FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism
A bank's board receives a quarterly report on ML/FT risk. Which content would best enable the board to fulfil its oversight responsibility under sound governance?
The board is best served by aggregated, decision-useful information: key risk indicators, residual risk by business line and geography, control testing results, open audit findings and regulatory changes. Alert counts, individual STR details or a mere policy confirmation do not show risk exposure or control effectiveness.
- AKey risk indicators, residual risk by business line and geography, control testing results, outstanding audit findings and regulatory developmentsCorrect
- BOnly the total count of alerts generated by transaction monitoring
- CDetails of every suspicious transaction report so the board can review each case
- DA statement confirming that the bank has an AML policy in place
Explanation
The board should receive information that lets it understand the risk profile and control effectiveness, including indicators, residual risk, test results and remediation status. Alert counts alone lack context. Reviewing individual STRs is operational and risks confidentiality breaches. A bare policy statement offers no insight into effectiveness.
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