On Monday, the RBI urged banks and other financial institutions to periodically evaluate their money laundering and terrorist financing risk assessments. It also stated that it had added a new section in the Master Directions on KYC. The aim of this is to enable regulators to identify, assess, and take appropriate measures to mitigate any potential risks. During the assessments, the RBI asked that REs (regulated entities) should take note of the overall vulnerability of sectors. If they find any, the regulators can relate to REs. Also, the internal risk assessments need to correspond to the size, geographical presence, and complexity of activities/structures.
Finally, the RBI said that RRs should adopt a Risk-Based Approach (RBA) to manage and control the identified risks. They must also have policies, controls, and procedures approved by the Board in place.
