Why Banks are exposed to financial crime risk
Retail, corporate, institutional and private banks sit at the core of the global financial system. They facilitate payments, provide credit, safeguard deposits and enable cross border capital flows. This central role makes banks a primary target for financial crime and places them under sustained regulatory scrutiny.
In a regulatory environment defined by evolving threats, increasing enforcement scrutiny and exponentially growing data volumes, banks face one of the most complex compliance challenges in modern finance: managing money laundering, terrorism and proliferation financing risk across global operations.
For Money Laundering Reporting Officers (MLROs) and senior compliance leaders at banks, the task isn’t simply to satisfy minimum requirements – it’s to demonstrate a deep, defensible understanding of risk that stands up to regulatory review, supports business decision-making and drives proportionate control execution.
Arctic Intelligence’s ML/TF/PF Risk and Control Assessment Solution has been developed specifically for Banks. It supports Banks in meeting regulatory expectations, providing a structured, evidence-based, regulator-ready framework that empowers teams to identify, assess and govern financial crime risk across every line of business.
Why Banks are targeted by organised criminal networks
Banks are inherently exposed to financial crime risk for several reasons:
- Central Position in the Financial System: Banks sit at the core of domestic and international payment systems, making them the primary gateway through which illicit funds must ultimately pass to be layered, transferred or integrated into the legitimate economy.
- High Transaction Volumes and Velocity: Retail, commercial and institutional banks process extremely high volumes of transactions across payments, cards, wires, trade finance and correspondent banking corridors, creating scale and velocity that can obscure suspicious activity without advanced, risk-sensitive controls.
- Diverse Customer and Product Profiles: Banks service a wide range of customers from retail individuals and SMEs to multinational corporates, trusts and financial institutions across a broad product suite, introducing varied and compounding ML/TF/PF risk exposures.
- Cross-Border and Correspondent Banking Exposure: International payments, correspondent relationships and trade finance activity expose banks to high-risk jurisdictions, sanctions regimes and proliferation financing corridors.
- Complex Ownership and Control Structures: Corporate customers frequently use layered ownership structures, special purpose vehicles and nominee arrangements that can obscure beneficial ownership and source of wealth.
- Digital Channels and Third-Party Integrations: Open banking APIs, fintech partnerships, payment platforms and embedded finance models introduce additional entry points for illicit funds if not governed through robust risk frameworks.
Taken together, these features make banks a primary target for organised criminal networks and place enterprise wide, evidence-based ML/TF/PF risk assessment at the centre of regulatory expectations.
Introducing Arctic Intelligence’s ML/TF/PF Risk and Control Module for Banks
Arctic Intelligence’s Banking Risk and Control Module provides a comprehensive and configurable foundation for conducting robust, enterprise-wide ML/TF/PF risk assessments tailored to retail, commercial, institutional and private banking operations. This module enables banks to:
- Identify and Prioritise ML/TF/PF Risks: Using a bank-specific risk taxonomy aligned to FATF and supervisory expectations, the module guides banks through identifying the highest-impact risk areas across environmental risks, customers, products and services, delivery channels, transaction flows and geographic exposures.
- Assess Controls and Operational Effectiveness: Moving beyond static compliance checklists, the solution maps controls to real banking risk drivers and enables testing of both design and operational effectiveness, allowing banks to demonstrate with evidence that controls are working as intended.
- Calculate Residual Risk Transparently: Residual risk reflects a bank’s true financial crime exposure. Arctic’s module aggregates inherent risk indicators with control performance data to produce defensible residual risk ratings that are directly aligned to risk appetite, escalation thresholds and governance frameworks.
- Produce Audit-Ready Documentation: Built-in audit trails, version history, review workflows and aggregated reporting provide regulators, internal audit and senior management with transparent, evidence-based documentation explaining how financial crime risk conclusions were reached and governed.
This solution embeds banking-specific typologies, regulatory best practice and global risk methodologies into a scalable, configurable risk and control platform that supports consistent application across business lines, geographies and legal entities.
The built-in audit trail, review logs and Board-ready reporting enable stronger governance oversight while making complex risk outcomes digestible for executives and boards.
Who does this module apply to?
The money laundering, terrorism and proliferation financing risk and control module contains a library of risks, controls and control tests designed specifically for different types of Banks:
| Retail and High Street Banks | Corporate and Institutional Banks |
| Private Banks | Digital Only Challenger Banks |
What does this module contain?
A. Enterprise-wide ML/TF/PF risk assessment, covering the following risk groups:
- Environmental Risk – covering exposure to internal and external risk indicators.
- Customer Risk – covering customer base profile, customer location risk, legal form risk, industry / occupation risk, PEP risk and customer activity risk.
- Industry Red Flag Risk – covering ML/TF/PF red flags associated with Banks.
- Product and Services Risk – covering the services provided by Banks that are subject to AML/CTF laws and the inherent risk characteristics of each of these.
