The SIC, Lebanon's Financial Intelligence Unit (FIU), receives, analyzes, investigates suspicious transaction reports (STRs) and ensures compliance of banks, financial institutions and other reporting entities with the AML/CFT regulations.
A report released this week by the Dubai
Financial Services Authority (DFSA) has found a certain lack of awareness of
trade-based money laundering (TBML) in firms operating at the Dubai
International Financial Centre (DIFC).
The Trade finance report 2016 points out
that while banks have strong internal controls for general credit risk, the
same is not true for TBML risks. It also finds that skills are lacking when it
comes to understanding the specific risks surrounding trade finance, and that
banks should take that into account when recruiting, whether internally or
“An inadequate focus on the specific financial
crime risks associated with trade has had a negative impact across several
system and control elements included in the review, namely: governance, risk
assessment, customer onboarding and ongoing customer due diligence. Firms are
required to have a certain level of awareness regarding TBML risks prior to
designing effective risk-based controls to manage them,” says the report.
One of the risks comes from the widespread
practice of outsourcing. The report notes that in some cases, banks are unable
to explain the functions that are being outsourced.
In terms of anti-money laundering (AML) risk
assessment, firms tend to lack specific assessment methods for TBML, focusing
rather on credit risk. Firms also tend to focus more on monitoring potential
sanction breaches than potential money laundering risk.
The DFSA adds that it is “concerned” that almost
all firms could improve their customer onboarding and ongoing due diligence
processes. “In particular, controls around identifying and dealing with the
risk of dual-use goods need improvement,” the report adds.
Ian Johnston, chief executive of the DFSA, says:
“There is an increased focus globally, on trade-based money laundering risks
from international groups such the Financial Action Task Force, and financial
service regulators. Our review and the published report are further testament
to the DFSA’s commitment to maintaining the highest international standards in
the DIFC. Given the importance of trade to this region, regulators need to
effectively oversee and supervise trade finance without hindering actual trade.
We urge firms to benefit from all international guidance issued in that