In a recent study titled ‘From recovery to balance’, the Dutch financial regulator De Nederlandsche Bank (DNB) has highlighted the need for a more targeted, risk-based approach to fight financial crime. Key points from the study are shared below.
To pursue a risk-based approach, the first step is for banks to better identify customer risk. Resource deployment should be limited for low-risk cases so as to free up resources for high-risk cases. The DNB will help financial institutions with this by providing guidance on approaches appropriate for low-risk customers.
Further, it would be helpful to expand the deployment of technologically innovative solutions to make the approach to tackling money laundering more targeted. For example, machine learning can help in classifying the customers into risk categories as well as in transaction monitoring. It is also crucial to ensure a stronger collaboration between AML/CFT agencies. In the near future, the DNB will be discussing the key concerns and areas where additional guidance is required.
Source: DNB, Netherlands