Prudential Authority mandates AML/CFT/CPF effectiveness review for mutual banks
The Prudential Authority has designated the effectiveness of anti-money laundering, counter-financing of terrorism, and counter-proliferation financing (AML/CFT/CPF) controls as its 2026 'Flavour-of-the-year' supervisory topic. Mutual banks are required to present on their controls at annual Board prudential meetings.
Supervisory focus on financial crime prevention
The Financial Sector Regulation Act, 2017 (FSR Act) mandates the Prudential Authority (PA) to promote the safety and soundness of financial institutions through a risk-based, forward-looking supervisory approach.
Annually, the PA reviews emerging risks to determine a 'Flavour-of-the-year' topic for increased supervisory focus.
For 2026, this topic is 'the effectiveness of anti-money laundering, counter-financing of terrorism and counter-proliferation financing (AML/CFT/CPF) controls'.
These controls must be informed by a comprehensive understanding of money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks.
All mutual banks are required to present on this topic at their annual Board prudential or equivalent committee meetings.
International standards and board oversight
The FSR Act aims to prevent financial crime, a goal reinforced by the Financial Intelligence Centre Act, 2001 (FIC Act), which mandates accountable institutions to identify, assess, monitor, and mitigate money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks.
These obligations align with international standards from the Financial Action Task Force (FATF).
Institutions must implement comprehensive risk management and compliance programmes (RMCP) for AML/CFT/CPF.
They are required to demonstrate tangible evidence of their ability to detect and deter criminal abuse of their services.
This includes preventing terrorist financing and disrupting proliferation activities, with the Board critically evaluating control effectiveness and providing strategic direction.