FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism
A global bank's group compliance function wants to assess ML/FT risk consistently across its subsidiaries. Which arrangement best aligns with the BCBS guidance on group-wide risk management?
The best arrangement is a group-wide risk assessment with group-level policies and access to customer, account and transaction information from branches and subsidiaries for AML/CFT purposes, with confidentiality safeguards. Siloed data prevents the group from seeing a customer's activity across entities.
- AEach subsidiary maintains separate customer data that is never shared, to avoid privacy conflicts
- BA group-wide risk assessment, with group-level policies and the ability to access customer, account and transaction information from branches and subsidiaries for AML/CFT purposes, subject to legal safeguardsCorrect
- COnly the head office's domestic customers are assessed, since subsidiaries fall under local supervisors
- DGroup policies are set by each subsidiary's sales team to reflect local market practice
Explanation
The guidelines call for consolidated, group-wide ML/FT risk management, including group-level information sharing (customer, account and transaction data) for risk management, with appropriate confidentiality and use safeguards. Siloed data prevents a group-wide view of customers' activity across entities.
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