Compliance Requirements and

Role of Board/Senior Management

Debaprosad Debnath
Former Consultant & Operational Head Bangladesh
Financial Intelligence Unit Bangladesh Bank

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Compliance Requirements

Customer Due Diligence (sec-25)

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2
Compliance Requirements

1. Assessment of Risks

A sound risk assessment can help to formulate proper risk

mitigation policy which is based on-

Delivery
Product Customer Country
Channel

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Compliance Requirements
2. Establishment and Implementation of Policies and Controls
Sound anti money laundering and anti terrorism prevention Policies,
Controls & Strategies includes-

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Compliance Requirements
3. Appropriate Customer Identification and Diligence Procedures -

Protects the
Ensure
reputation of
institutions Promotes Reduces the
the institution
“Correct & good business, incidence of
against the
Complete” governance fraud and
detrimental
knowledge and risk other financial
effect of
about their management. crimes.
association
customers.
with criminals.

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Compliance Requirements

4. Record Keeping Requirements

Customer identification and transaction

records should be preserved up to five (05)
years and supply those as when requested
by competent authorities:

Information details to include, name,

address, date and nature of the
transaction, type and amount of currency
involve, type and identifying number of
account and any other relevant
information;

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Compliance Requirements
5. Suspicious Transaction Reporting
To recognize the obligation to report if institution knows or suspect or have
reasonable grounds to suspect that funds involve were derived from a
criminal activity. Grounds for suspicion may include the followings:

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Compliance Requirements
6. Awareness Raising, Training and screening of employees-

Create awareness (customers,

counterparties and public).

Training and continuous

training of staff.

Background check of the staff.

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Compliance Requirements
7. Internal and external audit and independent testing-

Self Assessment

Independent testing

External audit

Overall control mechanism

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Compliance Requirements

8. UN Sanction monitoring -

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 Summary of Policy /
Directives

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Summary of Policy/Directives

 Risk Assessment  Transaction monitoring:

 System of monitoring
 KYC:
 Internal Reporting
 Customer Identification &
Verification  Exceptions reporting:
 Know Your Customer’s  STR
Business (KYB)  CTR
 Know Your Employee
(KYE)
 UNSCR sanction
screening
 Know your customer’s
customer (KYCC)  Record Keeping
 Risk based approach
 Training
 Review & update
 Assessment & Audit
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 Obligation of Board /
Senior Management

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Legal Obligation of Board

Section 26 Of MLPA 2012:

If any offence under this Act is committed by an entity, every
proprietor, director, manager, secretary or any other officer,
staff or representative of the said entity who is directly
involved in the offence shall be deemed to be guilty of the
offence, unless he is able to prove that the offence has been
committed without his knowledge or he tried his best to
prevent it.

Explanation.– In this section “director”

includes any member of the partnership
entity or any of the Board of Directors of
the entity, by whatever name called.

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Legal Obligation of Board

Section 16 of ATA, 2009:

(2) The Board of Directors, or in the

absence of the Board of Directors, the
Chief Executive Officer, by whatever
name called, of each reporting
organization shall approve and issue
directions regarding the duties of its
officers, and shall ascertain whether the
directions issued by BFIU under section
15, which are applicable to the reporting
agency, have been complied with or not.

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 Role of Board /
Senior Management

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Role of Senior Management

The most important element of a successful

AML&CFT program is the commitment of
senior management.

Senior management includes members of the

board of directors of the bank, or the member
of the highest management committee in
absence of the board of directors and the
Chief Executive Officer (CEO) or the Managing
Director (MD) of the bank.

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Role of Senior Management

Understand ML & TF risk of the

Reporting agency, take measures
to mitigate those risk;
Approve AML & CFT compliance
program and ensure its
implementation;
Ensure compliance of AML & CFT

Ensure compliance of AML & CFT

program;
Issue directives to ensure
compliance with the instruction
of BFIU issued under section 23 &
25 of MLPA, 2012 (as amended)
and 15 of ATA, 2009 (as
amended);
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Role of Senior Management

CEO or/and MD shall issue statement of

commitment to prevent ML, TF & PF in
the institution;

Allocate enough human and other

logistics to effective implementation of
AML & CFT compliance program.

Take reasonable measures through

analyzing self assessment report and
independent testing report summary;

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Role of Senior Management

Senior management
should take the report
Senior
from the Central
management
Compliance Unit (CCU)
must need to
into consideration which
ensure the They need to ensure
will assess the operation
adequacy of the the autonomy of the
and effectiveness of the
human and other designated officials
institution’s systems and
resources devoted related to AML & CFT.
controls in relation to
to AML & CFT.
manage ML & TF risk
and take any necessary
action to remedy the
efficiencies identified by
the report in a timely
manner.
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Role of Senior Management
Organization's HR Policy should include at least following issues
for proper implementation of AML&CFT measures:

Proper administrative sanction (proportionate and dissuasive) for

non-compliance of AML & CFT measures

Proper weight should be given in the annual performance

evaluation of employees for extra ordinary preventive action
vis-a- vis for non-compliance

Written procedure to recover the fined amount from the

concerned employee if the fine imposed on employee by the BFIU

Other measures that shall be taken in case of non-compliance by

the bank.

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Role of Senior Management - At a Glance

Understand ML/TF Risks for

institutions.

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 THANK YOU!

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