TheBasel Committee on Banking Supervision (BCBS)setsglobal standards for bank governanceand states that theBoard of Directors plays a critical rolein AML oversight.
Option D (Correct):The Board is responsible for:
Establishing and approving the AML compliance function.
Ensuring the compliance function has adequate authority and resources.
Overseeing risk management efforts and policies.
Option A (Incorrect):The Board should be actively involved, not just informed when required.
Option B (Incorrect):The compliance function must have direct access to the Boardto ensure independent oversight.
Option C (Incorrect):The Board must be involved in policy establishmentfor effective compliance management.
Why Board Oversight is Critical:
Ensures effective AML governance and accountability.
Reduces regulatory risks and potential financial penalties.
Strengthens financial institution stability and reputation.
Best Practices for Board Oversight in AML Governance:
Establish independent compliance reporting lines to the Board.
Ensure regular AML risk assessments and policy reviews.
Mandate regular AML training for senior management.
[Reference:, Basel Committee on Banking Supervision (BCBS) Corporate Governance Principles, FATF Recommendation 18 (Internal Controls and Board Oversight), Wolfsberg Group AML Risk Management Framework, , , , ]
