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The Supervisory Process

The FIU has adopted a risk-based supervisory strategy in accordance with the 4th Anti-Money Laundering Directive ((EU) 2015/849) (4AMLD). This approach requires the frequency, scope and method of supervision to intensify in accordance with the level of ML/FT risk posed by a reporting person. The supervisory process is as below:

Statistical Questionnaire

The statistical questionnaire (SQ) is a tool used to determine whether the reporting person (RP) falls under the purview of the FIU. RPs shall fill in the SQ and send the completed one to the FIU for analysis. Upon confirmation of being a reporting person, the Research and Analysis Unit performs a risk assessment exercise to categorize the RP into class of High, Medium or Low risk. This allows for the yearly risk-based supervision plan to be formulated on which the supervision team will conduct inspection throughout the year.

Training and Outreach

Once the RP falls under the purview of the FIU, he will be receiving updated materials via emails and will benefit from webinars and workshops organised by the FIU. These outreach activities aid the RP to be aware and up-to-date with AML/CFT obligations.

Offsite Examination

One of the inspection tools which the FIU has at its disposal is the off-site monitoring tool which is a desk-based examination of key documents that provide an overview of the regulatee’s operations, money laundering and terrorism financing risks as well as its level of compliance with AML/CFT legal and regulatory obligations prior to conducting an onsite examination.

The list of documents and information requested in the Offsite Examination include:

  • Business Information;
  • List of Products/Services and Clients risk rating;
  • Risk Assessment (Client and Business);
  • AML/CFT Internal Controls, Policies and Procedures;
  • Confirmation and documentary evidence of screening performed against the United Nations Sanctions Consolidated list; and
  • Documentary evidence of record keeping such as registers of internal and external suspicious activity, Politically Exposed Persons, Beneficial Owner and Training.

Onsite Examination

The onsite examination is focused on aforementioned risk-based supervision plan which has a mix of high, medium and low risk rating. The focus is more prioritizing the high-risk entities posing high ML-TF risk ensuring full coverage throughout the yearly plan.

Conducting the examination:
The inspection is conducted with a minimum of two inspectors present physically onsite. The examination normally is conducted as per AML/CFT checklist having full coverage on the AML/CFT themes and focalised on the short comings found during the offsite monitoring examination. Further to examination, there is inspection of documents and records such as CDD documents and registers to ensure that compliance is being maintained throughout the course of regulatee’s business.

Reporting findings:
Subsequent to inspection and examination, deficiencies and shortcomings identified are reported through Inspection report that is for internal use and deficiency finding letter which is subsequently circulated to RPs.

Remedial Action Plan

RPs are expected to respond to the FIU deficiency letter through a remedial action plan with a timeline of 7 days. A remedial action plan consists of actions that the RP will take to mitigate or eliminate the deficiencies noted. It is an undertaking from the RP committing itself to be compliant to the shortcomings highlighted.

Follow-up Examination

Consequently, post two months or prior of the deficiency finding letter depending on the severity of deficiencies, the FIU will conduct a follow up inspection to ensure that deficiencies noted have been corrected and undertakings of the RP have been implemented. The RP is expected to provide the FIU with all the measures/steps taken together with all documentary evidences to substantiate those measures/steps.
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