ML/TF Risk Assessment (pdf)

THE RISK -BASED
APPROACH

Table of Contents
QUESTION 1...................................................................................................................................3
Potential value of linking a reporting company's ML/TF risk assessment to its general risk
assessment....................................................................................................................................3
QUESTION 2...................................................................................................................................3
Potential drawback of linking reporting entity with ML/TF risk assessment for its general risk
assessment framework and best way to address these drawbacks...............................................3
References .......................................................................................................................................6

QUESTION 1
Potential value of linking a reporting company's ML/TF risk assessment to its general risk
assessment
ML/TF risk assessment
It is national money laundering terrorist financing risk assessment. It allows various
reporting entities in minimizing the risk of money laundering and financing to any entity
performing terrorist activities.
Potential value of ML/TF risk assessment linkage
There are numerous rules mentioned AML/CTF regulation developed for elimination of
money laundering within the country. these laws also helps in ensuring providing designated
services to their customers. In addition, with the help of information provided by ML/TF, an
entity can formulate its own risk based approach. By linking ML/TF risk assessment, an entity
can improve its efficiency of risk management as well.
An essential value that can be generated through the linkage is effective control over
reduction of inherent risk in an organisation (National Money Laundering and Terrorist
Financing Risk Assessment. 2018). Along with these values, linking of entity with MK/TF also
leads in providing guidelines to the entities in order to formulate plan regarding imposition of
anti fraud and any money laundering activities within the business.
As per the rules mentioned in the ML/TF, an entity needs to develop its risk management
profile and represent it in front of its board of directors on daily basis. It helps the managers
setting priorities and taking their best decisions accordingly.
Moreover, one of the potential value of ML/TF risk assessment is that it enables the
entity in detecting the activities causing money laundering within the business. it leads in
maintenance of ethical values within the business.
In this regard, linkage with ML/TF also provide values for improving the efficiency of
eliminating financial fraud and criminal activities from overall business unit.
QUESTION 2
Potential drawback of linking reporting entity with ML/TF risk assessment for its general risk
assessment framework and best way to address these drawbacks
Potential drawbacks of linking with ML/TF risk assessment

The ML/TF risk assessment helps in ensuring elimination of fraudulent activities and
other financial risks from the organisation and involvement of effective risk management within
the etity. Although there are a few drawbacks that a reporting entity can face due to linking with
ML/TF risk assessment. In case the entity fails to comply and implication of regulation provided
by ML/TF, it would lead in failure of entity in identification of overall risks involved within the
business. It may also result in increasing the cost of assessment for the reporting entity.
Furthermore, in case the reporting entity gets fail to tailor effective plans for the
organisation, it may result in increasing the financial uncertainties within the business. it may
cause the failure of overall organisation.
Addressing drawback:
In order to address all the drawbacks, it is essential to develop have indepth analysis of
the nature, purpose and objectives of the business before development of risk management plan
for the company (Aljada and et.al., 2019). It would improve the efficiency of reporting entity in
formulation of risk management plan and reduction of risk of failure as well.
Moreover, reporting entity needs to improve their understanding regarding relationship
betweem money laundering and the criminal activities underlying through money laundering
process. It would definitely lead in generation of more effective plans and procedures for
general risk assessment and addressing the drawback as well.

References
Books and journals
Aljada, A. and et.al., 2019. Effect of Permissive Underfeeding with Intensive Insulin Therapy on
MCP-1, sICAM-1, and TF in Critically Ill Patients. Nutrients, 11(5), p.987.
Online
National Money Laundering and Terrorist Financing Risk Assessment. 2018. [ONLINE]
Available through
<https://www.fatf-gafi.org/media/fatf/content/images/National_ML_TF_Risk_Assessment.
pdf>

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