What are best practices for assessing and mitigating proliferation risk by banks?
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Banks must implement high-risk mitigation techniques suitable for the complexity of their activities, establish procedures for monitoring credit risk mitigation, and validate risk assessment models regularly . Financial institutions play a crucial role in countering proliferation financing by conducting enhanced due diligence on transactions involving dual-use items or sanctioned entities . However, the effectiveness of financial sanctions in curbing proliferation remains questionable due to deficiencies in training and information sharing among banks and government agencies . To enhance risk assessment, banks should adopt stricter measures, such as setting tolerance limits for deviations from expected outcomes and implementing remedial procedures when credit policies are exceeded . Additionally, the financial community must continuously improve detection of illicit transactions to combat proliferation financing effectively .
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5 Citations | Banks can assess and mitigate proliferation risk by conducting enhanced due diligence on transactions involving dual-use items or sanctioned entities, following money trails, and improving detection practices. |
| Financial institutions like banks can reduce proliferation risks by implementing financial incentives and collaborating with large technology companies to prevent dual-use technologies from falling into wrong hands. | |
Open access•Journal Article | Not addressed in the paper. |
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