Workshop for Internal audit department scope of audit work when inspecting the compliance and AML departments          Download Brochure

Introduction:

Money laundering and terrorist financing worldwide, particularly those linked to illegal and irregular activities such as drug trafficking, weapons, prostitution, corruption and commercial concealment, pose a great threat to the integrity of many financial institutions and even some banking systems. The importance of this topic is made by many Governments, authorities and supervisors. Saudi Arabia's legislative and regulatory authorities have issued binding regulations and instructions to help financial institutions avoid illegal operations, maintain the integrity and reputation of the banking system and protect them from regular sanctions. 

The Anti-Money Laundering and Terrorist Financing Manual issued by the Central Bank of Saudi Arabia in November 2019 states in Item X: Independent Audit:

• The independent audit department should conduct an independent examination of the appropriateness, adequacy and effectiveness of the anti-money laundering and terrorist financing compliance program and procedures at the financial institution level, document the audit results and send them to the Board of Directors for appropriate action.

• The independent audit framework when assessing the appropriateness, adequacy and effectiveness of the anti-money laundering and terrorist financing Compliance program and procedures should be based on the risks of money laundering and terrorist financing, focusing on the risks most vulnerable to exploitation in the passage of money laundering and financing Terrorism.

• Internal audit should conduct independent tests of controls, policies and procedures to combat money laundering and terrorist financing and their suitability to identify the ML/TF risks.

The Compliance principles of the Banks issued by the Central Bank in September 2020, based on the 10 principles issued by the Basel Committee, also stated the eighth principle that the scope and activities of the Bank's Compliance Unit should be subject to periodic review by the  internal audit department, the Internal Audit should include the risks of non-compliance in the risk assessment methodology applied in order to assess the efficiency and effectiveness of the compliance unit to mitigate the risk of non-compliance