As emphasized in the Basel Committee guidance for "Sound Management of Risks Related to Money Laundering and Financing of Terrorism", the third line of defense (audit function) should:

The correct answer is B. Report to the audit committee of the board of directors to maintain independence. The third line of defense (internal audit) provides independent oversight of an institution's AML/CFT compliance framework. Option B (Correct): The internal audit function should report to the board's audit committee to maintain independence and objectivity.

AML/CFT Compliance Programs

Question

Options

AConduct AML audits no less often than every 12 months for consistency in annual reporting.
BReport to the audit committee of the board of directors to maintain independence.
CRemain independent from expressing opinions on the sufficiency of remediation or action plans to
DBe involved in the day-to-day operations of the AML program to immediately prevent control

How the community answered

(40 responses)

A
3% (1)
B
80% (32)
C
13% (5)
D
5% (2)

Explanation

The third line of defense (internal audit) provides independent oversight of an institution's AML/CFT compliance framework. Option B (Correct): The internal audit function should report to the board's audit committee to maintain independence and objectivity.

Topics

#Basel Committee#audit function#three lines of defense#board reporting

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