Designing a comprehensive AML & CTF risk-based approach for a local financial services business

Abstract

The purpose of this dissertation is to look at how Money Laundering (ML) & Terrorist Financing (FT) risks can be mitigated and prevented by implementing an Anti-Money Laundering (AML) and Counter Terrorist Financing (CTF) Risk-Based Approach (RBA). The main research objectives of this study are: to evaluate the main risks and weaknesses of the Maltese Economy and how these should be mitigated; to analyse the way a proper AML/CTF RBA should be implemented and conducted; to discuss the existing AML/CTF regulatory system with regards to emerging ML/TF risks and threats. The research methodology implemented in this study consists of both primary and secondary data. Secondary data involves the use of academic articles, published papers and also several local and international regulatory literatures. On the other hand, for the collection of primary data relating to the research objectives, online questionnaires were distributed to several individuals working within the local financial sector. The key findings acquired from this study suggest that due to certain weaknesses present in the Maltese economy, ML/TF risks and threats occur on a frequent basis. As a result, the main recommendation suggested by the regulatory authorities is to adopt and implement an AML/CTF RBA. From this study, it is found that a flexible RBA would be better in order to accommodate the differentials of each financial services business. Finally, due to improvements in technology, the ML/TF risks are always evolving and thus, the regulatory system will always be a step behind money launderers. As a result of these findings, several suggestions are recommended in the hope that in the future, further domestic research will be done with regards to this topic.