Empowering compliance: Crucial role of internal audit in navigating AML/CFT risk management

IN today’s increasingly complex financial landscape, the significance of robust Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) compliance cannot be overstated.

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With rising AML/CFT risks, Internal Audit plays a key role in ensuring compliance and managing inherent risks. This article highlights Internal Audit’s key role in effective AML/CFT risk assessments.

The imperative of comprehensive risk assessment

A thorough risk assessment serves as the cornerstone of an effective AML/CFT audit framework. Internal Audit must undertake this assessment at least annually, tailoring it to the specific business model of the bank. By analysing the customer base, Internal Audit can identify potential risks linked to high-risk customers or jurisdictions. The analysis considers different customer types — corporate, individual, private, and public — and recognising material changes that may elevate risk levels, such as the presence of Politically Exposed Persons (PEPs), High Net Worth Individuals, or complex ownership structures.