3.1 Licensing and Market Entry Requirements
FATF Recommendation 26: Regulation and supervision of financial institutions. ...Competent authorities or financial supervisors should take the necessary legal or regulatory measures to prevent criminals or their associates from holding, or being the beneficial owner of, a significant or controlling interest, or holding a management function in, a financial institution…
Areas of assessment:
- Group structure and beneficial ownership
- Proposed board members, senior managers and key personnel
- Business-wide AML/CFT risk assessment
- Transparency
- Source of funds
- Corporate Governance rules
3.2 Fitness and Propriety Assessments
The supervisory authority assesses whether incumbent and prospective board members are fit to occupy their position and whether their propriety is beyond doubt. A financial institution must be led by professionals who are competent to effectively manage all the risks to which the institution is exposed and who are of high integrity.
- Actions
- Professional history
- Background information
3.3 Corporate Governance and Risk Management Framework
corporate governance is defined as:
“A set of relationships between a company’s management, its board, its shareholders and other stakeholders which provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance. It helps define the way authority and responsibility are allocated and how corporate decisions are made.”
The BCBS has identified 13 principles for corporate governance in banks that include the following components:
- Board and Senior Management Oversight. Leadership on AML/CFT issues and compliance.
- Risk Management. Assessments and mitigation measures.
- Policies and Procedures.
- Internal Controls. Reporting, escalation lines, separation of powers, etc.
- Compliance. Independent monitoring.
- Audit. Independent auditory.
