Analysis and risk assessment: applying a risk matrix as part of a prevention plan against money laundering

Abstract

The proliferation of corporate fraud and financial crimes such as money laundering has led entities to reformulate their strategies by establishing internal control models focused on control environment and risk management. The starting point of the present paper is applying the policy of “knowing your customer” as the basis for an integral program of control and prevention of money laundering. The aim of the paper is to evaluate the application of a matrix which defines clients’ profiles, detects unusual or suspected transactions and mitigates associated risks in a local prestigious financial entity, situated in the city of Bahía Blanca (Province of Buenos Aires, Argentina). An empirical investigation of a current phenomenon was carried out by analyzing one situation through the perception of a group of people under study who were actively involved in the process as well as the researcher. The result of implementing the matrix serves as a catalyst for those in charge to make decisions regarding the detection of unusual or suspected transactions, to start the corresponding controls and alert mechanisms, and to deepen the analysis of clients.

Key words: internal control, money laundering, risk matrix.