Detailed Report on AML/CTF Risk Assessment and Management at Bank Vic

This report examines the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) risk assessment and management practices at Bank Vic, an Australian member-owned bank. The report analyzes the importance of AML/CTF frameworks, the role of business units in identifying and managing ML/FT risk, and the methods used for monitoring, mitigating, and identifying such risks. It delves into the three stages of money laundering: placement, layering, and integration, and how Bank Vic utilizes a risk matrix approach. The report also highlights the significance of AML/CTF in preventing financial crimes like smuggling and gambling, and the importance of protecting financial institutions from illegal activities. The report emphasizes the need for effective risk management, software implementation, and the role of sound policies and procedures in identifying and mitigating risks. The report also covers the identification of ML/FT risk by business units, and the importance of communication with senior members.

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Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Assessment and Importance of framework that is used by large Australian bank for conducting
AML/CFT risk assessment..........................................................................................................1
PART B ...........................................................................................................................................4
Business unit should Identify ML/FT risk ..................................................................................4
PART C ...........................................................................................................................................6
Ways that will help in monitoring, mitigating and identification of ML/FT risk........................6
PART D ..........................................................................................................................................7
Two AML/CFT risk its impact and measures to control these risk in Bank Vic........................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Retail banking is providing financial services to the customers for the purpose of securing
their money for long term in the future in form of current account, saving account, credit cards or
debit cards etc.
Present study will be based on Bank Vic company. It is member owned bank in Australia
that is founded by police officers in 1974 as a credit union. It will be providing services related
to police and other emergency services employees.(Stanley and Buckley, 2016).
Report will emphasize on importance of framework that is being used by anti money
laundering and counter terrorism financing act 2006 in the banking sector. It will also include
business units that is responsible for identifying and managing risk for the future. Furthermore, it
will include compliances that is used to monitor the risk and the key controls that will help in
mitigate from the identified risk.
PART A
Assessment and Importance of framework that is used by large Australian bank for conducting
AML/CTF risk assessment
Bank Vic is doing assessment of AML/CTF by implementing different software's that
will be used to detect this type of risk that will help in protecting information and data of the
banks. By adopting new technological changes that will help in assessing risk for the future.
AML stands for Anti-money Laundering refers to the policies and procedures that will
help in monitoring and tracking transactions that will be made in the banks. This help in
regulating illegal activities that is being done in the banking. These laws are requiring for both
financial institution and crimes that will be responsible for stop all these type of illegal activities
(Henning and Hauman, 2017). Anti-money laundering is applicable after the creation of
Financial Action Task Force. In these standards are set that is governed under the framework of
this system. After the implementation of FATF will help in identifying countries that do not have
proper legislation regarding Anti-money laundering.
Financial institutions are an important part of doing financial crime so it important they
must give proper training that will help in preventing black money in the country. This also has
software that is used in detecting any crime that will not be noticed by employees. Every
financial institution have to follow the rules and regulations that is written in the money
laundering system for the purpose of preventing these activities that will occurred in the banks.
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Another agency that is United Nations Office on Drugs and Crime is also helped in stop money
laundering. This office is having a website that contains all the detail about the money laundering
and the measures that will help in preventing it. These type of software will help in preventing
financial crime and illegal way of doing business like smuggling, gambling etc.
CTF stands for Counter Terrorism financing that includes doing investigation, analysing
and prevention of sources of funding that will be available for the purpose of doing violence and
help in protecting terrorist activities that will occur in the company (Iken and Agudelo, 2017).
This law mainly emphasize on protecting the identity that destroying different aspects of the
company. Through this law terrorism can be detected easily and help in preventing various
perspective of the business for future course of action. In finance terrorism it will be evaluated
that money will be used for the legal purpose in the company that will be helpful for it in the
future. In this it is easy to detect the way that will help in preventing money through money
laundering activities.
Financial institutions plays an important role in overcome from the problem of financing
terrorism. As in Bank Vic this type of law is applicable that will help in preventing illegal
activities from the company. It is also important as it helps in preventing high value transactions
that will be occurred in the banks.
