Within the support provided to the enhancement of the Slovak anti-money laundering and countering the financing of terrorism (AML/CFT) system, the Council of Europe produced methodological guidance for the assessment of money laundering and terrorist financing (ML/TF) risks in the Slovak banking sector. This initiative responded to a request from one of the key national stakeholders, the National Bank of Slovakia, with the aim to address gaps and recommendations identified in recent reports by MONEYVAL as well as the European Banking Authority (EBA), which highlighted the lack of a systematic sectoral risk assessment methodology for the banking sector in Slovakia.
The contents of the Technical Guidance Paper “Review and guidance on the methodology for ML/TF risk assessment of the Slovak banking sector” are based on a review of the most recent National Risk Assessment (NRA) Report, MONEYVAL and EBA Reports, existing methodological approaches for ML/TF risk assessment at different levels in Slovakia, and a series of substantive technical meetings with the staff of the National Bank in charge of risk assessment, methodological development and bank supervision. Reference is also made to international good practices from other countries, from the Council of Europe’s experience, the EBA and the Financial Action Task Force (FATF).
The Paper thus provides a series of concrete recommendations aimed at assisting Slovak authorities with the development of a comprehensive methodology for conducting an effective money laundering and terrorist financing (ML/TF) risk assessment of the banking sector in Slovakia. Indeed, while the ML/TF risks of the banking sector have been assessed, to a certain extent, as part of the most recent NRA, developing a dedicated methodology and conducting a regular sectoral risk assessment of the banking sector, separately from the NRA, will provide the national authorities with a more detailed, precise and up-to-date understanding of the ML/TF risks in this sector. In turn, this will allow for more timely deployment of supervisory resources to target identified risks.
Developed in a country-specific manner, the recommendations contained in the Paper build on the existing experiences of assessing the ML/TF risks as part of the Slovak NRA, as well as the existing process for entity-level risk assessment of individual banks, while also considering the adoption of international good practices, in terms of both terminology and process. The Paper also offers practical annexes with suggested risk rating scales and model risk-based supervision processes.
These recommendations were presented to and discussed with the concerned national beneficiary authorities, who welcomed this targeted assistance and committed to following-up with the finalisation of the methodology and conduction of the sectoral risk assessment through a national coordination process. Once completed and made available, the results of this sectoral risk assessment process will be of great assistance to supervisors as well as banks themselves, to manage their risks and resources more effectively.
This support was provided in the framework of the joint Technical Support Instrument (TSI) Project on “Enhancing the effectiveness of the AML Framework in Slovakia” funded by the European Union and the Council of Europe and implemented by the Council of Europe.