Anti-Money Laundering
and Risk Assessment (Part 1)

The analogy of crossing a road is used to explain the approach regulators expect from every regulated operator in the context of Anti Money Laundering (AML) and Combating Terrorism Funding (CTF). Similar to assessing the risks before crossing a road, regulated operators need to evaluate vulnerabilities in their services to prevent becoming a vehicle for Money Laundering and Terrorist Funding.

Posted on: Friday, October 6th, 2017

When we want to cross a road, we look at all possible traffic directions to make sure that we can cross it safely. We assess our risks and then take a decision to act, or not to.

In a similar way, this is what the regulators are asking from every regulated operator. Instead of how to cross the road, however, the aim is for you not to become the vehicle to assist in Money Laundering and Terrorist Funding (ML/TF)

Can I get injured if I stand on the side of the road? Is this car standing there or will it move? Will a car change its course? Is this car driving too fast for me? What are the traffic lights indicating? Red / Amber / Green?

In a similar fashion, are your services vulnerable to ML/TF risk from your customers? Do you know your customer? Is a previously good customer turning bad? Am I allowed to proceed with this transaction or should I flag it to the authorities?

This simple exercise of crossing the road may now be seen as a nightmare in the context of complying with Anti Money Laundering and Combating of Terrorism Funding. Where do we start?

Understand what you want to achieve

Crossing the road implies having a look out there and see what’s around you. Is there a big puddle in front of you that you’d be keen to avoid stepping into it? What route will I take? What is my aim to cross the road? Do I have everything I need with me so that I don’t have to cross the road multiple times? Maybe it’s not the road we want to cross in the first instance! What we are doing is understanding our aim. Our ultimate aim is to do business without falling foul with the regulator.

What can prevent you from achieving your goals?

Do I have a clear plan of how I will cross the road? Is there a barrier in the middle? Do I have a safety stop mid-way so that I split the risks of crossing a four-lane road? May I slip? Are the cars speeding too much? Is it too dark now so they can’t see me? Will the cars respond to the traffic lights?  Different vulnerabilities for your company must be considered, depending on your business model. Shoes can’t come in a one size fits all model.

How can I ensure success?

Are the drivers courteous and polite and will let me cross safely? Can I wave frantically to the cars so that they stop for me to pass? May I choose a better point in the road, use an underground passageway or a pedestrian crossing somewhere?  Doing the necessary checks, put in place policies and procedures and overall monitoring will let us take our journey in a safer and accident free manner.

How can Kyte help you?

Kyte can help you navigate your way by helping you map your route to AML compliance, assist in identifying your risks and vulnerabilities. We can work together to create or refresh your Policies, Procedures and controls to ensure your business’ journey is not affected by the potential bumps and pitfalls on the road.

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