NBU: “Know Your Customer” Principle as Cornerstone of Risk-Based Approach in Compliance Monitoring
This topic was at the center of discussions during a knowledge sharing seminar On Best Practices in the Area of AML/CTF Compliance Monitoring organized by the Forum for Leading International Financial Institutions (FLIFI) jointly with the National Bank of Ukraine (NBU). The seminar attracted almost 200 experts from Ukrainian and foreign banks. Opening remarks were made by NBU Acting Governor Yakiv Smolii.
The seminar was held as part of a large-scale project led by the Independent Association of the Banks of Ukraine On Best Practices in the Area of AML/CTF Compliance Monitoring. The NBU is also actively involved in the project. The project implementation is aimed at setting up regular and prompt communications and sharing experience in AML/CFT compliance monitoring.
According to the Acting Governor, the main task faced by the NBU and the banking sector nowadays is to fend off banking operations that bypass laws. Regular customers, however, should not face any hurdles when executing financial transactions. This will require from banks to put in place a risk-based approach.
“Banks must know their customers and find out sources of their funds. For this end, the NBU is currently improving and enhancing the efficiency of the system designed to counter the laundering of proceeds from criminal activity and terrorist financing, including by expanding bilateral cooperation with the leading international organizations,” said Yakiv Smolii. He underscored that the effective operation of the financial system in compliance with international standards is a priority for continued progress on Ukraine’s path towards association with the EU.
According to Ihor Bereza, the head of the Compliance Monitoring Department, all the measures taken as part of the project ON Compliance Monitoring Best Practices have been designed to enhance the compliance monitoring procedure. The FLIFI seminar is a new communication format for experts from the banking sector. During the event, branches of international banking groups will share best practices on compliance monitoring adopted from their parent companies. This will contribute to the development and introduction of an effective and efficient anti-money laundering mechanism,” according to Ihor Bereza.
He also highlighted that banks must focus all their efforts precisely to counter money-laundering operations and clients with a low risk profile should not undergo a rigorous verification.
After the seminar, banks, the FLIFI members, will share the results with the Independent Association of Banks of Ukraine to be promulgated on the official website of the organization, which has already published many best practices related to compliance monitoring.