The auditor identifies that the bank has launched trade finance services this year.

M1.1 - Risk Identification and AssessmentTrade finance introduces new types of risks such as exposure to cross-bordertransactions, multiple parties, and complex financial instruments. These elements necessitate a reassessment of existing risk frameworks to identify new vulnerabilities, including trade-based money laundering (TBML). As detailed in the CAMS-Audit guidance, financial institutions must periodically update their risk assessments to reflect changes in products and services​​​.

M2.1 - Enhanced Due Diligence (EDD) on High-Risk CustomersTrade finance clients often involve politically exposed persons (PEPs), entities in high-risk jurisdictions, or complex supply chains. According to FATF Recommendation 10 and CAMS standards, banks must enhance customer due diligence measures, including obtaining additional information on the customer's source of funds, beneficial ownership, and the nature of the business​​.

M4.2 - Transaction Monitoring SystemsThe complexity of trade finance transactions requires robust monitoring systems capable of identifying unusual patterns indicative of money laundering or terrorist financing. These systems must be calibrated to flag discrepancies in trade documentation, over- or under-invoicing, and deviations from expected trade flows, as emphasized in the FATF Recommendations and CAMS-Audit references​​.

References from Advanced CAMS-Audit Documents:

AML/CFT-document references specify the need for updated risk assessments and transaction monitoring systems aligned with international AML standards for new services​​​.

FATF Recommendations provide a framework for enhanced due diligence and risk-based approaches for trade finance​​.