For directors
10 questions every board should ask about financial crime risk
Use these at your next board or audit committee meeting. If management cannot answer one clearly, that is the place to start.
- Do we have a current, board-approved financial crime risk assessment that reflects our actual customers, products, channels and geographies?A generic or stale risk assessment is the first thing examiners test and the root of most program failures.
- Who is accountable for financial crime risk, and do they have the authority, budget and direct access to this board?Regulators look for a compliance function that can escalate without filters and is resourced to match the risk.
- How quickly would we know if we were moving money for a sanctioned party, a designated organization or a corrupt official?The answer should be measured in hours, with evidence, not assumed.
- When were our anti-money laundering, sanctions and anti-corruption programs last tested independently, what was found, and is it fixed?Open findings that reach the board late are a recurring theme in enforcement actions.
- Which correspondent banks, payment partners or key third parties could exit the relationship because of our risk profile, and what would that cost us?De-risking can hit liquidity, payments and revenue faster than any fine.
- Has the designation of cartels and other criminal organizations as terrorist groups changed our exposure, including through customers' customers, extortion payments or supply chains?Indirect exposure that was once a money laundering issue can now carry material-support risk.
- Are our monitoring and screening systems validated, tuned and producing alerts we act on, or volume we clear?Alert volume is not effectiveness. Regulators ask how the system was calibrated and tested.
- Which recent enforcement actions against peers would have found the same weaknesses here?Peer penalties are the clearest preview of what examiners will look for next.
- How does a serious issue reach this board, and has this board ever heard about one before a regulator did?Escalation that works is the strongest evidence of effective oversight.
- If a regulator or prosecutor asked tomorrow what this board did to oversee financial crime risk, what record would we show?Minutes, reporting and challenge on the record are how directors demonstrate oversight.
Sven Stumbauer · Partner, Forward Global · sven.stumbauer@forwardglobal.com · +1 404-402-8578 · svenstumbauer.com
For board briefings, independent reviews and advisory inquiries: sven.stumbauer@forwardglobal.com
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