CURENTIS AG at the 11th Zurich Conference on Combating Money Laundering

Open exchange of blows between FINMA and bank representative on the quality of money laundering risk analyses

Zurich, September 26, 2023 - CURENTIS AG participated again this year in the Zurich Anti-Money Laundering Conference. The conference again attracted over 200 experts from the banking and financial services industry to discuss current challenges and issues in the fight against money laundering.

The following two presentations were of particular interest to CURENTIS participants:

1. "Money Laundering Risk Analysis Requirements" by Nadine Riera of FINMA.
2. "Challenges of a Major Bank in Combating Money Laundering in a Global Financial Market" by Katrin Ivell of UBS.

Ms. Riera described very clearly the requirements that FINMA places on money laundering risk analysis. According to Ms. Riera, FINMA has reviewed the risk analyses of 30 banks and rated 50% as "largely insufficient".

Ms. Ivell responded very directly to this criticism of the banks in her presentation, expressing the personal opinion that the banks would have liked a dialogue and direct feedback to the individual institutions. She also said that FINMA had failed to communicate clear guidelines for risk analyses in advance.

What preceded the discussion?

FINMA had clearly criticized the money laundering risk analyses in its supervisory communication 05/2023 (source: https://www.finma.ch/de/~/media/finma/dokumente/dokumentencenter/myfinma/4dokumentation/finma-aufsichtsmitteilungen/20230824-finma-aufsichtsmitteilung-05-2023.pdf?sc_lang=en&hash=88066442E915B69C8046701073367AEE). Among other things, the notice states:

• "Often, an adequate definition of risk tolerance lacked the deliberate exclusion of certain countries, customer segments, services, and/or products (e.g., politically exposed persons from certain countries)
• There is also usually no suitable process to allow exceptions to the defined risk tolerance in individual cases (so-called exception to policy process), ...
• It was also regularly noted that no key risk indicators were defined to monitor compliance with risk tolerance, enabling management and the Board of Directors to regularly monitor....
• It was regularly observed that the assessments regarding inherent risk and control risk, as well as the resulting net risk, were not shown individually and comprehensibly for each recorded money laundering risk in each money laundering risk category. In this regard, it was particularly noticeable that not all money laundering risks relevant to the institution were always covered."

The discussion made it very clear that the development of anti-money laundering in Switzerland remains a controversial topic. CURENTIS will continue to follow the discussion closely.