AML compliance under CNB supervision: Risk assessments must work in practice

When it comes to AML compliance, having properly designed internal policies and procedures is no longer enough. What matters is whether they are effectively implemented in the financial institution’s day-to-day operations and in its approach to higher-risk clients.

This is also highlighted by a recent decision of the Czech National Bank concerning the operation of ČSOB’s AML framework. According to our lawyer Anna Kottasová, the decision demonstrates that a client’s risk assessment must have a tangible impact on the scope of monitoring, the information obtained and the subsequent measures taken by the financial institution.

“If a client is internally classified as high-risk or even unacceptable, but that assessment has no real impact on the scope of monitoring, the information obtained or the subsequent measures taken, the assessment is effectively of no practical use to the bank,” Anna points out.

In practice, this confirms the importance of the risk-based approach. An AML framework cannot be merely formal: the measures applied must reflect the client’s actual risk profile and have a genuine impact on the institution’s subsequent course of action.

Anna Kottasová focuses on financial market regulation, capital markets and compliance at Bříza & Trubač. She also has experience with licensing proceedings before the Czech National Bank, particularly in relation to investment firms and payment institutions.