Importance of AML/CTF framework
Anti-money laundering consist of different stages that will help in preventing from illegal
activities that will remain beneficial for the company (Buckley and Stanley, 2016). There are
three basic steps that will be used in money laundering framework are as follows:
Placement:- In this step money launderer will introduce the money that will be generated from
the criminal activities into the financial institution. That money will be breakdown into small
amount and then it will be deposited into the bank account. In Bank Vic also money launderer
will collect illegal amount and then deposit it into other financial institution.
Layering:- This step will help in protecting the true identity of the bank as the money is
transferred into different institutions that will help in preventing it from illegal activities. In this
segmentation is being done for the purpose of preventing its originality from other people. In
Bank Vic managers will use this technique to protect it from doing illegal activity. This will help
in overcoming from the problem of violence that is occurred in company for the future use.
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Integration:- In this step the fund is transferred to legitimate economy and then the money is
transferred to other sources that will be beneficial for the company in the future. As money
launderer will be investing in the real estate or in any luxury assets etc. In commonwealth bank
this step will be used by the managers to invest in the different sources that will help them in the
future. All these steps are not followed in a sequence as sometimes it may be possible that
legitimate money will be mixed with the illegal money (Choo, 2015). All these stages will help
in reducing black money from the company.
Bank Vic is using risk matrix approach that will help in identifying assessment of risk in
the company for the future. This approach is related to different hazards, scenario and maps that
will be characterize on basis of different aspects. For overcoming from all these risk that will be
occurred in the company this approach is used for reduction of risk in the future.
Anti-money laundering will be used in preventing financial institutions entities and the
detection of illegal activity that will destroy the operations of the company. It is important to
have anti-money laundering system in the institutions as well as in banks that will facilitating in
protecting various aspects of these institutions and financial system that is used for the future
course of action. As in this a proper rules and regulation is governed for the purpose of
safeguarding the illegal activities that is being done in the banks. It plays an important role in
having anti-money laundering system that will be conducted in the banks and different institution
(Harvey, 2019). There are different laws that will be applicable in the business for the future but
will be helpful for the future in the banks and different institutions.
It is important that will help in gaining various aspect of the money laundering that will
help in eradicating illegal means that is used for the future purpose in the economy. This will
reduce in doing illegal means business that will have a great impact on the operations of banks as
well as financial institutions. As it is important in every aspect that will be including different
methods that will be helpful for the future in different institution. In present scenario it is
important that doing illegal activity will harm the environment for the future. As illegal activity
will be reduced by using proper software that will be prohibiting from country. Different
methods will be used for the future that will eradicating various sources that is used for the future
course of action. Performing illegal activity will affect operations that will have greater impact
on future. Through these activities that is prohibited will be providing different aspects that will
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carrying various forms as it may abolish from different sources that is used in the company for
doing wrong things in the banks and financial institution.
CTF is used in protecting the business from outside sectors that will be running during
various perspective for different segments that will help in combating with financial system that
is implemented in various aspect in the company (Naheem, 2019). It is important in
implementation of different techniques that will reduce illegal form of work from the company.
As it is important for being indulge in the activities that will bring more opportunities as money
laundering is essential otherwise it will have different impact on its operation for the future.
These activities are important in the Bank Vic as these assessments is done to prevent from the
illegal activities that will be helpful for the future. It is an important part for removing provisions
that included illegal facts and destroying different company operations. Different people are
working in the company with different perspective as they are offering different aspects that will
be providing many segments that will help in achieving objectives. These anti-money laundering
will help in preventing from the smuggling, gambling activities that is practised in the
institutions. As Counter financing is also an important part that will protect financial institution
from being destroyed or any sort of violence that will bring gap in operations between different
aspect of the working. As nowadays there are different illegal practices that will be occurred in
companies that will have greater impact on its operation.
Therefore, both AML/CTF will help in protecting institutions and banks that will
providing various aspects that will be helpful for the future (Spicer, s2018). They detect and
report if they found illegal activity that is occurring in the different segments as it protect all the
data of the institution.
