Article 5
| No: M/20 | Date(g): 25/10/2017 | Date(h): 5/2/1439 | Status: In-Force |
Effective from Nov 04 2017 - Nov 03 2017
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Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs)shall identify, assess, and document their money laundering risks and keep it up to date, taking into account a wide range of risk factors, including those relating to its customers, countries or geographic areas, products, services, transactions and delivery channels, and provide risk assessment reports to the supervisory authorities upon request. The risk assessment under this Article shall include an assessment, prior to their use, of the risks associated with new products, business practices and technologies.
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5/1
Financial institution or designated non-financial business and profession shall identify asses and document their money laundering risks in writing, and regularly update its money laundering risk assessment and any underlying information, and keep both the report and any underlying information readily available for the supervisory authority. The nature and extent of the risk assessment shall be appropriate to the nature and size of the financial institutions’ or designated non-financial businesses and professions’ business.
5/2
Financial institution or designated non-financial business and profession when assessing its money laundering risks, shall give consideration to the following:
| a. | Customer risk factors and risk factors relating to the beneficial owner or beneficiary; | |||
| b. | Risk factors emanating from countries or geographic area in which customer operates or the place of origination or destination of a transaction; | |||
| c. | Risk arising from the nature of products, services and transactions offered and the delivery channels for products and services. | |||
5/3
When carrying out a risk assessment, a financial institutions and designated non-financial businesses or professions shall take into account the any risks identified on the national level and any variables which may increase or decrease the money laundering risk in a specific situation, including:
| a. | The purpose of an account or relationship; | |||
| b. | The size of deposits or transactions undertaken by a customer; | |||
| c. | The frequency of transactions or duration of the relationship. | |||
5/4
Based on the outcome of the risk assessment, a financial institutions or designated non-financial businesses and professions shall develop and implement internal policies, controls and procedures against money laundering that set out the appropriate level and type of measures to manage and mitigate the risks that have been identified; to monitor the implementation of those policies, controls and procedures; and to enhance them as necessary.
5/5
For higher level of risks the financial institution or designated non-financial business and profession shall apply enhanced mitigation measures; for a lower level of risks a financial institution or designated nonfinancial businesses and profession may apply simplified measures to manage and mitigate the risks. Simplified measures shall not be permitted if there is a suspicion of money laundering.
5/6
A financial institution or designated non-financial business and profession shall identify and assess the money laundering risks that may arise from the development of a new product, business practice or delivery mechanism, or from the use of a new or developing technology for new or pre-existing products. The risk assessment shall be carried out prior to the launch of the new product, business practice or delivery mechanism or prior to the use of the new technology. A financial institution or designated non-financial business and profession shall take appropriate measures to manage and mitigate the identified risk.