowledge

In order to complete an adequate AML/CFT risk assessment there are two specific subject matters that require application:

1. Risk Management (identifying and measuring risk); and
2. Anti-Money Laundering / Countering Financing of Terrorism (typologies, regulatory expectation).

Key Risk Indicators

Risk analysis is not complex, but it is a disciplined exercise. Each stage of risk analysis needs to be carried out with diligence at the forefront.

The AML Risk Management cycle starts with identifying Key Risk Indicators. This means those matters that cause risk to increase and decrease. To put into context for this article, when we speak of ‘risk’ we are speaking of the risk of money laundering or financing of terrorism occurring.

Measuring Risk

The basic calculation for risk is Risk = Likelihood x Impact. The greater the likelihood of an event occurring and the greater the harm that the event causes, the risk level increases.

By identifying the probability or likelihood of an event occurring and measuring the harm or impact that would result, then the level of risk is better understood. In the context of an anti-money laundering compliance framework, when the risk level is known, this assists to develop the program of policies, procedures and controls.

Business Vulnerabilities

For any typical business, there are 6 primary areas that have been identified as vulnerable to facilitating ML/FT. These include:

1. The nature, size and complexity of a business;
2. The product and services offered;
3. Customer types (B2B and B2C);
4. The Method used to deliver products and services;
5. Geographies dealt with.

Work Smarter – Not Harder

Regulatory technology has been designed to do the ‘thinking’ and the formatting to meet regulatory expectation. The ‘thinking’ component is referred to as algorithms. Algorithms follow a process or a set of rules to calculate and problem solve.

For businesses that lack the professional expertise of any subject matter, regulatory technology can fill that void. Regulatory technology provides efficiency and it significantly reduces the human resourcing element which in turn reduces operational costs.

Login and GO

AML360 provides an online account allowing AML/CFT compliance officers or business owners to log-in and complete an AML/CFT risk assessment. A comprehensive risk report is provided identifying and reporting on inherent risks that your business should manage. In some areas, prompts for the types of policies, procedures and controls are included.

Updates to risk assessments can be undertaken as often as needed over 12-months, at no additional fee.

The first written risk assessment will take no longer than 60 minutes. Ongoing updates take minutes.

Meet Regulatory Expectation

Gain compliance efficiency by having access to easy procedures and controls for undertaking an AML business risk assessment, also known as a firm-wide risk assessment and BSA/AML Risks.

All Industries – All Countries

AML360 provides AML business risk assessments to all industries. This includes lawyers, accountants, real estate agents, money remittance services, banks, finance lenders and more.

© Scoop Media