Handbook of Anti-Money Laundering.

CHAPTER 11RISK MANAGEMENT AND MONEY-LAUNDERING DETERRENCE

11.1 THE RISKS WITHIN MONEY-LAUNDERING DETERRENCE

Financial crime represents a major source of risk to a firm and always has a high priority with both regulators and the board. This means that it is important for money-laundering deterrence and terrorist-financing avoidance to be included within any enterprise risk-management framework. It also requires major control and management programmes to be implemented effectively. At the heart of a successful enterprise risk-management programme are the key concepts of risk identification and risk appetite. In the case of financial crime deterrence, a key control must be effective training together with the Know Your Customer processes and procedures, as discussed in earlier chapters and reiterated later here.

A firm faces a series of risks when considering financial crime deterrence programmes and policies. Some of these follow from the nature of the illegal events themselves and others from the way that the firm deals with these events in practice. The risk management of financial crime deterrence comprises several layers of control that always need to be present within the daily operations of the firm. Firms also need to have the governance structures in place to ensure that prompt and effective action is taken when a case requiring either investigation or reporting is identified.

It is imperative that firms constantly review their corporate structures to see that their chosen ...