Banks need to comply more closely with legislation to combat money laundering and terrorism financing, and with laws governing the imposition of sanctions. This is the conclusion reached by a DNB examination of banks that perform a high level of activities or transactions with or in countries on the Financial Action Task Force (FATF) warning lists, or are engaged in other significant cross-border activities. One specific finding was the need for improvement in the quality of integrity risk analyses, records of the outcome of client surveys and dossiers.
All the banks that were examined have a relatively large number of clients with complex (‘tax-friendly’) offshore constructions. The integrity risk analyses and client acceptances revealed that, as a rule, banks were insufficiently aware of the potential inherent integrity risks of these clients. Most banks apply the statutory procedures, but these have often been described inadequately and the necessary records in the client dossiers are insufficient. The processes required to identify the ultimate beneficial owners / interested parties and the nature and purpose of the commercial relationship also need to be tightened, as does the monitoring of client transactions.
Background and aim of the examination
The examination sought to identify levels of compliance with legislation to combat money laundering and terrorism financing, as defined in the Financial Supervision Act (Wft) and the Anti-Money Laundering and Terrorist Financing Act (Wwft), as well as legislation to uphold sanctions. The banks were assessed against a benchmark in which their risk profile was compared with the severity of the findings.
The banks that were examined will be given individual feedback on DNB’s findings, and DNB will shortly issue a more detailed report to the sector as a whole.