Instruction on Policies and Procedures for the Effective Management of the Risk of Money Laundering and Terrorist Financing during the provision of financial services has been approved

07/05/2024

The Executive Board of the Central Bank of the Republic of Kosovo (CBK), at the meeting held on 3 May 2024, approved the Instruction on Policies and Procedures for the Effective Management of the Risk of Money Laundering and Terrorist Financing (MLTF) during the provision of financial services, applicable to all financial institutions.

This Instruction defines the policies and procedures that financial institutions must establish to effectively manage these risks, promoting the expansion of financial inclusion, competition and consumer protection in the financial sector.

According to this instruction, financial institutions must ensure that the implementation of these policies and procedures cannot result in refusals or group interruptions of contractual/business relations for certain categories of customers that they assess as high risk for MLTF. CBK recognizes the responsibility and obligation of financial institutions in assessing the risk of their clients, assessment that according to this instruction must be done individually for the profile of each applicant or receiver of financial products/services individually.

Refusal or termination of the contractual/business relationship by financial institutions on the basis of risk for certain categories of clients (according to segments, legal status, or other) without assessing the individual risk profile, is considered an unjustified action and an indication of ineffective management of risk from MLTF. This can limit access to finance and financial inclusion as well as reduce competition in the financial system, which is why it is addressed through this instruction.

Also, the instruction avoids the unhealthy practices of financial institutions which prevent the access of certain categories and entities to financial services without an adequate assessment of their individual risk and well argued, while promoting the protection of consumers and the expansion of financial inclusion, for a sustainable and comprehensive growth of the competitive financial sector.

CBK, in implementation of its mandate, remains committed to ensuring that international standards and best practices are applied fairly and accurately. Therefore, the adoption of this instruction, which was preceded by the Guideline on Consumer Due Diligence and Risk Factors (dated 29 December 2023), helps financial institutions to effectively manage these risks when providing financial services, while it is also in function of expanding access to finance, as well as maintaining the integrity and stability of the financial system of our country.

The approved instruction can be found on the official website of the CBK Guideline on policies and procedures for the effective management of money laundering and terrorist financing (ml/tf) risks when providing access to financial services