On 3 April 2020, the Autoriteit Financiële Markten (AFM) announced improved risk management at surveyed investment institutions and companies.
After investigating 15 investment institutions and companies, the AFM found these have improved their processes to reduce integrity risks (such as money laundering and terrorist financing).
22 May 2020
After an amendment to the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) in July 2018, investment institutions and companies have been required to determine and assess their risks of money laundering and terrorist financing. They must also have procedures and measures in place to limit the risks and manage them effectively.
- The vast majority indicate that they have set up procedures
- The policy and systematic integrity risk analysis (SIRA) in 14 of the 15 investigated institutions were not yet fully organized.
The AFM expects all investment institutions and companies to put their procedures and measures in order with regard to risk assessment and the policy to counter the risks.
They can do this by reading through information from the AFM Wwft Guideline, putting it into practice and applying the following principles.
- The risk is not too general and focuses on the nature and size of the institution;
- The risk assessment addresses all risk factors related to:
* the type of client (for example retail / business / politically exposed persons (PEP) / high net worth / non-resident / working in cash intensive sector;
* product, service, transactions (for example cash / real estate / raw materials / high-risk country);
* delivery channel (e.g. direct / non-face-to-face / introduced / intermediaries);
* countries or geographic areas (e.g. sanctioned countries / high-risk countries, Financial Action Task Force (FATF) list / offshore / tax ports);
- The risks are realistically estimated by the company and not standard, without motivation, estimated as 'low'.
- The policy is elaborated in clear, easily accessible procedures for, for example, client risk classification, continuous monitoring and checks with regard to PEPs and sanctions regulations;
- The policies and procedures contain a clear description and assignment of tasks, powers and responsibilities within the company.
During the corona crisis, the AFM calls on financial companies to continue to pay extra attention to procedures against (new forms of) money laundering and terrorist financing. We are therefore in line with a statement from the European Banking Authority (EBA). Our Wwft inquiries also continue to run.
This article was originally published in the April edition of REGWATCH. Read the full edition covering the following jurisdictions:
- European Union
- Hong Kong
- United Kingdom