CAMS · Question #812
A large international bank is conducting a comprehensive review of its risk management framework to ensure it effectively addresses various financial crime risks, including AML, CFT, sanctions…
The correct answer is C. Conduct a periodic enterprise-wide risk assessment that includes identifying inherent risks. Conducting a periodic enterprise-wide risk assessment (EWRA) is the most effective approach to identifying, assessing, and mitigating financial crime risks. It ensures all inherent risks across areas like AML, CFT, sanctions, fraud, ABC, and tax evasion are evaluated, existing…
Question
A large international bank is conducting a comprehensive review of its risk management framework to ensure it effectively addresses various financial crime risks, including AML, CFT, sanctions, fraud, anti-bribery and corruption (ABC), and tax evasion. The bank's compliance team is responsible for evaluating the current risk assessment processes, identifying potential gaps, and recommending enhancements to better mitigate these risks. During this review, the team needs to consider the different types of risk assessments and how to integrate findings into the overall risk management strategy. Which approach should the compliance team prioritize to enhance the bank's ability to identify, assess, and mitigate the identified risks?
Options
- AUse a static risk assessment model that remains unchanged until a significant regulatory update
- BDelegate the risk assessment process to individual business units to conduct independently and
- CConduct a periodic enterprise-wide risk assessment that includes identifying inherent risks,
- DFocus primarily on AML risk assessments, as these are typically the most scrutinized by
How the community answered
(33 responses)- A3% (1)
- B9% (3)
- C85% (28)
- D3% (1)
Explanation
Conducting a periodic enterprise-wide risk assessment (EWRA) is the most effective approach to identifying, assessing, and mitigating financial crime risks. It ensures all inherent risks across areas like AML, CFT, sanctions, fraud, ABC, and tax evasion are evaluated, existing controls are assessed, and residual risks are identified. This comprehensive view enables a cohesive and proactive risk management strategy aligned with regulatory expectations.
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