Banks set timeline for risk assessment

Bangladesh Bank (BB) has asked the banks to comply with the risk assessment process on money laundering and terror financing by March 31 this year, officials said.
The Bangladesh Financial Intelligence Unit (BFIU) of the central bank issued a guideline in this connection on Thursday in line with Money Laundering Prevention Act-2012 and Antiterrorism Act-2009.
 "The guideline will provide the basic ideas of identifying, assessing and mitigating money laundering and terror financing risks that banks may encounter in doing their business," a BB senior official told the FE.
He said it would also help the bankers identify their high-risk areas of business.
The banks may face business risks arisen from their customers, products and services, delivery methods or channels, jurisdictions or geographical presence and/or regulatory risks such as non-compliance with the requirements of MLPA-2012, ATA-2009 and directives issued by the BFIU.
The banks first do need to identify those business or regulatory risks, the official added.
However, this guideline shall be treated as minimum instructions and indications to identify and assess the risk of money laundering and terror financing in their businesses and take effective measures to mitigate the identified risk.
"The banks are allowed to use more stringent tools to identify and assess the risk of ML & TF in their entities," the central banker noted.
He also said the guideline has been issued with a view to effectively implementing Anti Money Laundering (AML) and Combating Financing of Terrorism (CFT) measures as well as reinforcing the current pace of financial inclusion.
The banks have to apply the enhanced due diligence in a high-risk scenario and the simplified due diligence in case of a low-risk scenario, according to the instruction on risk mitigation. The BFIU also instructed banks that output of this risk assessment will be utilised as an input of AML and CFT core risk management guideline.
The central bank has also relaxed its reporting requirements on the capital market activities of the banks to help better the stock market stability, officials said.
Under the revised provisions, the banks are now allowed to submit their consolidated reports on the day's capital market activities on every Thursday instead of the daily basis the same day. The decision will be effective on Thursday next.
The decision came at a coordination meeting of the watchdogs such as the Bangladesh Bank (BB), the Bangladesh Securities and Exchange Commission (BSEC), the Office of the Registrar of Joint Stock Companies and Firms and the Insurance Development and Regulatory Authority (IDRA), Micro-credit Regulatory Authority (MRA), Department of Cooperatives (DoC) and Bangladesh Telecommunications Regulatory Commission (BTRC). The meeting was held at the central bank headquarters in the capital Thursday with BB Governor Atiur Rahman in the chair.
"We've relaxed reporting requirements aiming to facilitate the country's stock market for achieving better stability in the capital market," BB Deputy Governor SK Sur Chowdhury told the FE after he emerged from the meeting.
He said the central bank has always been extending support to the capital market by adopting different market-friendly policies.
"If the capital market activities are prudentially managed by the banks, there is a scope of enhancing their investment in line with the existing rules and regulations," the deputy governor explained.
Talking to the FE, another BB official said the banks have already started adjusting their capital market portfolios in line with the Banking Companies (Amended) Act 2013.
He said the bank's capital market exposure came down to around 43 per cent in November 30 last from 50 per cent earlier due mainly to increase in their eligible capital components.
The BB's latest move came against a backdrop of growing demand from the stock market stakeholders, including brokers amid poor market turnover in the recent months.
Taking the prevailing market situation into consideration, top 20 brokers of the Dhaka Stock Exchange (DSE) have been demanding such relation for the last few months.
Terming such a move positive, bankers, however, said it would help put a positive impact on the overall stock market.
According to the Banking Companies (Amended) Act, total capital comprises four components such as paid-up capital, balance in share premium account, statutory reserve and retained earnings as stated in the latest audited financial statements.
While calculating the banks' total investment in the capital market, all types of shares, debentures, corporate bonds, mutual fund units and other securities, owned by them, will be taken into account.
The central bank earlier asked the commercial banks to bring down their overall capital market investment within 25 per cent of total capital by July 21, 2016 to minimise risk in investment portfolios.
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