Risk-Based Approach would ensure sanity in financial institutions – GIABA

A Risk-Based Approach (RBA) to Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) would help bring sanity in the financial institutions and to ensure an effective or robust AM L/CFT regime.

Mr Kwaku Dua, Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) and the National Correspondent/Chief Executive Officer, Financial Intelligence Centre, said a RBA to AML/CFT seeks to ensure that countries, competent authorities and financial institutions, take necessary steps to identify, assess and understand the ML/FT risks to which they are exposed and take AML/CFT measures commensurate to those risks in order to mitigate them effectively.

Mr Dua said this on Tuesday at the opening of the Regional Train-The-Trainers’ Workshop on Risk-Based Supervision for AML/CFT Compliance in Accra.

The four-day works workshop is being organised by the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), a specialised institution of ECOWAS; in collaboration with the International Monetary Fund (IMF) and the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ).

It is being attended by more than 40 participants from the five Anglophone countries in the ECOWAS Sub-Region: Ghana, Nigeria, Liberia, Sierra Leone and The Gambia.

The primary objective of the workshop is to equip participants with the necessary technical skills to be able to deliver similar training in their respective countries.

Mr Dua said Ghana conducted its National Risk Assessment in 2014 and was revised in 2018; stating that in line with the Financial Action Task Force (FATF) standards, the findings of the National Risk Assessment (NRA) which was well communicated to all identified some lapses in the country’s AML/CFT Supervisory regime.

Mr Dua recalled that one of the strategic deficiencies identified during their Second Round of Mutual Evaluations was on Immediate Outcome Three, which seeks to ensure that Supervisors appropriately supervise, monitor and regulate financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) for compliance with AML/CFT requirements commensurate with their risks.

“Indeed, Ghana was rated Moderate which is an indication that, we still have some work to do in this area,” he said.

He said due to some of these deficiencies; Ghana is under observation by the International Country Risk Guide (ICRG).

He said the ICRG handed down an action plan with timelines for Ghana to address.

One of the action items was the improvement of risk-based supervision by developing a robust risk assessment methodology for (including but not limited to) the Non-Bank Financial Intermediaries (NBFIs) and DNFBPs sectors.

Others are enhancing risk-based supervisory capacity of regulators and launching a regular fora or mechanism to facilitate communication between supervisors and the private sector.

The rest are conducting inspections of NBFIs and DNFBPs on a risk-sensitive basis and demonstrating impact of supervision activities (including sanctions/penalties) on compliance with requirements.

Mr Dua said the frequency and intensity of onsite and offsite AML/CFT supervision of their respective sectors was very key to a robust AML/CFI' regime.

“We believe that this workshop is timely and at the end of the day would sharpen your supervisory skills even more to undertake more effective offsite and onsite inspections which will go a long way to address the deficiencies identified during our Mutual Evaluation exercise,” he said.

Dr Ernest Addison, Governor of the Bank of Ghana, in speech read on his behalf, announced that processes were being put in place by the Bank to develop robust framework for implementing a RBA to AML/CFT for DNFBPs.

Mr Aba Kimelabalou, Director-General, GIABA, in a speech read on his behalf, said the complex and dynamic nature of ML/TF makes it imperative for stakeholders to continue to work in partnership and to explore better ways to counter the threats posed by this seemingly intractable problem.

Mr Oral Williams of the IMF said with the introduction of the FATF new framework, many countries have not yet had the expected ratings as when there is new reforms it takes time.

Mr Opimbi Osore, African Coordinator, GIZ, Illicit Financial Flows (IFFs) Programme, said if African nations do not effectively combat IFFs, their economic growth would be undermined.