Risk and Regulations in AML/CTF Program for Australian Banks

Running head: AUSTRALIA
RISK AND REGULATIONS
CON-000523338
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AUSTRALIA1
Part a
Risk assessment programs are undertaken by the organizations with the objective of
evaluating the severity and the likelihood of the risk to occur. On the contrary, the different
modifications that are planned by the organizations are enabled through the evolution of
different strategies based on the prioritization of risks. It has been noted that the different
changes that are commenced by the organizations might face a significant amount of risks that
should be assessed and addressed with the objective of continuing the progressiveness. In this
relation, the assessment of the AML/CTF risks is assessed by banks with the objective of
minimizing the chances of fraudulent activities relating to money laundering and misstatement1.
Again, the purpose of undertaking the risk assessment is to identify the sources of terrorist
financing (ML/TF) for grasping the even distribution of control mechanisms.
The risk assessment programs that are commenced by the organizations are mainly
divided into two parts- Part A and Part B. The AML program requires the enrollment of the
Australian bank with AUSTRAC after which the operational criterions are developed in
orientation with the needs of the venture. The creation of the operational framework after the
assessment and prioritization of the risks would enable the organization in improving the success
factors of the program. The major steps of the risks assessment and strategy formulating
operations are undertaken by the organizations in part a of the AML program2. In this relation,
1 Choo, Kim-Kwang Raymond. "Designated non-financial businesses and professionals: A
review and analysis of recent financial action task force on money laundering mutual evaluation
reports." Security Journal 27, no. 1 (2014): 1-26.
2 De Koker, Louis, and Mark Turkington. "Anti-money laundering measures and the
effectiveness question." In Research Handbook on International Financial Crime. Edward Elgar

AUSTRALIA2
the AML/CTF program is divided into two parts, namely Part A and Part B, would enable the
organization in improving the rate of operations3.
Figure: AML/CTF Risk Factors (Source: 4)
Part A of AML/CTF risk program
Identification and segregation of risks
Publishing, 2015.
3 Fratangelo, Pierpaolo. "Prevention and countering of money laundering and terrorism
financing." In Italian Banking and Financial Law, pp. 105-130. Palgrave Macmillan, London,
2015.
4 De Koker, Louis. "Money laundering compliance—the challenges of technology." In Financial
Crimes: Psychological, Technological, and Ethical Issues, pp. 329-347. Springer, Cham, 2016.

AUSTRALIA3
The large Australian bank might take steps to enhance communication with the
stakeholders with the objective of continuing the transparency and gaining knowledge of the
procedures followed by the different departments. On the contrary, the bank might also take
steps to consult with the AUSTRAC with the objective reviewing the policies and evaluating the
loopholes that might influence the scope of ML/TF occurrence5. The inherent risks are
specifically the uncertainties that arise out of the operations that are undertaken by the
organizations while operating in the diverse global economies. In this relation, the banks
encounter different risks relating to the internal operations of the employees and the external
aspects like customer insolvency and the like which might affect the interests of the ventures.
Therefore, the banks form different strategies with the objective of minimizing the level of risk
that are encountered by the organizations. The key changes in the organizational operations are
influenced bythe identification of the ML/TF risks and mitigate the same with the objective of
improving the rate of operations. The AML/CTF program enables an organization in addressing
the money laundering and terrorism financing risks that might be faced by the bank. The Risk
program enables an organization in evaluating the customers, the services that are being
provided, the nature of delivery of the services and the jurisdictions that might be taken into
account.
On the other hand, the residual risks that are being faced by the banks are grounded on
the remaining risks that are often encountered by the banks while making fund transfers and
managing wholesome assets of the customers. The residual risks, like the inherent risks are often
5 Gelb, Alan. "Balancing Financial Integrity with Financial Inclusion: The Risk-Based Approach
to «Know Your Customer»." CGD Policy Paper 74 (2016): 1-24.