Financial Crime Forum - Developing an Effective Money Laundering Risk Matrix
Why make a Money Laundering Risk Matrix?
An effective money laundering risk management programme depends on a series of decisions.
To make those decisions, you set a series of criteria, and apply those as a template to new business and to transactions as they happen.
But how do you set those criteria in a structured way, and how do they link together to give you an effective risk control measure?
How do you maintain the criteria in order to ensure you do not get too many false positives - and don't let important issues slip through?
The answer is a risk matrix.
What is a “Risk Matrix?”
We hear a lot about “black box” analysis. A risk matrix is not a black box : it's a dynamic decision-making tool that you can apply to all of your customers to identify those who are within the "safe" zone - and which allow you to identify those that are higher but still acceptable risk as well as those that you should consider a high risk, even if not reportable. And it's part of best practice.
The risk matrix is defined by and in turn defines your company's appetite for risk. The concept is simple: the execution is complex.
Building a risk matrix involves considering a wide range of factors, including an analysis of your company, its products and services, factors relating to the customer and counterparties and external factors. An effective risk matrix does not stand still: it changes as applicable circumstances change.
That sounds like hard work – but it need not be. And properly executed a risk matrix will provide the starting point for all of your other systems to detect and deter money laundering, terrorist financing and other financial crime.
In this intensive and highly practical course, you will build a risk matrix that suits a fictitious company and its products, and take away a model that you will be able to modify to take account of your own company's circumstances and changes in the environments in which you operate.
In this course you will learn how to design and use a risk matrix:
* factors that underpin risk matrix development
* economics factors that underpin the "proceeds" section of the matrix
* assessing countries risk
* assessing client types and risk
* assessing anticipated transaction profiles
*adding in external factors e.g. sanctions
* setting the weighting factors
* applying the matrix in practice
* the limitations of the matrix approach
* beyond the matrix – how it plugs into your existing systems and enhances them
* how to maintain the matrix
An effective Money Laundering Risk Matrix is:
- simple and inexpensive to set up
- simple and inexpensive to deploy
- simple to use
- simple and inexpensive to maintain
An effective Money Laundering Risk Matrix has the following outputs:
- prioritisation of risk based on factors you specify and applicable to you, your customers and your legal and commercial obligations
- alerts to higher risk customers and transactions based on your own assessment of risk
An effective Money Laundering Risk Matrix provides
- assessment information for you to make informed decisions for money laundering, terrorist financing and compliance purposes.<