By considering the nature and extent of money laundering risk to which a firm is, or could be exposed, risk can be assessed for likelihood of occurence and potential impact (e.g. regulatory enforcement). For significant risk, informed steps can be taken to allocate resources where they can be most efffective.
Eliminating inherent risk is not always possible. The extent to which acceptable levels of residual risk remain is a factor of senior management 'risk-appetite', influenced by an understandng of regulatory expectations, legal requirements and risk-assessment findings.
MLRA planning considerations, include:
A properly scoped and successfully completed MLRA should provide senior management with an informed view on the following:
FCRM assists clients to identify risk in the operating environment. Our personnel utilise experience of conducting regulatory reviews (e.g. s166), knowledge of systems and controls issues, and previous Nominated Officer and MLRO experience, to help clients produce a comprehensive analysis of their money laundering risk.
We consider various sources during an MLRA assignment, including: (i) known incident and control weaknesss data; (ii) control-gap risk assessment; (iii) output of structured meetings/workshops; (iv) trend analysis; and (v) regulatory considerations (e.g. published papers, guidance and thematic reviews).
MLRA findings are documented and used by client senior management to inform risk-appetite priorities. MLRA output is also available to the client for use as the baseline for any subsequent review/refresh, as part of the firm's risk-based AML framework.