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The consultation aimed at fostering a consistent approach to identifying and managing the ML/TF risk to which credit and financial institutions are exposed as a result of their operations in such countries and sets out minimum actions that should be taken in this context. In particular, issues such as individual money-laundering and terrorist financing risk assessments, customer data sharing and disclosure of information related to suspicious transactions are addressed in this paper.
We understand that the consultation concerns only the actors that have subsidiaries and/or branches in countries where local laws do not permit the application of the group AML policies and procedures, including those countries that still have a banking secrecy legal protection. Regarding the latter, it must be noted that such countries only pose an issue in case banking secrecy legislation prohibits the fight against money laundering and terrorist financing.
The suggestions made in this paper look reasonable from an academic perspective. However some recommended measures may impact significantly the financial industry actors (including investment funds assuming they fall in the abovementioned scenario) from a business perspective or from a compliance function perspective (e.g. enhanced on going monitoring, carrying on enhanced reviews on the branch/subsidiary including on site checks or independent audits, etc …). Therefore we would advocate to always keep in mind the need to adopt a risk-based approach when implementing the guidelines.