The Reserve Bank of India has issued a “Guidance Note” for regulated entities/REs (banks, NBFCs, authorised persons, payment system operators, etc) to deal with risks related to money laundering (ML) and terrorist financing (TF).
The note on internal risk assessment (IRA) of ML and TF is intended for the REs, particularly for the dealing staff and the Anti-Money Laundering (AML) / Countering Financing of Terrorism (CFT) / Counter Proliferation Financing (CPF) practitioners of the REs.
In addition to supporting the RE’s risk assessment and compliance efforts, the document also intends in helping to formulate the internally developed RBA (risk based assessment) of the respective REs by laying down certain broad principles, methodology, etc
The RBI noted that in an ever changing business environment and the increasing level of complexities in the banking and other financial products offered by banks and other REs, there is always a likely exposure to the elevated ML/TF/ proliferation financing (PF) risks.
The risks are further multiplied as use of emergent technologies and newer methods of payments enter the scene.
The REs are, accordingly, required to have appropriate level of control/mitigating measures, so as to ensure that the elevated ML/TF risks do not result in the financial institution being misused for ML/TF, willingly or unwillingly and do not lead to loss of reputation and/or other financial losses for having allowed the suspicious transactions routed through the banking channels/ financial systems without timely reporting as per prescribed procedures and regulations.
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