Risk assessment plays an important part that will help in designing overall framework
that will be related to AML/CTF activities that will be organized in the company. It is important
to assess risk as that will reduce fewer chances of getting disruption in Bank Vic.
PART B
Business unit should Identify ML/FT risk
These measures will help in assessing ML/FT risk. With the help of sound risk
management function that will provide implementation of policies and procedures that will use
in determining risk for the future. Proper rules will be followed that will help in preventing from
illegal risk that will affect operation of business. It is necessary for Bank Vic to identify money
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laundering and terror financing risk. All banks are required to use appropriate policies and
procedures that will help in identifying this type of risk in the company. Sound risk management
program will be implemented that will help in addressing all types of risk that will be associated
with ML and FT risk. For banking sector it is important to develop understanding of this type of
risk that will help in mitigating and managing these risk in the future.
There are various other factors that help in increasing this risk for the future. Risk can be
assessed in by implementation different software's that will help in mitigating these type of risk
from Bank Vic Effective risk management is required from cope up with it in the future. There
are different business units that is having operation in the company for mitigating different
concepts and methods that will be used in managing these type of risk for future. It is important
in having understanding related to risk as there are different types of transactions that will be
occurred in banking sector so it is necessary in having knowledge regarding ML/FT risk
(Thompson, 2018). If such type of risk is identified then it will be properly communicated to
the senior members in company so that it will take proper precautions for reduction of risk in the
company. Senior members must have knowledge regarding risk so that they will combat easily
with these type of risk in Bank Vic Information that is with senior members are effective so that
it will help in taking decision for the future course of action.
There are three line of defence that will be using in mitigating Ml/FT risk. It is having
different perspective that will help in maintaining a regular managing of risk. These line of
defence consisting of internal audit in the company. As the first line of defence contains policies
and procedures that will help in detecting and reporting illegal transaction. In this proper
regulation and instructions are mentioned that will coordinate all the activities under bank.
Standards will be maintained by employees in the company that will help in providing different
aspect for the future in business. Training will be provided so that every employee in the
company is aware of this type of risk and in difficult situation it will be managed by employees
also so it is beneficial for future course of action.
According to second line of defence board members of the company are responsible for
monitoring different aspect that will be fulfilled by members in the company for the future
course in company (Newbury, s2017). Lastly, the third line of defence also plays an important
role in managing risk for the future in Common wealth bank. This line of defence is responsible
for evaluating effectiveness of employees in bank that will help in mitigating ML/FT risk.
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PART C
Ways that will help in monitoring, mitigating and identification of ML/FT risk
As the head of AML/CTF compliance it is necessary to follow the rules and regulations
that will help in monitoring and identifying various aspects can be helpful for the future course
of action as compliance head. Different risk will be identified by board members that will help in
monitoring different aspect of risk that will be useful for evaluating different segments in the
future. It has to use different tools that helps in monitoring ML/FT risk in the company. They
will have to identify the barriers for create problem for the company. Changes in the policies and
procedures will provide different perspective brings changes in the operation of bank. Effective
system is being used in the company that bring efficient resources and lead to create different
perspective in the company.
For banking sector it is necessary to identify risk so that it will not destroy whole working
as there are so many illegal activities that will occur in banks. Internal audit will help in
evaluating different aspect that will be useful for banks to indulge in various sectors. It is
necessary to identify different ways that will help in preventing business operation from different
risk that will be disturb operations of Bank Vic. Nowadays there are different factors such as
cybercrime, fraud or using data of company in unethical manner that will affect functioning of
the bank. These illegal activities will destroy functioning of Bank Vic (Riccardi, Milani and
Camerini, 2019). Policies and procedures are important to follow that will bring efficiency in
doing work in company. Higher the risk in business higher will be return that will be useful for
AML/CTFs risk for reducing this risk from banking sector.
