Page 91 - The Corporate Report Pack

The importance of data in a compliance driven organisation
• e Amendment Bill formally adopts a risk-based approach (RBA) to money laundering. While an RBA has been referenced in the guidance notes to the current FIC Act, the FIC Amendment Bill seeks to implement stricter RBA requirements and entrench into law the requirements of a nancial institution to identify, assess and understand its money laundering and terrorist nancing risks and apply appropriate countermeasures through an AML, CFT risk management and compliance programme.
e introduction of an RBA e ectively moves AML and CFT compliance away from a one-size- ts-all set of rules to a framework based on a nancial institution’s assessment of its money laundering and terrorist nancing risks.
of client activity based on the assessment of the client’s risk.
In this new world, nancial institutions will have to put measures in place to have a single view of the customer and the customer’s transactions, across all systems and business units.
Part III: e business bene ts of being compliant
Compliance is still regarded as a ‘tick box exercise’ where many nancial institutions apply a minimum standards approach. ey may do this to avoid over- complicating customer onboarding procedures, possibly out of a belief that customers will take their business elsewhere if processes are too cumbersome.
e importance of data and data quality in the assessment of risks posed by clients and their associated parties, products and services o ered by the nancial institution, transaction risks and risks related to employees should urge nancial institutions to avoid the temptation to simply follow the minimum requirements as set out in the FIC Amendment Bill.
e importance of data and data quality in the assessment of risks posed by clients and their associated parties, products and services o ered by the nancial institution, transaction risks and risks related to employees should urge nancial institutions to avoid the temptation to simply follow the minimum requirements as set out in the FIC Amendment Bill.
Instead, nancial institutions should carefully assess and apply reason to the type of additional data it will require in order to successfully assess and mitigate money laundering and terrorism nancing risks within their organisations.
When determining data requirements, it is important that nancial institutions keep in mind the ‘downstream’ consequences when applying the data for AML and CFT purposes – such as identi cation and reporting of suspicious activities and transactions and the requirement to conduct ongoing monitoring
Otherwise, nancial institutions also seem concerned about the cost implications of changes to systems and data when introducing an RBA. e reality is that many nancial institutions do not yet have the systems capabilities in place to conduct a holistic risk-based assessment of customers and their transactions because of shortcomings in existing data and infrastructure. Adding data elds and data processing is time-consuming and has signi cant cost implications across the entire value chain.
While it is a fait accompli that compliance with the FIC Act (once the Amendments are signed into law) is required, there are strategic advantages to obtaining and processing additional customer data. In obtaining and analysing customer data for FIC Act purposes, additional insights can emerge in respect of customer behaviour and patterns, o en leading to signi cant upselling and cross-selling opportunities as well as the ability to better mitigate organisational risks.
The Corporate Report 7