- Channel Risk – covering face-to-face and non-face-to-face customer onboarding and transaction channels.
- Transaction Risk – covering higher risk transaction types.
- Country Risk – covering higher risk country risk exposures based on the residency, nationality or citizenship (Individuals) and country of registration, incorporation, domicile or operations (Entities).
These modules also include a comprehensive library of suggested controls and control tests to support design and operational effectiveness testing.
Banks can deploy the content module out-of-the-box or tailor it to their methodology, eliminating the need to start from scratch while maintaining full ownership of their risk model. It also allows firms to import their own risk indicators and controls or enhance the expert-built libraries to suit their bespoke risk methodology and regulatory environment.
B. Product and Services ML/TF/PF risk assessment module, covering over 120 different products and services, with inherent ML/TF/PF risk attributes of each over the following risk groups:
- Deposit and Savings Products – covering Cash Management Accounts, Certificates of Deposit, Deposit Accounts, Money Market Accounts, Retirement Savings Accounts, Safety Deposit Boxes, Savings Accounts, Term/Time Deposit Accounts and Transaction Accounts.
- Payment and Transaction Services – covering Bank Drafts, Cash Passports, Charge Cards, Correspondent Bank Accounts, Credit Cards, Debit Cards, Digital Currency, Merchant Acquiring, Payment Processing, Prepaid Cards, Domestic and International Remittance, Stored Value Cards and Transaction Services.
- Personal Lending Products – covering Buy Now Pay Later (BNPL), Cash Advance Loans, Debt Consolidation Loans, Early Wage Access, Home Improvement Loans, Home Loans/Mortgages, Medical / Dental Loans, Mortgage Broking, Peer-to-Peer Lending, Personal Loans, Personal Overdrafts, Lines of Credit Stored Value Cards and Student Loans.
- Commercial and Business Lending Products – covering Aircraft Leasing / Aviation Financing, Capital Financing, Commercial Equipment Leasing, Commercial Loans, Commercial Overdrafts / Lines of Credit, Commercial Real Estate Lending, Commercial Real Estate Sale Leaseback, Crowd Funding, Equipment Loans, Factoring and Forfeiting, Fleet Financing, Inventory Financing, Project Financing, Syndicated Lending and Working Capital Loans.
- Trade and International Finance Products – covering Bank Guarantees, Documentary Collections, Export Credit, International Trade Credit, Performance Guarantees, Performance Bonds, Supply Chain Finance and Trade Finance.
- Investment and Wealth Management Products – Administrator Services, Asset Management, Custodial or Depository Services, Discretionary Portfolio Management, Estate Planning, Family Office Services and Family Trusts, Financial Planning, Philanthropy and Charitable Trust Management, Private Banking and Trust and Escrow Accounts.
- Investment Products – covering Capital Investments, Commodities Hedging Products, Exchange Traded Funds, FX Hedging Products, Interest Rate Derivatives, Investment Funds, Margin Loans, Secondary Market Trading of Commercial Loans, Securitisation, Structured Equity and Equity Products, Trading in Bonds, Commodities, Currencies, Derivatives and Equities and Unit Trusts.
- Superannuation, Pension and Insurance Products – covering Annuities, Defined Benefit Plans, Defined Contribution Plans, Insurance (General), Payment Protection Insurance (PPI), Superannuation Accounts, Superannuation Funds and Whole of Life.
C. Channel ML/TF/PF risk assessment module, covering over 30 different inherent ML/TF/PF risk attributes of each over the following risk groups:
- Face-to-Face Channels – covering Internal Physical Channels; Relationship Managed Physical Channels and External Physical Channels.
- Non-Face-to-Face Channels – covering Internal Remote Assisted Channels; Internal Manual Channels; Internal Digital Self-Service Channels; Internal Programmatic / Embedded Access Channels; External Interbank and Payment Infrastructure Channels and External Digital Channels.
- Face-to-Face or Non-Face-to-Face Channels – External Partner Intermediary Channels.
- Customer Onboarding Channels (General) – Channel type; onboarding through face-to-face channels and non-face-to-face channels and customer onboarding through intermediaries.
- Transaction and Delivery Channels – Value of transactions by delivery channel type.
- General Channel Risks – Higher channel risk indicators.
Companies we’ve helped
Here are some of the companies we’ve helped in this sector:
| ICBC | Nationwide | Bank of India | ||
| African Bank | Flagstar Bank | CRDB Bank | ||
| Suncorp Bank | Bendigo Bank | Secure Trust Bank |
Get started with Arctic Intelligence
Whether you are establishing your first enterprise-wide ML/TF/PF risk assessment or upgrading a legacy spreadsheet-based program, Arctic Intelligence’s Banking Risk and Control Module is a scalable, defendable and configurable solution that meets the needs of modern compliance teams.
Book a demo or contact us to explore how our platform can help your business strengthen compliance, mitigate financial crime risk and build a risk program that stands up to regulatory scrutiny.
Or visit our website to learn more.
