Master TBML Risk: Implement AML/CTF Standards Successfully

The Compliance department of a major Dutch bank had developed a new Anti-Money Laundering (AML) / Counter Terrorism Financing (CTF) Standard, including requirements for Trade-Based Money Laundering (TBML). These requirements needed to be implemented in the first line of defense to identify and manage TBML risks in trade finance transactions. The bank aimed to raise awareness around TBML and enlisted Compliance Champs for support in the implementation.

Background

The bank had identified TBML as a top risk in its Systematic Integrity Risk Analysis (SIRA).
The TBML requirements were theoretical and needed practical translation.
The Trade department focused primarily on sanctions checks and lacked procedures for identifying money laundering and terrorism financing risks.
The first line felt insufficiently involved in the Standard.

Commercial departments were concerned about the profitability of trade products after implementing the TBML checks.
Greater collaboration was needed between various departments such as Trade, account managers, CDD analysts, and customer service.
The FEC organization was undergoing a reorganization, impacting the availability of stakeholders.
The bank engaged Compliance Champs to implement the TBML requirements.

compliance champs Policies and Procedures

Solution

A project-based approach was chosen to implement the TBML requirements. Key steps in the project included:

Establishing a project organization: A core team was formed in close collaboration with stakeholders from various departments, including Trade Services, FEC, and customer service. This team consisted of project managers from both Retail and Wholesale to implement the Standard bank-wide.
Conducting a gap analysis: Various teams performed a high-level gap analysis to identify where the TBML requirements were not met. A data analysis was also conducted to understand the bank’s trade portfolio.
Developing a Global Procedure on TBML: The gap analysis and data analysis served as the basis for a procedure that translated the Standard’s requirements into practical first-line procedures. Collaboration with Trade Services, FEC, and customer service ensured that the TBML checks were specifically tailored for various trade products. Additionally, a governance structure was established to manage TBML risks, including roles, responsibilities, and an escalation process.
Conducting a pilot: A pilot was conducted for the Retail NL organization, where the prescribed TBML checks were tested on hundreds of trade transactions. Feedback from the pilot led to adjustments in the procedure and formed the basis for a maturity model for TBML risk management.
Analyzing the TBML data landscape: The TBML risk indicators and red flags were translated into concrete data points. It was assessed whether the bank already had these data points, in which systems they were stored, and whether the data was structured or unstructured. This laid the foundation for improvements in data governance and further automation.

Results

Improved collaboration
Close cooperation between Trade Services, FEC, and customer service led to a shared vision on TBML.
Practical procedure
A procedure that practically prescribes how TBML checks should be performed ensured a uniform approach within both the Retail and Wholesale organization.
Data insights
Analysis of the TBML data landscape provided insights into available data and tools for improved data governance and automation.
Increased awareness
The project significantly contributed to raising awareness around TBML, with senior management now focusing on the issue.

Conclusion

Through a structured, project-based approach and close collaboration between various departments, the bank successfully laid the foundation for the implementation of TBML requirements in the first line. This led to increased awareness, improved procedures, and a solid basis for further automation and mature TBML risk management.