Proper implementation of software will help in identifying this type of risk and reducing
its impact on business operations that will bring efficiency in the company. As a Senior manager
it is key responsibility for identifying different ways that will be provide safer transaction for the
future course of action. These risk can be evaluated by adopting technology that will be used in
Bank Vic for preventing it from fraud and cybercrime activities that will disrupt operation of
different business activities. Different approaches will be used in determining risk in business.
Technological change will also have an impact on business operation as this will lead to
disruption of data and information of the company. Various important information that is stored
in the software for protecting it from different risk that will occur in the company.
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Relevant information will be required for mitigating different factors that will bring risk
in the company. Updating information for the future will help in bringing new ideas and
innovation into business that will create difference in various perspective. Managing risk is the
biggest factor that will be contributing into business by every employee (Cooper, 2018).It is
important in doing ongoing monitoring of business operations that will create understanding of
various business sources that will be used in the company. Proper recording of data is important
for the future use in business as that reduce chances of risk that will is more essential for running
operations smoothly. Therefore, head of AML/CTF will have to endure that risk can be
minimized so that it will improve efficiency and productivity.
PART D
Two AML/CFT risk its impact and measures to control these risk in Bank Vic
There are various type of risk associated with anti-money laundering and counter terror
financing act are as follows:-
Business risk:- These risk are related to business operations that and the function of AML/CTF
in this is to identifying factors that will have greater impact on the business operations. This is
further divided into four categories such as:
Customer Risk:- This is mainly associated with consumer as KYC is being done by customer
that will help in protecting various processes by ML/FT risk. KYC is being provided for doing
customer verification so that true identity will be there that will not create any problem in the
future. For example: Information that is being provided by the customer is not true as there are
different perspective that will be help in providing different perspective of risk in the company.
Product Risk:- This is related to quality and quantity of product that is provided to customer. It
is important in providing good quality product to customers that will satisfy their demands. It
may include exchanging of currency so at the time of transaction that will have greater impact on
transferring data and information from one place to another so AML/CTF is hepl in protecting
dat and information.
Delivery Risk:- There are several methods that will related to delivery as it may be face to face
or through online marketing that will depend on company (Sahay and Pandya, 2017). Delivering
goods and services face to face contains less risk as compared to providing product through
online sources.
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Jurisdiction Risk:- In this ML/FT program will help in reducing risk that will disturb operation
of bank in future course of action. It contains different elements that will be related to lack of
transparency or financial condition is not good that will have impact on Bank Vic.
Regulatory risk:- This is associated with rules and regulations that will be followed in the
company (Scott, 2018). These are related to various aspect that will be providing different
measures that will be provided by AML/CFT measures that will be taken by it.
IMPACT
As business risk is the most important one that will create disturbance in whole of the
business. Business methods and concepts will be influenced as that may create different
perspective in Bank Vic for the future All the above risk is having a greater impact on business
operation of bank Vic as that will disturb functioning of the company. All these risk is having
different aspect that generate difference in the operation and the actual work done. All these risk
affect business operations and that may lead to disruption in the future. Due to these risk
goodwill will decrease as customers are not happy with its services that is being provided by it.
(Latimer and Duffy, 2019).Customer risk is the biggest risk that will be faced by most of the
companies that are related to services that is being delivered to them by the company and
delivering right product at the right time at right place is important but it will have affect
operations of business in the future.
MEASURES TO CONTROL AML/CTF RISK
Implementation of software that will help in reducing risk. It can be taken into account
that risk is related to stolen of data and information from the company premises. Every business
is having risk related to its internal functioning may be related to customer, supplier, product that
will create different aspects so it is important for future course of action to reduce risk from the
company (De-risking in the financial sector, 2019). Availability of different software's in the
company that will help in controlling risk from business. There are various factors that will affect
functioning of the company. There are various segments that create competition so it will impact
on business operations. This will have a greater impact on different operations that will are more
effective for the company. Proper risk management is being followed that protect various aspects
in the company as saves time in implementing different software that will be created by
company. It is necessary in identifying risk that will affect business. Risk will be regarding
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implementation of new software in Bank Vic so there is a risk regarding its functioning in the
company (Gelb, 2016).
