Banks' Internal Governance Obligations and AML Risks

This research paper examines the internal governance obligations of banks in relation to money laundering (ML) risks arising from new technology-enabled means of transferring funds, specifically crypto assets. It outlines the recent developments in the European Union's anti-money laundering (AML) legislation, particularly the 2021 AML package, and emphasizes the need for banks to strengthen their internal governance procedures to effectively manage ML risks. The analysis employs a legal dogmatic methodology, critically assessing current and upcoming EU policies and legislation. The findings indicate that recent regulatory changes are enhancing the connections between ML risk assessment, exposure, and management. The paper discusses how these developments necessitate a more stringent AML risk management regime for banks, highlighting the importance of adapting organizational procedures and processes to address the challenges posed by crypto assets. The originality of this research lies in its exploration of the causal relationship between ML risk identification and the corresponding internal governance obligations of banks.