Effectiveness of Risk-Based AML/CFT/OFAC Programs

Over the past several months, two U.S. regulators and The Wolfsberg Group have issued releases advising that regulators and financial institutions (FIs) who are either enforcing or subject to Anti-Money Laundering/ Countering the Financing of Terrorism /Office of Foreign Assets Control (AML/CFT/OFAC) regulations should refocus their risk-based AML/CFT/OFAC programs to testing a program’s effectiveness, rather than only seeking compliance to technical requirements. This change is to better evidence how a program’s internal controls are effectively mitigating an institution’s inherent AML/CFT/OFAC risks.