CONCLUSION
As per the above study it can be concluded that anti money laundering and counter terror
financing act will help in protecting company from illegal activities that will destroy its operation
in the future course of action. They are responsible for identifying risk and then monitoring it
into different segments that helps in saving data and information of company. Information gone
out from business will become dangerous as personal information of company will be out that
will create dispute and may affect different operations. It is necessary to reduce risk from
company that will have greater impact on manufacturing of product and services and that will
lead to create problem for future. Stages that is being used in identifying risk include placement,
layering and integration that reduce effect of risk in the company. All these stages plays an
important role in eliminating risk from business in future course of action. It can be observed that
risk is always present in business that will have effect on different operations in the company.
There are different types of risk that are associated with anti money laundering and counter terror
financing act and reduction in different type of risk from the company.
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REFERENCES
Books and Journals
Buckley, R.P. and Stanley, R., 2016. Protecting the West, Excluding the Rest: The Impact of the
AML/CTF Regime on Financial Inclusion in the Pacific, and Potential Responses. CIFR
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Choo, K.K.R., 2015. Cryptocurrency and virtual currency: Corruption and money
laundering/terrorism financing risks?. In Handbook of digital currency (pp. 283-307).
Academic Press.
Cooper, K., 2018. Counter Terrorism Finance, Precautionary Logic and the Regulation of Risk:
The Regulation of Informal Value Transfer Systems Within the UK. In The Palgrave
Handbook of Criminal and Terrorism Financing Law (pp. 1029-1060). Palgrave
Macmillan, Cham.
Gelb, A., 2016. Balancing Financial Integrity with Financial Inclusion: The Risk-Based
Approach to «Know Your Customer». CGD Policy Paper.74.pp.1-24.
Harvey, A.I., 2019. Appraising aml/ctf Legislation in the International Context. In Anti-money
Laundering and Counter-terrorism Financing Law and Policy (pp. 182-238). Brill
Nijhoff.
Henning, J. and Hauman, M., 2017. Fortifying a risk-based approach in the South African
AML/CFT process. Journal of Financial Crime.24(4).pp.520-528.
Iken, J.G. and Agudelo, A., 2017. Managing correspondent banking ML/TF risks: Recent
regulatory developments on the risk-based approach model. Journal of Financial
Compliance.1(3).pp.255-266.
Latimer, P. and Duffy, M., 2019. Deconstructing digital currency and its risks: Why ASIC must
rise to the regulatory challenge. Federal Law Review.47(1).pp.121-150.
Naheem, M.A., 2019. Local intelligence–the missing link in CTF regulation in the banking
sector. Journal of Money Laundering Control.22(1).pp.132-144.
Newbury, M., 2017. Designated non-financial businesses and professions: The weak link in
Australia’s AML/CTF regime. Journal of Money Laundering Control.20(3).pp.247-
261.
Riccardi, M., Milani, R. and Camerini, D., 2019. Assessing money laundering risk across
regions. An application in Italy. European Journal on Criminal Policy and
Research. 25(1).pp.21-43.
Sahay, C.D. and Pandya, A., 2017. Terror Financing and The Global CTF Regime. Occasional
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Scott, B., 2018. AUSTRAC v Tabcorp: A case study in enforcement action by Australia’s
financial crime regulator. Journal of Financial Compliance. 1(4).pp.373-380.
Spicer, J., 2018. AUSTRAC and the financial sector-partners in crime prevention: A look into
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Australian Institute of Professional Intelligence Officers. 26(3).p.3.
Stanley, R.L. and Buckley, R.P., 2016. Protecting the west, excluding the rest: The impact of the
AML/CTF regime on financial inclusion in the pacific and potential responses. Melb. J.
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Thompson, R., 2018. AML/CFT in Myanmar: a review of recent developments. Journal of
Money Laundering Control.21(3). pp.358-369.
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Online
De-risking in the financial sector.2019.[Online].Available through<
https://www.worldbank.org/en/topic/financial sector/brief/de-risking-in-the-financial-
sector>
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