BCBS revised the guidelines on sound management of risks related to money laundering and financing of terrorism. The recent revisions pertain to Annex 2 (on correspondent banking) and Annex 4 (on general guide to account opening) of the guidelines. The Basel Committee's guidance includes a list of risk indicators that correspondent banks should consider in their risk assessment of money laundering and financing of terrorism associated with correspondent banking.
These guidelines address essential elements for sound management of money laundering and terrorist financing risks, discuss anti-money laundering and counter financing of terrorism in a group-wide and cross-border context, and elaborate on the role of supervisors in this area. Furthermore, Annex 1 covers using another bank, financial institution, or third party to perform customer due diligence while Annex 3 offers list of relevant recommendations by the Financial Action Task Force (FATF). In short, the Basel Committee guidance sets out concrete regulatory and supervisory expectations. The guidelines are applicable to all banks. Some requirements may need to be adapted for use by small or specialized institutions, to fit their specific size or business models. However, it is beyond the scope of this guidance document to address these adjustments.
The publication is fully consistent with, and complements, the FATF standards and guidance, including the guidance on correspondent banking services issued in October 2016. The published clarifications are in response to growing concerns in the international community that banks are withdrawing from correspondent banking to avoid these risks. A decline in correspondent banking may, in turn, affect the ability to send and receive international payments in entire regions (see FSB Action plan to assess and address the decline in correspondent banking). The revisions aim to ensure that banks conduct correspondent banking business with the best possible understanding of the applicable rules on anti-money laundering and countering the financing of terrorism. A consultative version for revisions to the annex on correspondent banking was issued in November 2016.
Keywords: International, Banking, BCBS, AML/CFT, Correspondent Banking, Account Opening
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