Assessment

All Financial Institutions must include a section for the risk assessment in their AML manual; the banks must design an effective risk-based controls in order to comply with the local regulations.

The same risk management principles that the bank uses in traditional operational areas should be applied to assessing and managing AML risk. A well-developed risk assessment will assist in identifying the bank’s AML risk profile. Understanding the risk profile enables the bank to apply appropriate risk management processes to the AML compliance program to mitigate risk. This risk assessment process enables management to better identify and mitigate gaps in the bank’s controls. The risk assessment should provide a comprehensive analysis of the AML risks in a concise and organized presentation, and should be shared and communicated with all business lines across the bank, board of directors, management, and appropriate staff; as such, it is a sound practice that the risk assessment be reduced to writing.

There are many effective methods and formats used in completing a AML risk assessment; therefore, B&P Advisory Group will not advocate a particular method or format. Bank management should decide the appropriate method or format, based on the bank’s particular risk profile. Whatever format is chosen to be used, it should be easily understood by all appropriate parties.