Which is a key reason why a financial institution (FI) conducts an enterprise-wide AML risk assessment?

Question

Options

• AThe need to assess money laundering and terrorist financing risks and ensure there are adequate
• BThe identification of specific risk categories (i.e., export, inactivity, layman, and false locations)
• CThe need to understand its overall budget needs for each department and for internal audit.
• DThe board of directors and senior management are required to have an AML risk assessment for

• A
  75% (18)
• B
  8% (2)
• C
  13% (3)
• D
  4% (1)

Explanation

A key reason why a FI conducts an enterprise-wide AML risk assessment is to assess money laundering and terrorist financing risks and ensure there are adequate controls to mitigate those risks. An enterprise-wide AML risk assessment allows the FI to identify and appropriately manage the ML/TF and other illicit financial activity risks within its banking operations. It also helps the FI to establish global AML control standards and determine the effectiveness of its AML risk management program, including internal preventive and detective controls. By understanding its risk profile, the FI can better apply appropriate risk management processes to the BSA/AML compliance program to mitigate and manage risk and comply with BSA regulatory requirements. The BSA/AML risk assessment should provide a comprehensive analysis of the FI's ML/TF and other illicit financial activity risks, and should be documented in writing and communicated to all relevant stakeholders.

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