Which scoring themes would be affected?

The auditor identifies that the bank launched trade finance services this year. The target clients are multinational companies who actively support China’s belt and road initiatives.

Which scoring themes would be affected? (Select Two.)
A . 11.2
B . 11.3
C . 12.1
D . 12.2
E . 13.1

Answer: AB

Explanation:

Identification of Themes Relevant to Trade Finance Services:

Trade finance services for multinational companies participating in China’s Belt and Road initiatives involve transactions with potential geopolitical, regulatory, and economic risks.

These transactions generally encompass cross-border activities, high-value accounts, and potentially politically exposed persons (PEPs).

Scoring Theme A (11.2): Economic Activity and Geographical Risks:

As these services involve international trade, they are inherently linked to economic activity and geographical risks. FATF guidelines indicate the necessity to evaluate regions with different AML/CFT maturity levels. This is consistent with theme 11.2, focusing on the understanding and mitigation of risks associated with economic and geographical contexts.

Scoring Theme B (11.3): Customer Due Diligence and Enhanced Measures for High-Risk Profiles: The target clientele includes multinational companies, which might require enhanced customer due diligence (EDD), especially when engaging with entities or PEPs from countries with varying regulatory controls.

FATF Recommendations and Basel Committee insights emphasize robust customer identification, verification, and ongoing monitoring, aligning with theme 11.3’s requirements. Not Affected Themes:

C (12.1): This theme pertains more to specific reporting or transaction monitoring requirements that might not directly relate to the initiation of trade finance services.

D (12.2) and E (13.1): These themes are typically associated with procedural adjustments rather than the scoring of risk profiles.

Advanced CAMS-Audit Framework Alignment:

Advanced CAMS-Audit highlights the role of structured compliance frameworks in mitigating risks tied to strategic initiatives like the Belt and Road.

Evaluators assess the institution’s alignment with FATF, Basel Committee, and regional guidelines to ensure adherence to best practices for risk mitigation. Conclusion:

The scoring themes A (11.2) and B (11.3) are significantly influenced by the introduction of trade finance services targeting multinational corporations under China’s Belt and Road initiatives. This is due to the intertwined economic and geographical risks and the requisite enhanced due diligence measures for high-risk customer segments.