The Basel Committee on Banking Supervision (BCBS) is the global standard setter for the regulation of banks. It has 45 members from 28 jurisdictions, consisting of central banks and authorities with formal responsibility for the supervision of banking business.
The BCBS has issued the 29 Core Principles for Effective Banking Supervision which are a set of high-level supervisory standards that guide the supervision of banks and banking systems:
- Principles 01 to 13 focus on the powers, responsibilities and functions of supervisors;
- Principles 14 to 29 focus on prudential regulations and requirements for banks.
These 29 principles also have:
- Essential criteria: minimum baseline requirements for sound supervisory practices.
- Additional criteria: suggested best practices that countries should aim for.
From an AML/CFT perspective, principle 29 is the most important:
- Abuse of financial services. The supervigor determines that banks have adequate policies and processes, including strict customer due diligence (CDD) rules to promote high ethical and professional standards in the financial sector and prevent the bank from being used, intentionally or unintentionally, for criminal activities.
