Credit institutions shall be obliged to carry out customer typing taking into account risk criteria used to assess the level of risk of their operations to launder criminal proceeds and to determine the risk of involvement of the bank and its personnel in the operation of the organization's services for legalization.
The FATF distinguishes between external and internal money laundering risk factors. External factors that may have a certain likelihood of negative impact on the bank's operations are understood as the surrounding reality and customers. The internal factors are considered to be the shortcomings of the AML/CFT control system, which makes the credit institution popular among criminals.
Implementation of the money laundering risk has such consequences of loss of business reputation, imposition of a fine on a credit organization or revocation of its license, as well as other legal consequences provided by law. In turn, the onset of consequences leads to financial losses for the bank. If the regulator publishes information that a credit institution is involved in money laundering, then it leads to a loss of business reputation, which in turn leads to a massive demand by the credit institution for immediate fulfillment of previously taken obligations and outflow of deposits and clients in cash and settlement services. As a result, the bank's liquidity is decreasing. Proceeding from it, it is possible to draw a conclusion that approach of risk of legalization leads to a number of realization of other risks which are interconnected with each other.
Therefore, the risk of involvement of the bank in money laundering is the probability of financial losses of the bank due to its involvement in money laundering operations, which were obtained illegally. It is also a possibility that the bank will be used to carry out these operations due to the vulnerability of the AML/CFT system, incorrect actions of authorized persons and the impact of external factors.
The Bank shall be obliged to develop the Internal Control Rules for the purpose of AML/CFT (ICP), which shall contain the following:
- Regulations on the Bank's organizational work aimed at combating money laundering;
- Chronology of procedures of authorized persons and personnel of the bank for implementation of internal control in the field of anti-money laundering;
- To determine the area of responsibility, as well as the terms of performance of duties of authorized persons in the bank employees for AML/CFT purposes.
The specifics of the bank's organizational structure should also be taken into account when developing the LOAC. Also, the rules should be observed by all units of the bank that are involved in transactions with money and other property.
It is extremely important that LOACs comply with all legal requirements in this segment, as their incomplete reflection may lead to the application of sanctions against the bank or a responsible employee, as well as to the implementation of a number of risks, which will adversely affect the activities of the credit institution.
A modern type of control of the bank is compliance control, which is used to monitor compliance of the organization's activities with the norms of law.
Compliance is usually understood as ensuring that activities are carried out in accordance with the applicable norms and standards. The purpose of compliance is to minimize the risk of involvement of a credit institution in laundering in order to prevent the realisation of a number of risks that may cause damage to the bank's activities.
This control implies the organization of a special department, which should consist of specialists with experience in law and finance. Development and subsequent implementation of anti-money laundering policies and procedures. Organization of trainings for training and advanced training of personnel in the field of AML/CFT, familiarization with technologies and methods used to reduce compliance risks. As well as continuous monitoring of the legal framework and transactions, detection of atypical transactions, development of a specialized system that alerts about suspicious activity, assessment of risks and probability of automation of various elements of compliance.
Management of the risk of involvement of the bank in the laundering of illegal income is a complex of measures aimed at timely detection, analysis, assessment and prevention, and control of events related to the risks arising from the provision of services to customers by the banks and throughout the course of business, as well as minimization of negative consequences for the bank.