FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism
A bank's board is reviewing its approach to money laundering and financing of terrorism (ML/FT) risk under the Basel Committee guidelines. Which statement best describes the expected relationship between the bank's ML/FT risk management and its overall risk governance?
ML/FT risk should be integrated into the bank's enterprise-wide risk management framework, with the board approving policies and overseeing their implementation. It is not a stand-alone compliance task, nor the compliance officer's sole duty, and it requires ongoing monitoring beyond onboarding.
- AML/FT risk should be managed as a stand-alone compliance matter, separate from the bank's enterprise-wide risk management framework
- BML/FT risk should be integrated into the bank's overall risk management framework, with the board approving and overseeing the policiesCorrect
- CML/FT risk management is the sole responsibility of the compliance officer, with no board involvement required
- DML/FT risk need only be considered at account opening and not on an ongoing basis
Explanation
The Basel guidelines expect ML/FT risk to be treated as part of the bank's overall risk management, with the board and senior management responsible for oversight and for approving policies. Treating it as isolated compliance work or leaving it to one officer contradicts this. Ongoing monitoring is also required, not only account-opening checks.
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